Explore the critical need for effective cashflow management, the transformative benefits of modern planning solutions, and success stories of businesses transitioning from error-prone Excel sheets to advanced platforms.
Can your business afford to gamble with its financial stability? During a period of economic uncertainty, effective cashflow management isn’t just a luxury—it’s a lifeline. A revolving credit facility allows businesses to borrow large sums according to specific business needs. The credit available and interest rates payable vary depending on the loan agreement. RCFs offer convenient access to funds within set limits, aiding in bridging cashflow gaps, managing inventory, fostering business growth, and tackling unforeseen expenses. However, utilising an RCF also entails responsibilities such as paying interest on borrowed amounts and abiding by credit limits to avoid potential fees or penalties for missed repayments. Accurate cashflow management is crucial not only to reduce the need for RCFs but also to utilise them effectively. The facility is well used across many industries, but particularly in the construction sector.
While RCFs offer flexibility and quick access to funds, poor cashflow management can exacerbate the risks associated with these financing options. According to the Office for National Statistics, the construction industry in Great Britain experienced a significant increase in recorded company insolvencies in 2022, partially attributed to errors in cashflow management. This underscores the critical importance of accurate financial planning to mitigate risks and ensure business stability, particularly for industries heavily reliant on RCFs.
Recognising the challenges and potential pitfalls of using Excel for cash flow planning, it’s crucial for organisations to seek out alternative solutions for managing their cashflow in real-time. Some large organisations run cash flow reports over quarterly cycles with reports plagued by user errors, input inaccuracies, not to mention the security concern of spreadsheets being shared across various company sites and departments for data input.
Enter modern planning platforms like Anaplan and IBM Planning Analytics, innovative tools that offer real-time insights, collaborative features, and automated workflows that Excel simply can’t replicate.
With standard templates, multiple users can seamlessly access and contribute to the data, fostering greater collaboration and efficiency. Granular analysis capabilities ensure access to detailed data insights, enabling businesses to make informed decisions at a site-level. The time savings are significant, benefiting regional teams as well as those responsible for compiling and analysing the data, ultimately allowing for more strategic allocation of resources and faster response times to market changes.
While RCFs are taken out for the group, the company may have numerous local bank accounts to pay or receive money, so it’s crucial to ensure that cash is available in the right accounts at the right times. Planning tools help facilitate easier collaboration, allowing local teams with close knowledge of cash flows, such as house exchange dates and land purchase dates, to make valuable contributions ensuring a more accurate picture for the entire company.
Countless organisations have experienced the transformative power of planning solutions for cashflow management. One such example is Countryside Partnerships Plc., a construction company acquired by Vistry Group in 2022. Faced with project delays and financial setbacks stemming from Excel-based methods, they recognised the urgent need for change.
Seeking a more efficient and secure solution, Countryside turned to Anaplan.
With Anaplan’s implementation, they transitioned from error-prone Excel sheets to a standardised template accessible to authorised users. This streamlined their workflow and enabled real-time plot-by-plot analysis, empowering regional offices with quicker access to relevant data for informed decision-making. Subsidiaries could now input data in real-time, contributing to a live database on house and land sales that facilitated accurate forecasting.
The most significant impact? Countryside now had the capability to track land and house sales in real-time, enabling them to make informed decisions about when to draw funds from their revolving credit facilities (RCFs). By timing their RCF drawdowns strategically, they minimised interest rate charges, saving substantial amounts in the long run. With cashflow reports generated automatically based on site requirements, the burden of manual report generation was lifted, allowing their team to focus on strategic decision-making and cost-saving initiatives.
This success story serves as a testament to the transformative potential of planning solutions like Anaplan or IBM Planning Analytics in revolutionising cashflow management and driving business success.
When selecting a planning solution for cashflow management, consider factors such as scalability, integration capabilities, and user-friendliness. By aligning these criteria with your business requirements, you can choose a solution that addresses your current needs and lays the groundwork for future growth and prosperity.
In summary, the risks of relying solely on Excel and RCFs for cashflow management are evident, but so are the opportunities presented by modern planning solutions. By transitioning to advanced platforms like Anaplan and IBM Planning Analytics, organisations can fortify their cashflow strategies, mitigate risks, and unlock new frontiers of financial performance and stability.