Focus on cash and liquidity in Oslo
The morning seminar arranged by OpusCapita and Management Events Studio offered both academic theory and practical advice on cash management.
In the introduction, Professor Paul Ehling from BI Norwegian School of Management presented his study and thoughts on the topic ‘Cash As a Hedge’. For companies with growth potential and financial constraints and that cannot expect to receive enough cash flow when investment opportunities arise, it makes sense to put the cash in a bank account – using cash as a hedge. ‘For pretty much all other types of companies, using cash as a hedge would not be a good idea. It is better to repay your debt or issue dividends to your shareholders,’ he stated, referring to the results of his studies among Norwegian companies.
Getting closer to practice, OpusCapita consultant Krister Backlund pointed out in his presentation that good forecasts are a prerequisite for successful cash management – for example, making sure to have cash on location when needed and not suboptimising the cash at hand by having a deficit in one pool and a large balance in another. Also underscoring that it is vital for the data applied in forecasts to be of good quality and to cover all important flows, he stated: ‘In other words, both financial and operational flows. Many treasury management systems focus solely on financial flows; by contrast, ERP systems tend to focus more on operational flows. But you need to take both types of flows into consideration in forecasts, and that’s what a liquidity management system does.’
‘Effective liquidity management requires well-adapted, quality cash forecasts,’ stated Anders Rønning, cash manager at media company Schibsted. He revealed how this company, which is made up of 310 reporting entities, uses cash forecasts in liquidity planning for both the short and long term. For instance, Schibsted compares operational cash flows to EBITDA to see the trends. Rønning offered some practical advice for setting up a suitable system, such as that in the first few weeks, it is more important to create the forecasting routines than to focus on perfect data content and that the treasury function should also give feedback to the reporting entities.
Interested in knowing more about the seminar and upcoming events? Contact Laura Ala, laura.ala@opuscapita.com.
