Insights From Haresh Chhaya, SAP Treasury and Working Capital Solutions Leader: The Challenges of Cash Flow Forecasting for SAP Customers 

Published: 25/August/2023

Reading time: 4 mins

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Key Takeaways

⇨ Cash flow forecasting is pivotal for financial strategy, yet complexities arise due to disconnected processes in financial systems.

⇨ SAP's Haresh Chhaya emphasises the need for integrated solutions like SAP S/4HANA Treasury Management to address cash visibility and capital cost challenges.

⇨ By leveraging tools like Taulia and focusing on multi-bank connectivity, SAP aids businesses in overcoming cash flow forecasting hurdles.

Cash flow forecasting is essential to any company’s financial strategy, but it comes with a fair share of complexities. For most companies, these challenges are multifaceted and relate to disconnected processes in financial systems, such as order management, banking communication, payments, and collections. The forthcoming SAPinsider research on Cash Management and Visibility underscores the pivotal role of cash forecasting and validates it as a top priority for SAP customers. Haresh Chhaya,  Senior Director, Treasury and Working Capital Solutions at SAP, echoes this sentiment, citing SAP internal research and offering insights on the topic.  

Chhaya asserts, “What we are hearing is that a significant number of SAP customers are concerned about accurately forecasting cash flows.” Despite having sophisticated ERP and treasury management systems (TMS) in place, organisations struggle to forecast their cash accurately. While TMS vendors, such as FIS, Kyriba, and others, provide comparable functionalities, Chhaya says only a few companies can match the end-to-end capabilities SAP offers, including TMS and core accounting system. Many organisations maintain legacy systems and rely on manual methods, especially when recording cash inflows and outflows. This results in disconnected processes, decreased visibility, and other complexities. Chhaya explains, “The biggest challenge for most customers in this area is capturing all the cash flows within their financial systems in a timely manner and using them to determine the next steps.” 

Decreasing Cash Visibility 

As Chhaya highlights, one of the critical issues is the deterioration of cash visibility due to broken processes. The initial findings from the SAPinsider research also echo this sentiment, as only five percent of respondent organisations reported a global view of cash and liquidity, down from 11% in 2022. Organisational data must be collected from multiple sources, which makes it challenging to gain real-time insight into receivables, payables, inventory, global cash, and forecasting. This lack of visibility increases risks for companies. As Chhaya indicates, “If you can’t fully understand your financial exposures when hedging, you may not have an effective hedge.” Thus, accuracy becomes crucial for a company’s financial health. 

Navigating Increasing Cost of Capital with SAP’s Integrated Solution 

Chhaya also stresses the challenge of higher capital costs resulting from disconnected systems. He explains that not being aware of available working capital means leaving money on the table and relying on costly bank borrowing.  

An integrated solution like SAP S/4HANA Treasury Management can eliminate inefficiencies and provide a comprehensive view of finances. SAP S/4HANA Treasury Management solution portfolio consists of four main components: cash and liquidity management, payments and bank communication, debt investment and risk management, and working capital management. Each component caters to different financial needs, allowing for a holistic approach. 

Legacy Systems and the Need for Multi-Bank Connectivity 

Despite the benefits of integrated solutions like SAP S/4HANA TMS, many companies still operate on legacy ERP systems like SAP ECC 6.0 or lower. In recent conversations with SAP customers, finance leaders recognise the need to improve core finance processes prior to a complete transition to SAP S/4HANA. Chhaya suggests that businesses can enhance current landscapes by prioritising multi-bank connectivity. He explains, “Businesses can implement SAP multi-bank connectivity solution to automate statements and payments with their banks. “This increases efficiency for businesses by providing them with a more extensive bank network and seamless transactions. 

SAP Technology Investments Aim to Address Core Challenges 

During the conversation, the acquisition of Taulia by SAP was a key point of discussion. Taulia is a pure working capital platform offering a comprehensive solution to SAP customers. Chhaya emphasises the significance of this acquisition and asserts that Taulia seamlessly integrates with SAP ERP, enabling organisations to unlock cash trapped in receivables, procurement, and inventory management processes.  

Furthermore, Chhaya emphasises the SAP Business Technology Platform (BTP) as a crucial element in SAP’s solution offering. “Advance Payment Management solution built on SAP BTP can take payments from any source, SAP or non-SAP, and connect to banking partners,” he elaborated.  

While challenges around cash flow forecasting are evident, Chhaya’s insights suggest the solutions are within reach. By tapping into SAP’s advanced tools, enhancing collaboration between departments, and staying in tune with industry trends, businesses can effectively navigate cash flow forecasting challenges. 

What does this mean for Mastering SAP members?  

Embrace multi-bank connectivity. Chhaya says, “Today, businesses operate with multiple banks. And if you are a global business, you are dealing with even more banks across different regions.” For companies to maintain an accurate cash forecast, it is essential to integrate and consolidate data across all the banks. By embracing tools and solutions that allow multi-bank connectivity, businesses can gain a unified view of their finances, ensuring better forecasting accuracy.  

Consider comprehensive solutions for working capital management. SAP customers should lean towards solutions that provide an all-encompassing view of their working capital. By integrating these different components, businesses can not only enhance their cash forecasting but also optimise other aspects of their financial management.  

Enhance collaboration between IT and finance. Given the technological nuances of cash flow forecasting in today’s digital age, there’s a need for seamless collaboration between a company’s IT and financial departments. Chhaya’s insights hint at this intertwining. By fostering this collaboration, businesses can ensure that they are leveraging the full potential of their SAP solutions and addressing any tech-related challenges promptly. 

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