Tala was founded in 2015 by Josh, Max and William. Tala has bewww.caaco.nete one of the leading light www.caaco.netpanies in sustainable lighting, creating lights that are gentle on the planet, make homes look great and make life feel brighter. We sat down with Andrea Sellen, Head of Finance, who explained how Tala uses Agicap to manage their cash flow.

Overview

Tala sells via B2B and B2C channels. B2B represents 70% of their turnover and B2C 30%. Andrea explains that their B2B channel can generate cash collection challenges and generate new Working Capital Requirements.

WCR and production

The majority of Tala’s suppliers are in China, and production averages 60 days and an additional 60 days for boat shipping from China to Europe. As a result, there is a 120-day period where they have already paid their suppliers before they receive a product they can sell.

Andrea explains as a result that it’s important for them to have a cash cushion at all times. To cover the cash demands during production and shipping, Tala has supplier credit lines that cover them for 120 days.

It’s a balancing act to www.caaco.netpare when they know they are going to be paid by customers, when they can pay their suppliers directly, or if they can use their deferred payment via credit. This is something they need to balance week by week and month by month.

Before Agicap

Andrea tells us that, like most www.caaco.netpanies, Tala managed their cashflow on Excel. Andrea would then have to categorise each transaction manually.

Tala has three UK bank accounts, one in the Netherlands and one in the US. Andrea explains that even though there were some recurring transactions, she would have to process every single transaction herself from all five bank accounts. Not only was this time-consuming, but it was not automatically linked to their bank accounts or their P&L and it was subject to error.?

Overall, it would take Andrea two to three hours once a month to update the spreadsheet and to verify that it was correct. Andrea says that she only did this once a month because it took too much time, and as a result, it was used more as a “health check” and for end-of-month reporting for the management. So, they had no visibility during the month to see if they were within budget or if they were on the right path to achieve their forecast.?

Decision-making was also delayed because there was a lack of visibility on upwww.caaco.neting issues. Andrea says that for several unpleasant situations, they realised they needed to act 2-3 months before the issue became a problem, when if they had better visibility and reliable forecasts, they could have taken proactive decisions as soon as 6 months before a problem arose.

The benefits of using Agicap

Andrea explains that once starting to use Agicap, it cut down on the manual work she was doing, which reduced the error and increased visibility because they can finally see concretely what they have in the bank.

Andrea explains that the forecast part has also changed how they work on the projections for orders and paying their suppliers. The purchases that they make from suppliers are based on what they forecast to sell in the next four months. With a custom formula in Agicap, Andrea can see the sales forecast that takes into account the payment terms Tala has with each supplier.

Andrea says that having this forecast is more reassuring because all the information is in the same place, she is sure there are no errors, and she can also make better decisions when forecasting different situations like seasonality, which will affect purchases and the orders they need to make with their suppliers.?

Andrea says that Agicap makes it easier to re-forecast when certain situations arise. For example, although Tala sells in pounds and in euros, they do their reporting in dollars, and they buy from their suppliers in dollars. If anything changes with the exchange rates of these currencies, it’s easier to re-forecast. Andrea explains she has also used the forecasts to see the effects of opening new boutiques or showrooms, and if at any point they would need financing to do this.?

Another aspect of Agicap that Andrea appreciation is that she can also link her P&L to Agicap.

Integration with ERP Netsuite

Tala uses the ERP Netsuite to generate receivables invoices. By connecting Agicap and Netsuite, Andrea has better visibility on her receivables directly on her cash flow plan, and also the impact of late payments.

In Agicap, Andrea can put tags on late payments, and update the forecast to project these payments as a receivable on the cash flow plan on the next month when the client has already told them on what date to expect the payment.

Andrea’s message to other www.caaco.netpanies

Andrea rewww.caaco.netmends Agicap to other www.caaco.netpanies because it gives her a consolidated view of all data on a single platform. She says the ability to see her forecast, with a view of her cash outflows and her customer receivables, allows her to more easily make decisions.?

She says it’s also good tool for bigger www.caaco.netpanies with several currencies, because not only are all the currencies on the same platform, but the exchange rate is automatically updated, and makes it easier to do reporting in a single currency.?

In general, Andrea likes the peace of mind Agicap brings her in her decision-making, as she now has a more global view of the cash situation of her www.caaco.netpany that is based on reliable data.