How to get the right Cash Flow report from SimCorp Dimension

27 of October 2021

💡 SimCorp Dimension does have a few ways to provide the clients with the realized and expected cash flows reports. Why these reports matter?

🤷‍♂️ They signalize if the assets & liability cash flows mismatch, provide the important data for market value stress testing (e.g. Solvency II regulation, FTK etc.), might be used for verification of duration, credit risk, interest rate risk, and last but not least the cash flows define the pricing for your financial instruments (especially it is vital for OTC derivatives as they are not listed).

📊 Thus, it is not a coincidence that not only the clients but also the market regulators are often interested to monitor such cash flow report. Whereas, the audit companies don’t hesitate to check its every line carefully. The calculation of the expected cash flows is technically a complicated process, that depends on settings & characteristics of each financial instrument. For example, a fund with thousands of positions in different financial instruments might generate hundreds thousands ash flow lines. It is not something you would enjoy doing manually in Excel – not only because of time (it requires) but also from the result quality point of view. With the realized cash flows the story is more simple: as they have already happened – it is possible to retrieve them from the registered transactions.

📐 The expected cash flows (which are also known as predicted or forecasted cash flows) often raise many questions. One could say: “if we have the concrete financial instruments – then why should it be complicated to forecast the expected cash flows for them?” The answer would be “a purpose”.

In financial theory, there are different methodologies as well as ratios, which are calculated for financial instruments. In the center of them we have the instrument pricing theory, which is a key to all stress tests. In other words, knowing a purpose or how exactly the forecasted cash flow report is expected to be used, one could choose the appropriate cash flow methodology. Whether you calculate the interest rate or credit risk for hybrid interest type callable bonds or derivatives – each purpose & instruments scope would matter for the choice of cash flow calculation methodology.

🕵️ Analyze the expected cash flow report purpose carefully (before constructing one) in order to be sure that the result is reliable and precise enough to monitor and signalize a mismatch between the assets and liabilities.

🧊 From our side, at we are always glad to consult you regarding the optimal solutions for cash flow prediction and reporting, and help you to choose the appropriate cash flow calculation methodology for your purpose.

🤗 Benefit from the automation advantages, that SimCorp Dimension provides you with, smartly and let the reports be always precise and delivered on time for your clients.