How do you manage cash flow volatility and uncertainty in a global market?

Totally agree. Having a direct rolling cash flow forecast is critical in this process. Every team, internally, that impacts cash flow needs to work with the treasury team to formulate this forecast, and it needs to be ongoing monthly, with more diligence in M3 of the quarter.

Treasury’s responsibility is to provide liquidity to the company under all circumstances. That said, I agree 100% with the previous posts about forecasting models being extremely important, but equally as important is securing a credit facility for the company to cover any shortfalls that show up in your forecasting model. This is most beneficial for company’s when collections and disbursements have large timing differences. For example, certain retailers have certain months when they’re buying inventory in Q1 that won’t be sold until Q2 (seasonality).

A driver every company has is working capital fluctuations. Cash-to-cash cycle, DSO, DIO and DPO have always to be monitored. It can be useful to calculate some type of working capital such as trade working capital or operative working capital. Every variance in working capital causes changes in company liquidity.

Some of the tools can be: 1. Implementing physical cash pooling if available. 2. Hold cash in investment grade banks. 3. Have a risk management policy in place for maximum acceptable cash balances to manage counterparty/credit risk.

I do agree,. If your identification is not being considered or rejected then the identifier is the loser. But the article is right.

Absolutely, a company's financial adaptability and resilience in a dynamic business environment can be improved by utilising scenario analysis. For instance , as a BI analyst, I look at the worst case scenario critically, identifying potential risks and developing backup plans so that we are better equipped to deal with unforeseen circumstances and lessen their effect on cash flow. It makes it easier for the company to stay grounded.

Make some exercices to see liquidity changes caused by DSO, DIO, DPO, CAPEX variations can be useful to understand the level of impact they have. In my experience, just 1 day in DSO increase can caused 1 million of liquidity decrease. When you elaborate cash flow forecast use the scenario analysis to make understand to your audience how could be the liquidity trend (maybe not all people have the sensibility to understand liquidity changes).

Eu concordo, e é preciso tudo estar muito bem planejado, contanto também com a experiência do gestor para saber os momentos corretos de manter mais ou menos fluxo de caixa.

For informational purposes only, forecasting cash flow amidst global volatility demands a nuanced approach. Firstly, scrutinize historical trends while acknowledging their potential irrelevance due to unprecedented events. Secondly, incorporate scenario analysis, assessing multiple outcomes based on varying levels of volatility. Thirdly, stress-test your models, factoring extreme situations to gauge resilience. Finally, maintain agility in adjusting strategies as conditions evolve. Remember, adaptability is key in navigating unpredictable financial landscapes.

Few ways to do cash flow forecasting is projecting your future cash inflows and outflows under various scenarios. It begins with historical data and key assumptions, leading to the creation of a baseline scenario representing expected outcomes. Another way can be sensitivity analysis, which explores variations in assumptions, resulting in best-case, worst-case, and most likely scenarios. Stress testing considers extreme events and potential mitigation strategies. Regular monitoring and communication are essential to adapt to changing circumstances and maintain financial stability.

This is a quite critical aspect. Always streamline your accounts receivable and payable procedures, encouraging prompt payments from customers while negotiating favorable terms with suppliers. Implement inventory management practices to reduce holding costs without risking stockouts. Cut unnecessary expenses, use technology for efficient financial management, and consider financing options that align with your cash flow needs. Continuously monitor and update your processes to adapt to market changes and improve overall cash flow efficiency. Effective cash flow optimization boosts liquidity and enhances financial stability.

Collect data, analyze them to undertand on which variables you can act and then make an action plan with other company department. Usually the department involve are sales, because the create credit and purchase because the create debt. You can use some method to adjust and manage your liquidity but if you want to have a high impact con it you have to change payment conditions both for customers and suppliers.

Ter uma proteção cambial é muito importante, como por exemplo quando o dólar sobe bastante em um curto prazo de tempo, isso pode aumentar os custos e com isso diminuir a margem ou até mesmo gerar prejuizos.

A diversificação é algo que se usa para mitigar os riscos e assim aumentar as opções em um cenário mais desafiador, agilizando e diminuindo os momentos de incerteza.

Consider cash revenue generation in FC versus cash expenses. Determine the best match in FC cash flows given need for any cross border repatriation versus cross border payments. May incorporate several country subs into this analysis via cross company receivables,payable or notes. Run sensitivity/exposure analysis using historical FC rates. Don't forget tax analysis.Avoud withholding ans taxes an excessive IC balsnces