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October 22, 2014 -

Better cash management offers opportunity to improve bottom line

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Whitepaper - CIB CFO  Corporate Treasury 2014 FINAL imageA big, but often overlooked, issue facing companies is just how much cash they actually have in hand – and if they are managing it optimally.

“One-in-three companies in Australia don’t know what the majority of their cash position is,” says Chrystie Dao-Szabo, Head of Cash Management Sales at BNP Paribas. “Some 30% of them have less than 50% visibility of their actual cash flows and amounts, while another third also have less than 75% accuracy in their cash forecasting.

“This means a lot of companies do not know their solvency position at any specific point in time!

“A third also say their cash forecasting is keeping them awake of a night, according to our latest Corporate Treasury & CFO Outlook.”

Mrs Dao-Szabo adds: “Many are also not getting the best out of their cash-flows, with half of respondents (53%) allocating their surplus cash to traditional bank deposits. As a result, many corporates are losing money by not making their cash work better for them”.

Filipe Simao, Head of Client Advisory at BNP Paribas in Europe, notes: “Two-in-three corporate treasurers also report that their boards and management are paying closer attention to cash management and liquidity.

“Half (54%) reported that meeting compliance and regulatory requirements takes between 10-30% of their day, while for one-in-five respondents it takes between 30-50% of their time. It is unlikely that reporting pressure will decrease in the near future; rather it is becoming part of the ‘new normal’.”

Mr Simao notes: “There is a mismatch between the importance placed on cash management and the confidence level of treasurers in their cash visibility, forecasting and processes – which shows a clear need for corporates to enhance their cash management.

“Globalisation, increasing regulations and market volatility is putting increasing pressure on CFOs and treasurers to improve their cash management. As a result, we are seeing a growing interest in cash management efficiency.

“Treasurers are increasingly becoming the bankers of their organisations. Some are even looking at setting up an in-house bank or at least partnering more with their banks.”

Read the Corporate Treasury & CFO Outlook here.