Tesorio and Bank of America Introduce CashPro Forecasting at AFP 2020


Tesorio CEO & Co-Founder, Carlos Vega, joined Paul Smithwood, VP, Product Manager for Bank of America on the virtual stage at AFP on October 29th to introduce CashPro Forecasting - a smarter approach to cash forecasting. The title of their session, which was one of the most well-attended at the conference, was “CashPro Forecasting: Forget Forecasting. Start Analyzing.”

“By partnering with Tesorio, we can bring a better product to market much faster by connecting the big bank (Bank of America) with this highly experienced and strategic startup.”

- Paul Smithwood, VP, Product Manager, Bank of America

Below are the highlights and insights from Carlos and Paul’s session along with a first-look overview of CashPro Forecasting.

How finance has rapidly evolved from a source of truth to a source of value

Corporate treasury, since its beginning, has traditionally been focused on mission-critical functions (reconciliation, payment execution, etc.). Essentially, moving forward with a rearview on historics. Now, that’s all changing.

“The finance function is well-positioned to guide the company’s data and analytics agenda.As historical analysis becomes fully automated, the organization’s analytics capabilities should evolve to include predictive analytics, an important opportunity to add real value.”

KPMG, “On The 2019 Audit Committee Agenda”

New technology has begun automating much of what used to take a lot of manual effort: data wrangling, entering payments, executing payments, and reconciliation, to name a few. With automation taking care of more and more of that work, capacity is being freed up to focus on the insights and analytics that allow organizations to take intelligent action that impacts strategy and the bottom-line.

“Bank of America is harnessing this trend with new technology and cutting edge solutions. With a customer-first mentality, we are working side by side with our clients to identify pain points and figure out how best to solve them by partnering with innovative companies like Tesorio.”

- Paul Smithwood, VP, Product Manager, Bank of America

Why now?

There are many reasons why Bank of America believes now is the right time for CashPro Forecasting. COVID is certainly accelerating change for most businesses, but shifting regulations and emerging technologies have been driving change and creating opportunities for financial institutions to deliver new types of value for their customers for quite some time.

Let’s look at what GDPR did in Europe and the impact it had on the banking side. The revised payment services directive (PSD2) led to open banking forcing banks to open up their precious customer data. Smart banks quickly realized their customers’ data was no longer a moat for them to drive retention, so in order to win, they had to figure out how to provide intelligent services that pull in data and leverage new technology to differentiate and build customer value. Instead of fearing the implications of open banking, Bank of America leaned into the opportunities it created and partnered with Tesorio over two years ago to realize their vision for how to build customer value via CashPro Forecasting.

Greater connection has led to greater creativity

“In the context of open banking and with a focus on customer value we saw an opportunity to enable the work people need to do on the CashPro platform,” said Paul. “Our vision was defined by the interconnection of data, people, technology, and process, within and across companies, to better manage and achieve cash goals.”

Today the tool utilizes machine learning and real-time data to allow users to achieve better and better cash predictions, gain insights into how to execute strategies, and create a virtuous cycle of ever-improving cash flow performance. Interconnecting data and people in what used to be siloed work has truly powerful impacts.

“In order to be innovative, you don’t just launch and sell an innovative product, you build financial solutions that create an ecosystem and a view into data and information that fosters innovation—that’s the connection that will drive positive change for everyone involved."

- Carlos Vega, CEO & Co-Founder, Tesorio‍

Not all cash flow forecasting is the same

While not everyone means the same thing when they say cash flow forecasting, everyone can certainly agree that forecasting is critically important.

At the highest level of definition, there is indirect and direct method forecasting. Direct method forecasting attempts to predict cash flows for liquidity management in the nearer term (generally up to 90 days, but often much longer) by looking at every single cash transaction organized into units of time such as a day, week, or month. Indirect method forecasting is a top-down approach that utilizes projected income statements and balance sheets and is more useful for long-term planning purposes.

At the end of the day, every CFO needs to be able to answer to their CEO, the street, or their board the important question of, “where are we going to land on cash?” and that is where direct method forecasting is very powerful. By aggregating and analyzing cash transactions while they’re happening you can understand what’s happening before your books are closed, and more importantly, you can start taking actions in order to affect your cash flow immediately.

Forecasting is hard

Most finance teams are constantly working on and updating cash forecasts. If we’re all doing it so frequently, why is it still so hard?

Obviously, the goal is always to create accurate forecasts, and having accurate data from multiple sources must be incorporated. Most finance teams rely on Excel - manually entering data and making updates on a continuous basis and often by multiple different people..

“Excel is something you can’t take from us! We finance people love Excel and our formulas. I mean, I even use it to plan my grocery shopping!” said Carlos Vega.

Fear not, the intention is not to replace or take away Excel. However, it is important to recognize where there are limitations, and how current approaches impact productivity and accuracy. The fact is that cash flow forecasting is tedious and time-consuming work, and roughly 90% of Excel spreadsheets will have errors. Still, spreadsheets are trusted and a core part of most team’s workflow, and this is why CashPro Forecasting need not be looked at as a replacement. Instead, the automation and real-time accuracy it provides can be viewed as a massive head start, accelerator, and augmentation of existing workflows.

If you are a Bank of America customer and would like to learn more about CashPro Forecasting click here.

From forecasting to analyzing

Cash Forecasting consistently resides at the top of the priority list for finance and treasury teams, and that has only increased amidst the uncertainty brought by the COVID crisis. Knowing exactly where your business will land on cash tomorrow, next week, next month, or next quarter has become more important than ever for most businesses.

This new reality creates challenges for CFOs and their teams because let’s face it, forecasting is a big pain. Clearly, a tool is needed that eases the process, removes manual effort, increases accuracy, and frees time to actually analyze forecasts.

“Bank of America wanted to be the solution that takes the pain away for our customers, so we reached out to clients, treasury teams, and finance experts...after many interviews and conversations, the primary pain points we found were:”

  • Forecasting is too manual, people are spending 50% of their week just refreshing forecasts
  • Forecasts aren’t accurate, nobody seems happy with them, and they’re only making do with what they have. The bottom line is that no one can confidently answer the question, “how accurate are your forecasts?”
  • Forecast solutions that exist today require extensive implementation timelines and can’t accommodate the different needs that are unique to every treasury team”

Armed with an understanding of our customer’s challenges we reached out to Tesorio and started working on a solution. Bank of America has the data, Tesorio has the technology, and it is all integrated for you in CashPro Forecasting. With no integration or implementation, our customers can just flip it on and start taking action. This is extremely powerful, and it’s just the beginning!