The pandemic put cash forecasting front and centre and forced developments within corporates and among their suppliers. The Treasurer finds out how COVID-19 impacted Cashforce, the added requirements that clients brought to its doors and the lessons learned. CEO Nicolas Christiaen explains how the company updated its platform to a hyper-scalable, API-enabled microservices architecture, with connection capacity to any outside system through application programming interfaces (APIs).
The treasury and finance technology market has always been changing. At Cashforce we have seen this dynamic since we started in 2013. But it is within the past two years that we have seen the rate of change accelerate and, in that time, we have learned many lessons. The COVID-19 pandemic forced companies to change the way they do business, and for our clients and prospects this was evident in what then became their top priority.
Suddenly, corporate treasury teams were focused on cash forecasting above virtually all other tasks. The appetite for learning about best practices in managing cash information in real time was enormous. Treasury teams needed to understand their current cash positions and near-term forecasts, as they always have, but that was not enough. They needed visibility out to further time horizons; they needed to understand the mechanics of their working capital; and they needed a reliable ongoing forecast that grew more accurate over time. The reasons why were not complex.
Within weeks of the start of the pandemic, treasury teams knew they would be in for a tough ride. Even those operations that previously performed well were experiencing breakdowns in their normally solid assumptions and correlations. Treasury teams with formerly predictable working capital models were now struggling with new payment behaviours on both the client side and their own accounts payable departments.
By late spring of 2020, corporate treasury teams were either steering their way through a working capital crisis where knowledge of cash would be paramount, or they were flush with cash and wanted to get ahead of their competition through acquisitions, investments or simply planning for a rainy day. Some of these organisations were already data-driven, but needed better tools. Others were still using Excel and knew that they barely understood where exactly their cash was. Since we were able to help with both working capital analysis and forecasting, the interest in our products grew exponentially.
Cash forecasting has always been an important topic for treasury teams. However, from a functional standpoint, it was always hemmed in by what tools the financial technology market could provide. When treasury practitioners began to see what a dedicated cash-forecasting tool, informed by solid analysis of working capital, could do for them, they quickly moved past the modules that treasury management system and enterprise resource planning providers typically offered. They saw the product during a time when accurate forecasts were the difference between success and failure, and they felt empowered. Now was the time to get the right tool to drive process improvements. This inevitably led to discussions about just how to do that.
Digitisation of treasury workflows and processes has been a strong theme throughout this time. Corporate treasury teams received a broad mandate to leverage technology to create efficiency and reduce errors to save time and money. In this context, Cashforce fit right in.
Our first method for helping our clients is to connect to and automatically pull in all the source data needed to build an accurate cash forecast. Once this process was completed, these treasury end users could focus on configuring a solid workflow that enabled their subsidiaries to get involved in managing the raw data for the forecast, while applying logic to make the forecast more accurate. Over time, our clients could monitor this data flowing into their forecast and use Cashforce to find ways to improve the data quality. But the benefits did not end there.
Any cash-forecasting tool, indeed, any financial technology, will only be as good as its output. The companies we speak to on a regular basis need a solid baseline forecast and they need robust analysis of that forecast. This includes scenario analysis, the ability to run simulations to stress test for future (black swan!) events, forecast-to-actuals variance analysis, and the use of artificial intelligence and machine learning in the areas of payment behaviour.
The results speak for themselves. Pearson Education was able to save millions in borrowings by using cash-forecasting solutions to centralise its forecasting operation, lower its day sales outstanding and gain a true understanding of its future cash flows. Kellogg Company was already able to save millions at the very start of its onboarding, benefitting immediately from our working capital analytics.
We decided to build a completely new version of the platform. Our goal was to recreate what was valuable in our current platform and incorporate what we have learned over the past eight years. Cashforce is now built upon a hyper-scalable, API-enabled microservices architecture, capable of housing millions of transactions. It can be connected to any outside system through APIs (in addition to more traditional connectivity methods). On top of that, our platform contains real-time data processing, allowing for best-of-breed cash management and cash-forecasting processes.
We can now scale up to fully support the processing and performance needs of large-sized multinational corporates, while also lowering the barrier of entry for mid-sized companies to elevate their cash-forecasting operation. All these lessons, learned from our clients, partners and our own team, have shown us the path forward to creating a lasting value proposition to all of our customers, present and future. These lessons have illuminated the path forward for the Cashforce platform and will allow us to continue to help our clients in the years to come.
Nicolas Christiaen is CEO of Cashforce
