Microsoft takes great pride in running a centralized treasury for its more than 350 legal entities in 118 countries, which have over 1,100 bank accounts at more than 100 banks worldwide. Unlike many companies that forecast operating expenses by regional operating centers, the $70 billion technology company requires its more than 200 subsidiaries to forecast anticipated expenses every month. The result: net variances—forecast to reality—of 20% to 30%.
With more than $1 billion in capital flowing through its system each day, the wide variances resulted in over-forecasting by hundreds of millions of dollars, exposing Microsoft to heightened counterparty, country and fraud risk. “That is a lot of money, and we were determined to identify the issues causing it,” says Jim Scurlock, senior manager of global cash planning at Microsoft.
The team created two databases using Microsoft technology—one to provide visibility into direct debits so each subsidiary could add them to their accounts payable cash flows, and the other to keep key contact information for the payroll, tax and accounts receivables teams.
With regard to the first database, each subsidiary is required to have an owner responsible for recognizing and recording all direct debits, in addition to ensuring that the database is updated each month to guarantee it doesn’t become stale.