Are you a treasurer in need of a solution for better cash forecasting, but you don’t have the budget you need? You are not alone. We have lately seen more articles, aimed at treasury organisations, about how to get the CFO to buy in. This is a very good trend. We are finally starting to react to perhaps the most repeated question of all times from our treasury customers: “Well, how do I get the CFO to sign off to this cash forecasting solution?”
The thing is, our potential customers know that they need to fix the cash forecasting. After working with us and our partners, they also know why they need to do it. It’s when they need to get the actual sign off for the purchase, that problem arises. Usually, the CFO does understand the importance of not ever risking a scenario where the people watching the money go “oops.” However, they often fail to understand that achieving great quality in cash forecasting requires investment into sophisticated tools. “You already got your TMS system” or “just use a spreadsheet like you always did”, being the most common justifications.
So, what do you do when you have a situation, a potential problem arising from that situation, and identified (adverse) implications if that problem materialises? Well, you negotiate as if your liquidity forecast depended on it.
SPIN action plan
Let's break the next steps into an actionable plan. Just like everything else, selling is about influencing and negotiating. Please enjoy a little thing we call SPIN in the sales world. It is a very good approach to almost everything. To find out more, check out Huthwaite International’s program. We are just using it to model the approach for this particular case. All credit for the SPIN model goes to the Huthwaite group.
Step 1: Situation
To help build the business case to your advantage, start with exploring and understanding the situation you are in. What made you look into a solution to improve your cash flow forecasting? Write it down and prepare to present it to your CFO. Describe your situation accurately, keep it short and to the point. You know your CFO, what kind of approach works best: presentation or informal verbal conversation? If you are unsure, test with something smaller first. Once you find the correct approach, you will make selling your actual bigger idea much easier.
Step 2: Problem
A situation on its own doesn’t make anyone give you a budget. You need to take the next step. Lay out the problems that arise out of the situation. For example: you have no control or visibility into your bank accounts (or worse: no idea of how many you have), your auditor is potentially going to have a field day with no existing audit trails, except who owns what for the last informal office get together (you are the treasury department after all), the amount of manual work is useless and causes errors, you have no control over the variance of your forecast or what the reason for anything is, including why you wake up every morning at 6am to sit 1.5 hours in traffic to work Excel sheets when all you ever dreamt of as a kid was being a fighter pilot. Try to dig up every risk in your present situation. This is good preparation for the next step: the implications of these problems.
Step 3: Implication
So, you have described the situation and the problems. Now let's scare the CFO, who, after all, is the modern Superhero of the company (try to get this point across in your argument). This step is about telling them all the horrible things that can happen if all your problems and risks come true or are left unattended. What happens if you don’t invest your lazy cash? What if one of your subsidiaries sits on cash you didn’t know about, and you decide to take an expensive spot loan for another one? What if you don’t catch a potential liquidity risk in time? What if no business unit wants to play your stupid game of “putting data in an excel file”? Then you do what you do best: calculate the cost of this. Voilà! You have a pretty airtight business case. Just one more step.
Step 4: Need - pay off
This is the fun part. Now you get to describe what you need to mitigate the problems and make sure the implications of said problems never happen. You need to make the info gathering so easy for your organisation (ie not having to fill out a thousand excels), that they will do it. Proper visibility and reliable forecast = no more catastrophic implications. Make sure you choose a scalable, flexible solution with no hidden technology lock-ins or costly implementations and remember to include it’s cost. Also, include the process after the implementation of the software. Explain how you plan to plant it in the business units as the new cool thing to be on top of. I am writing about software solutions here because that is what you need, right? If you still think you can work with spreadsheets, you missed some problems and implications in steps two and three.
Practice makes perfect
After these steps, you are done! If the task seems daunting, remember that everyone learns to walk before they run. Take your first step by practicing your pitch. It’s always helpful, even for a seasoned expert, to test your arguments and presentation beforehand. Go ahead and enlist your family and friends as your sparring partners. Tell them to make counterarguments like: “You should just use spreadsheets” or “We have enough money to skip forecasting altogether.” Practice calmness in the face of adversity. Then proceed with questions like “Thank you, great input, how do you propose we avoid human errors or lower the time spent on consolidating data from 10 systems without a tool?” Or “Good point! But how do you propose we rake in the ROE of our lazy cash?” Open-ended questions invite them to try to solve your problem. It will end up in them accepting your well-reasoned solution quicker. To find out more about this subject, read “Thinking fast and slow” by Daniel Kahneman, it’s amazing!
So, this is it. If you feel this looks like a horrifying amount of work, you can get help with creating a business case and selecting vendors. There are many good companies out there doing that. Don’t hesitate to reach out for backup. After all, your liquidity forecast depends on it.
Anna-Lisa Natchev is head of sales and marketing at Analyste