EOSB Cash Flows
Cash Flow Forecaster
CFOs are asking: What is the impact of the new End of Service Benefit (EOSB) saving scheme on the company's cash flows?
Please use our proprietary simulation tool that forecasts EOSB cash flow scenarios.
Note: This calculator only shows on Desktop devices
How to use this Simulator:
In a first step please enter the total annual payroll of the company as well as the accumulated EOSB gratuity liability that has accumulated on the company’s balance sheet.
In a second step you enter the model scenario parameters:
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Median tenure, is the average length of service of your employees (= number of years they stay with your company, the time between when they join and when they leave)
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Average salary increment is the likely future salary increment for the whole company
How to read the Simulator Graphs:
The simulator calculates the cash flows of the two key elements:
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EOSB Contributions [Blue]: These are the employer contributions the company pays the Fund Manager for the new EOSB saving scheme. It’s a regular monthly cash outflow, depending on the length of service of employees. (In case you’re not yet familiar with the new system, please read this article)
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Legacy EOSB payout [Green]: When you switch to the new scheme, the accumulated EOSB gratuity is frozen, and paid out to employees as and when employees leave. In our simulator we have assumed the employees leave your company following a Weibull distribution. Of course, there may be shock events that make employees leave faster or slower.
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The Total cash flow [Purple]: the sum of the ongoing contributions, and the legacy EOSB payouts.
How to interpret the Results:
As you can see, once you switch to the new EOSB system, there is a transition phase with increased negative cash-flow. The length of this phase, and the shape of the cashflow “hump” depend on the pattern of your employees leaving.
Important to note that from a P&L perspective the new system is neutral, as the existing EOSB liabilities have already been passed through the P&L.
Interested in Learning More?
Please contact us, we will be happy in assisting you to model your company’s likely EOSB cash flow pattern.