Tips & advice on improving cash flow forecasting & liquidity planning: Q&A with SAP treasury expert Moussa Soukal (transcript)

Tips & advice on improving cash flow forecasting & liquidity planning: Q&A with SAP treasury expert Moussa Soukal (transcript)

Reading time: 9 mins

Accurate cash flow forecasts – even two or three months out – are elusive for many companies. Challenges range from data inaccuracies, to technical issues and integration problems, to poorly devised processes.

What are best practices to sidestep these issues, and how can SAP treasury functionality help you more accurately pinpoint your company’s future cash position?

In this Q&A moderated by Allison Martin of Financials 2013 with conference speaker and Treasury expert Moussa Soukal of Hanse Orga. On January 31, Moussa took questions here for the hour in the Financials Forum thread on topics such as:

– What are best practices for implementing a standardized format for tracking changes to cash flow forecasts?

– How can we avoid errors due to country-specific data formats and multilingual systems?

– What are best practices for avoiding integration issues with subsidiaries using different ERP systems?

– What are reporting options to improve cash flow forecasts, including executive reporting?

You can read our edited transcript here:

Allison Martin, Financials 2013: Thank you for joining us today for today’s Q&A with Moussa Soukal of HanseOrga International here in the Financials Forum today!

Moussa Soukal is an expert on SAP financials and treasury functions, and is a speaker at our upcoming SAPinsider Financials 2013 conference this March. Our topic today – cash forecasting & liquidity planning – will be the topic of one of his sessions.  

Thanks to all of you who have already posted some advance questions! Moussa will be here for the next hour, taking your questions, and will be jumping in shortly to respond to your posts.

Allison Martin: Welcome, Moussa, and thanks for joining us! 

Moussa Soukal, Hanse Orga: Dear All,

Welcome to this Q&A on tips to improve cash flow forecasting & liquidity planning and thank you
for joining us!


NoemiBors: Hi! Really significant questions have been posted in the forum summary which I´m looking forward to having it answered, but I have some questions additionally with regards to forecasting:

– What kind of trending strategy (besides historical baseline) do you use in a constant changing and capricious business environment?

Thanks a lot in advance!

Moussa Soukal: NoemiBors,

Thank you for your questions,

– In terms of trending strategy, I would recommend to:

1. Use Multiple Methods

2. Use Many Variables

3. Use Scenario-Based Forecasts

4. Track Actual Results and Adjust

Some tips  using multiple models and scenario based forecasts, and trending methods for forecasting: 

– A sales force composite: This is an estimate of future sales based on the sum of estimates from all of the company’s salespeople.

– Correlation analysis: Sophisticated models can be useful in forecasting sales. Some companies create sophisticated statistical models called response modeling: sophisticated statistical models used in forecasting that are based on how customers have responded in the past to marketing strategies.

Since forecasts are estimates, the more estimates generated from various methods, the better. For example, combining expert opinions with a trend analysis could help you not only understand what is happening but also why.

Riyazali Momin: Can you share your experience in terms of using tools, methods, and solutions for achieving real-time (or close to real-time) working capital reporting?

Moussa Soukal: Based on my experiences, the best results are
reached by leveraging your current ERP functionalities, and combining this with niche specialized SAP add-on tools to  automate working capital functions such as Order to Cash, Purchase to Pay cycle, Working Capital and Free cashflow are key.

– When you automate your different components of the Working Capital, you can achieve near real-time information and reporting.

-An example would be to automate the order to cash cycle (especially the cash application side) so you can impact your receivables and impact your DSO (as fast as possible, independently from manual tasks and resources and have people only working on exceptions).

We delivered such projects for IBM, Dow Chemicals, Dupont, Owens Corning…

Generally speaking, when we start from the results, we found out that the biggest block to near-real-time information (Working Capital) are inefficient processes on the back-end.

NoemiBors: What % is acceptable for a minimized error rate? How to reach it? 

Moussa Soukal: Depending on models, the acceptable rate will decrease over time and with your level of adoption and comfort levels. The rate could start at 10-15% to  decrease to around 5%


Andrea Haynes: For cash forecasting in companies using multiple ERP systems, any advice? Where do you see the biggest integration problems?

Moussa Soukal: That’s a great question, thank you!

That’s an issue that we constantly come across, the heterogeneous ERP landscape.

What we discover, is that some specialized add-ons solution (SAP certified) which enhance your SAP platform use the SAP as a master platform and at the same time can reach out to non-SAP ERP platforms to create the missing link and one-integrated ca
sh & liquidity management solution that could help you to bridge the gap between multiple SAP & non-SAP ERP.

The biggest integration problems come from the final stage of your cash forecasting, which is last but not least — the tracking of actuals versus forecasts.

This step is difficult because various ERP are not integrated and the information resides in various environments, so it’s very difficult to get a one single picture. What I would recommend is to consolidate everything in one solution and work for the planning side, forecasting models side, and work on individual variance analysis through your various ERP solutions.

NoemiBors: What is the maximum period for a minimized error rate forecast?

Moussa Soukal: In my general experience, the 90 days rolling forecasts horizon works well to reduce errors to the minimum. Generally speaking, under one year is a good horizon.


Allison: Hi Moussa,

One issue I’ve heard come up from attendees is how to standardize the format for tracking changes to cash flow forecasts. Can you share any advice or best practices for this?

Moussa Soukal: Allison, thank you, another great question!

This issue comes up a lot. I see similar things during our business assessments of our customers and prospective customers.

From my experience, the main idea is to streamline your process first for cashflow forecasting reporting. Then you need to apply technology (solution) to that issue to help you address it.

As IBM mentioned to us, “Do not Automate a mess!”

The best practice for me would be to use a standard add-on software which offer the ability to keep track of cashflow forecasts.

I would recommend a SAP certified add-on with Cash Forecasting fo
r SAP – which offer cash forecasting templates that can be set-up by financial users and distribute across the company.

– These templates are available through SAP GUI as well as over the web for Non-SAP entities.

– The solution is able to keep track of cash forecasts changes and create a new version of cash forecasts. We can then easily come back and compare various forecasts versions between them.

– The templates are centralized to a Dashboard, where the Finance Team can track changes, versioning of forecasting, reviews as well as logging in submission date and time, with possible deadline for rolling forecasts submission.

So the model become more like a self service platform for all the various departments to report in a user friendly way (ERP-based agnostic) with the full visibility and control for the finance team to track changes, submissions and more. 

Dave Hannon: Moussa, what’s the most common user error that creates insufficient or inaccurate cash flow data?

Moussa Soukal:  Thanks, I hope i understand your question right,

What I see a lot is the following, the most common user errors,

– Taking raw data from the ERP without making any adjustments/ assumptions/ re-treatments. For example, with an accounting due date for incoming invoice due, this cashflow data is not re-adjusted to a cashflow-based forecasting, taking into account customer past payment behaviors, which will lead to in-accuracies. In other words, “Garbage in, garbage out.”

– Forecasting at a 30,000 ft level, without having enough granularity in your cash forecast plan.

– Exporting data from ERP (SAP or others) to Excel and re-treating numbers with possible errors.

– Having only a indirect method for your
cash forecasting (budget-based and GL derived). I always recommend having a hybrid solution – somewhere between an indirect and direct method. (Using add-ons solutions can provide the direct method, by starting at the bank information level and deriving the cash forecast plan.)

Ken Murphy: Hello Moussa, thank you for your insight. Do you have any tips for ways SAP reporting can directly help improve cash flow forecasts? I’m thinking of executive forecasts in particular?

Moussa Soukal: Hi Ken, thank you!

For SAP reporting, I will suggest leveraging the maximum from the SAP cash & liquidity management modules for quick wins.

For SAP cash management, you can get a pretty good view for a few weeks out of the cash position worksheet when set up right.

For the Liquidity Manager module, the best way will be to leverage SAP BW for the planning side of things and use it in collaboration with the actuals allocation algorithm for the variance analysis. Looking at the four basic steps I mentioned before:

1.Use Multiple Methods

2. Use Many Variables

3. Use Scenario-Based Forecasts:  All the above methods have to be developed/specified in BW, are often time consuming but BW is very flexible in handling models/data models.

4. Track Actual Results and Adjust:  The set-up can be time consuming for the algorithm and the rules based engine for the automatic allocation.

Overall, the quick wins are there, but it will take quite some efforts to align what business vision of cashflow forecasting with the IT efforts to fully design and elaborate what you are looking for.

I would suggest having a look at SAP certified partner for finance niche specialist, which can provide a lot of value for reasonabl
e time to implement and very good ROI, while leveraging your SAP platform. (One technology, One solution).

Allison Martin: Thanks to all who posted questions and followed the discussion!

A full summary of all the questions will be available here in the Financials Forum soon.  

I also invite you to meet Moussa in person at Financials 2013 in Las Vegas March 19-22. For more details, simply visit the Financials 2013 conference website and follow us on Twitter at #financials2013. We hope to meet you in Las Vegas!

And thank you again to HanseOrga’s Moussa Soukal for joining us today. I’m looking forward to seeing you at the conference in just a few weeks.

Moussa Soukal:  Thank you all, as well, for your great questions and for your time. I hope you enjoyed it. I look forward to seeing everyone in Las Vegas!

If you would like to have additional information and/or new questions, please do not hesitate to contact me at

Moussa Soukal is Managing Director of Hanse Orga International Corp., the international subsidiary of the German financial software specialist Hanse Orga AG, offering SAP certified Finance Suite solutions for SAP.  Before joining Hanse Orga in 2008, Moussa was a Treasury Business Consultant, helping international corporate clients to implement treasury technology and previously was a Treasurer – Cash Mana
ger at Deutsche Bank Paris.  Moussa is a speaker at the upcoming Financials 2013 conference in Las Vegas, March 19-22.

Allison Martin is conference producer for SAPinsider’s Financials 2013 conference. You can follow her for updates on the event at #financials2013 and @allisonmartin14

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