Providing Visibility into Liquidity During Transition
The Situation
After being taken private in a sponsor led transaction, a $1 billion global technology and manufacturing company was placed into a situation where ~75% of its prior cash balance was no longer available to fund a tight working capital cycle and a greatly increased debt service requirement. The Company’s legacy management team operated a decentralized cash management process and had very limited experience forecasting cash flows across its 40+ legal entities located around the world. After weeks of operating an unreliable cash forecast, Accordion was engaged to stand up an enhanced 13-week cash flow model to provide Management and the Sponsor with visibility into the Company’s cash flow.
Services
13-Week Cash Flow Forecasting
Active Liquidity Management
The Execution
- Met with management and the Sponsor to understand the desired outcomes and set expectations.
- Coordinated with internal stakeholders to quickly develop a foundational knowledge of the business, transformation plans, and the legacy forecasting process.
- Reviewed legacy model inputs and gained an understanding of data availability and format.
- Built a comprehensive 13-week cash flow model with improved forecast methodologies, more relevant cash flow categories to increase visibility into transition plan progress, and automated update capabilities to decrease weekly production time and enhance accuracy.
- Incorporated direct data inputs from company source files using Power Query to greatly reduce manual inputs.
- Created automated variance analysis with functionality to accommodate forecast-to-forecast and forecast-to-actual views over any time period for major legal entities.
- Integrated a detailed build of new capital structure, debt service requirements, and a mechanism to monitor liquidity and indicate borrowing needs.
- Enhanced regional cash flow templates to eliminate inconsistencies across the organization related to currency translations and intercompany transactions.
- Managed the weekly update process during full treasury team transition.
- Partnered with new treasury team to ensure a seamless transition and created a detailed Users’ Guide for training and reference.
The Results
Accordion provided critical visibility and stability during a time of diminished liquidity and team transition. As a result of our efforts, the Company and Sponsor can project detailed cash flows allowing them to gain necessary insights into the business, identify periods of tightening liquidity, and make informed decisions. Furthermore, the Company can now take proactive actions as needed to improve results.