Multinational consumer goods company Unilever has revamped its global cash forecasting process through the use of working capital insights.

Managing the treasury function of an enterprise whose products are used in almost every country on the planet is no small undertaking.

Unilever’s global treasury organisation is based in Switzerland. The company uses a separate TMS system in addition to its SAP system and has around 2,500 bank accounts across its 600 entities globally.

Realising that it needed to move away from manual intensive processes that were hampering its cash forecasting capabilities, Unilever has been working with Cashforce to improve data quality and connectivity, standardise disparate processes, and enable rapid analysis of behaviours and trends within its cash operations.

One of the initial objectives was to place cash with different tenors because lack of visibility meant the company was losing out on opportunities to improve its interest line, explains Gerard Tuinenburg, Director Systems, Processes and Transactional Banking at Unilever treasury.

“That has been one of the drivers to building a business case, making use of insight to enable better decisions on the tenor of our investments,” he says. “In addition there are many people involved across the different country teams, payroll, and tax teams and we hope to reduce headcount that isn’t being used in the forecasting process.”

The company also wanted to create a system that was ready for integration with banks using APIs to get balance and transaction data and potentially create proposals and execute using rules-based policies.

Tuinenburg recognised that putting a process in place which was not bottom-up would not work. “Where I see huge benefits – for short-term forecasting primarily – is that we get the latest intra-day cash balances to inform our hedging or investment decisions,” he says.

Unilever’s IT team – whose responsibilities include the company’s TMS – were heavily involved in the integration process.

One of the benefits of the project is better visibility of where the company’s cash is sitting. Information and data gathering has been accelerated by cutting out manual activities although Unilever intends to run both systems in parallel for some time to see if the same information is received by the different processes.

“There is drill down functionality in the Cashforce tool which could be quite valuable, certainly as we start looking at working capital,” says Tuinenburg. “It is going to be the tool we can build on from a technology perspective and we have high hopes on that.”

It is also seen as an effective method of removing the silos between different teams including treasury and purchasing.

“What we have learned over time is to make sure you have the relevant resources in the team, not only from an IT perspective but also from a treasury perspective – that people dedicated to the project understand what you are working on and what you want to achieve,” he adds.

Tuinenburg’s advice for companies considering embarking on similar projects is to look out for their data quality and make sure they properly understand their data drivers and levers. In the case of Unilever, involvement of all stakeholders – including senior management – has been crucial.

“When we started loading the data we quickly learned that we had a few accounts that we thought were in the cash pool but were not because that was clearly visible in the dashboards, so it was a very quick win to put those accounts into the cash pool,” he adds. “What we also found out when loading data through SAP is that we had outstanding that go back more than ten years, so we had some ‘hygiene’ to do there.”

Cash positioning and short-term forecasting represent the first stage of the project with the next phase including working capital forecasting, using the APIs with more banks, and having discussions around how the company can automate its FX hedging and investment.