While the $34 billion voice and data services provider could identify spend via its regression-based forecasting process, it could not isolate where projected overspending was occurring. “It wasn’t ‘show me the money’ so much as show me where the money is being spent,” says Jennifer Dale, assistant treasurer and director of treasury services at Sprint. “We wanted real-time visibility into where spend was occurring and how this was trending compared to the budget, rather than an analysis at month-end when the books are closed.”
Dale was tasked with developing a model with a higher degree of accuracy. The goal was to take the cash forecast AP line and expand it to the business-unit level to track cash spend against the budget and forecast. Dale identified the top 10 business units by spend category, accounting for roughly 80% of total spend. Treasury then created a database utilizing a waterfall hierarchy of identification points to track expenditures in the units.
Since implementation, the variance analysis for spend has improved from 5% to 10% to a 2% variance. Sprint now expects to achieve a $500 million improvement in working capital by year-end.