Cash Forecasting

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Cash Forecasting

• Jimmy Doyle
• Treasury Director
• Bank of Scotland

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Bank of Scotland Retail

• Bray branch will be in the first phase of our
  retail project

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Cash Forecasting

• Equity is blood Dr. Michael Smurfit
• Cash is King- almost everybody else !

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Cash Forecasting

• To maximise interest earnings / reduce borrowing
  costs
• Liquidity management
• FX risk
• Financial control
• Monitoring setting strategic objectives
• Capex budget
• Working capital

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Cash Forecasting-maximise interest income /
reduce borrowing costs

• Identify periods of cashflow surplus / shortfall
• Plan your payments
• Negotiate flexible deposits / overdrafts with
  your bank
• Use set-off / zero balancing

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Cash Forecasting Liquidity management

• The aim of cash management is to provide the
  company with sufficient liquidity to function
• When assessing surpluses / deficits note the
  amounts, currency,and period in which they will
  arise
• Move funds between divisions / subsidiaries etc.

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Cash Forecasting FX Risk

• Plan separately in each currency
• Identify the flows within the currency
• Mach the flows against opposites within the
  currency or-
• Hedge

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Cash Forecasting Financial Control

• Model your Payables and Receipts against
  Purchases and Sales
• This can be to identify mismatches between credit
  to customers and credit from suppliers. This, in
  turn, identifies your funding requirements

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Cash Forecasting Monitoring setting Strategic
objectives

• Compare actual cashflows of specific projects or
  business units against plan
• Use results as input into corporate strategy and
  objective planning

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Cash Forecasting Capital Expenditure

• Cashflow projections determine whether the
  company is generating enough cash for Capital
  expenditure.
• Can force the decision of Debt vs. Equity

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Interest Rate Outlook 2006

• rates will rise by 0.25 next week and will
  peak at 3.0 by end 2006
• Stg rates will remain at current levels for
  most of 2006
• rates will continue to rise and will peak at
  5.0 by end 2006