Balancing Digital Aspirations While Addressing Risk Management Fundamentals: Observations From Citi Treasury Diagnostics

24 FORECASTING CURRENCY EXPOSURE: METHODOLOGY Use of Cash Forecasting Yes No 10% 90% With 90% of companies forecasting cash, it is now a core component of a robust treasury operation, providing visibility into future aggregate cash positions across currencies; invaluable to helping companies identify natural offsets and opportunities for internal hedging. Successful algorithmic forecasting techniques can yield significant reductions in interest expense through better identification and utilisation of surplus cash held across organisations. Despite the availability of advanced cash forecasting technologies coming on stream, over 80% report that manual input remains part of their forecasting methodology with only 34% utilising statistical analysis over past patterns to predict forward. Forecasting Methodology Manual Input Forecast of collections Forecast of payables Automated from TMS/ERP Statistical analysis of past patterns Other 81% 44% 38% 34% 34% 14% “ Covid-19 had raised our awareness for the need to tackle forecasting error. Its source stems both from our business model but also operational and reporting short-comings across the organization.” — European Treasury Manager