In the first instance, Mukopi’s goal was to bring 27 countries onto a single platform, bringing together information about bank accounts and signatories and centralising cash reporting. “One of the things we have been trying to do is consolidate our accounts that are held in the same global/regional bank into a single login platform, so there’s no need to log into different accounts – you can log in once and view what the position is or authorise payments without having to log into different countries accounts with different login credentials,” he explains. “That has business continuity benefits, because for instance, if any disruption happens in a particular country you can still address the issues from the head office without necessarily needing to have a physical presence there.” Mukopi adds that this also improves liquidity management, with reports arriving on a timely basis from the relevant countries.
The quest for effective forecasting
These efficiencies have also been a key part of Mukopi’s efforts to create a cash flow forecast. “This is a challenge, because there are many uncertainties,” he says. “You may not know when donors will give funds, for example.” That said, Mukopi is a strong believer in the importance of a robust cash flow forecast. “Any organisation that operates without a forecast is risking a lot – it’s like flying blind, because you don’t know when you are going to be hit by cross currents. When you have a forecast, you can predict where the troughs are and mitigate positions in good time.”
One obstacle is that there is no standard template for a cash flow forecast. As Mukopi explains, it’s essential that the person in treasury who is responsible for cash management or liquidity management fully understands the “cash language” in that organisation. “If it’s a business entity that generates cash, you need to know what your cash generation model is,” he says. “If it’s an NGO you need to know your sources of cash and the timings so that you can model how cash moves around the organisation. If you don’t fully understand the pattern of this movement, any forecast you make will be missing key information.”
When it comes to creating an effective forecast, Mukopi advocates an 80/20 approach, with initial efforts focused on the biggest risks associated with cash and the possible impact on the overall cash position if specific cash streams fail to materialise. “Once you identify the biggest risks, it is easier to isolate them and use them as the building pillars of the model,” he explains. “Then the rest of the process involves looking at areas which bring less of an impact if they fail and improving the accuracy of those areas.”
That said, Mukopi notes that cash flow forecasting is a continuous improvement process, because companies will never get it right the first time – “you may start at 60%, move up to 70% – and then over time discover that you have reached 90% accuracy levels.”
Aside from the challenges of cash flow forecasting, Mukopi says another area of focus is on building relationships within the organisation as well as external stakeholders. While people often focus on their own specific areas of responsibility, he argues that setting links between departments can go a long way towards working more effectively and ensuring that the organisation has a common goal. “Working alone can never be fruitful,” he says. “For example, when I worked in the electricity business, I had to work closely with the customer services team, which was in charge of looking at debtors, this in turn improved creditors management.”
Meanwhile, Mukopi has had plenty of other tasks to focus on in his current role. From managing FX risk and establishing innovative risk management tools to safe guarding donor funds to strengthening emergency response processes via effective liquidity management, Mukopi has achieved much in a short space of time. He hopes to become an MCT in the near future.
Of course, not everything is plain sailing. Like many treasury professionals, Mukopi is frustrated by inefficiencies within the KYC process – particularly when institutions repeatedly ask for the same documents. “The inflexibility can be unhelpful,” he says. “For example, you might give the bank a certified copy of a passport – and a year later they will come back and ask for the same passport to be certified again. This creates a lot of work which is often not commercially advantageous, especially for humanitarian agencies.”
But despite these challenges, Mukopi is enthusiastic about the benefits of pursuing a career in treasury. His advice for others looking to do the same? “Don’t look back – just go ahead and get started. It’s a dynamic role with new things landing on a daily basis, and the need is there in the market. I may have got here by chance, but I’m glad I landed in treasury.”