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June 6, 2013updated 04 Apr 2017 4:11pm

Internal complications inhibit cash flow forecasting in Asia Pacific

Results from the Asia-Pacific Treasury Barometer survey have revealed that complications arising from internal platforms, policies and procedures are the cause for unsatisfactory cash flow forecasting processes.

By Imogen Rayfield

Results from the Asia-Pacific Treasury Barometer survey have revealed that complications arising from internal platforms, policies and procedures are the cause for unsatisfactory cash flow forecasting processes.

Conducted by the Bank of America Merrill Lynch and SunGard, the survey found that only 14% of respondents were completely satisfied with their cash flow forecasting process, a method corporations use to determine future financial liquidity.

Factors identified as hindering the accuracy of this method include: inaccurate sales targets (33%), lack of internal systems integration (35%) limited availability of resources (23%), ineffective centralized reporting processes (23%) and inefficient collections processes (19%).

The survey revealed five key priorities respondents believe treasurers in Asia Pacific need to address over the next 12 to 24 months.

Improving cash visibility was the top priority with 60% of respondents identifying it as a main focus. Yield enhancement and cash concentration both had 44% of respondents citing them as a treasury priority.

The rationalisation of bank accounts (38%), particularly corporations in the high revenue bracket, was pinpointed as an important objective, as was mitigating counterparty risk (31%).

Technology was also found to play a significant role in enhancing regional treasury structures and cash flow forecasting, with over two thirds of treasurers and treasury professionals still relying on spreadsheets to run their operations.

"Domestic reform and increasing internationalization will continue to be the key challenges facing treasuries across Asia for the next 12 to 24 months, a sentiment echoed in their unanimous top priority of ‘cash visibility,’" said senior vice president for the corporate liquidity segment in Asia Pacific at SunGard, Michael Fullmer.

"Across the board, treasurers have identified clear plans for change across their bank relationships, cash forecasting, treasury management and connectivity."

The survey was carried out at the beginning of 2013, involving 900 treasurers and treasury professionals from companies across Asia Pacific. Some treasurers from Europe and North America also took part.

 

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