Steering Treasury with the ConVista Cash Matrix

Steering Treasury with the ConVista Cash Matrix

Treasurers are faced with immense amounts of data and information each day, which continues to increase as a result of global processes and advancing digitalization. As this data forms the basis for decision-making and risk management, it is important for Treasurers not to get lost in this "data jungle" during the reporting process. An associated phenomenon with this is information overload. In this case, the availability of information exceeds the capacity of the recipient of the report to process this information. Among other things, this occurs because information is available from a wide variety of sources, in different formats and of varying quality, making it difficult to evaluate. Reporting solutions that are supposed to provide more transparency and control for the treasurer, however, have to deal with exactly these data volumes, be it data lakes or specialized individual reports. This first article of a multi-part series on the topic of steering Treasury through a comprehensive KPI framework will focus specifically on the relevant aspects in cash management and what Treasurers can do to avoid information overload.

The solution to the problem of information overload is to focus Treasury steering on truly relevant KPIs and their dimensions and to map them in an intuitive reporting tool. Particular attention must be paid to ensuring that the relevant KPIs are provided at all times in the required quality and data depth to enable further processing in analytics tools such as the SAP Analytics Cloud or comparable solutions.
 

How Can Cash Management be Steered the Right Way?

The definition and characteristics of KPIs are determined individually from corporate to corporate. Nevertheless, the basic requirements for these KPIs are generally applicable: aligned with the strategic goals of the company, KPIs should be measurable, relevant for decision-making and meaningful, standardized and interlinkable. At the same time, company-relevant KPIs are always individually tailored to the respective needs and requirements of Corporate Treasury. A look at the cash reporting of global companies and groups reveals that there is no standard definition for “cash” or “net cash”. Experience, however, shows that deriving and adapting the cash definition from the underlying accounting standards can be very helpful. Apart from that, it proves to be a great advantage to use a generally applicable KPI framework that can be applied to several treasury areas. Such a framework is provided by the ConVista Cash Matrix for a meaningful treasury management in the cash area. 
 

What Components is the ConVista Cash Matrix made up of?

To avoid information overload, it is advisable to focus on relevant aspects only. For example, KPIs are presented according to a uniform corporate definition (One Truth) and mapped across decision-relevant dimensions, resulting in our Cash Matrix:

Components of Net Cash

In practice, a "net cash" presentation became established whereby cash-positive components as well as cash-negative components ("net of") are categorized and a “net cash” position is created. The categories should be structured according to liquidity. In addition, the individual components of net cash should be shown separately and according to maturity, and the tied-up portion or trapped cash should also be displayed in the reporting.

 

The matrix character of “net cash” comes about through the consideration of “net cash” or its components across various dimensions. These dimensions enable a holistic, yet structured, view of “net cash”. The focus on the following dimensions has proven itself in practice:

  • Type of Data (actuals, budget, forecast as well as variances and due date profiles)
  • Organization (group, devision, legal entity)
  • Geography (region, country)
  • Currency (reporting and transaction currencies)
  • Time Horizon (day, week, month, quarter, year)
  • Counterparty (external e.g. banks and internal e.g. intercompany)

How do I avoid Information Overload in Reporting?

In order to maintain an overview, dashboard solutions are available, which should be precisely setup based on the individual needs of Corporate Treasury and focus on the above-mentioned components. The ConVista Cash Matrix provides the input in the form of standardized KPIs, which are visualized on the dashboard in a user-friendly way and put into context with each other. This makes it easier for the Treasurer to identify changes and new opportunities at a glance. The following figure is an example of such a dashboard solution for the cash management area. Views can also be used to change the functional treasury area, which will be discussed in further articles of this series.

 

Where previously a multitude of individual reports with little meaningful key figures prevailed as a basis for decision-making and risk management, a holistic report in the form of a dashboard can now be generated interactively and clearly. Cash reporting is now based on a comprehensive KPI model, the ConVista Cash Matrix, which uses the available amount of data profitably for the Treasurer. This avoids a possible information overload of the report recipients or the Treasurer himself and at the same time the abundance of (real-time) data can be used efficiently for the company.

Any questions? Feel free to contact us:
Christian Million

Christian Million

Christian.Million@convista.com
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