Asia-Pacific treasurers face some of the same challenges their peers face in the US and Europe a survey says.
Just like their counterparts in the rest of the world, Asia-Pacific treasurers want better cash visibility, better yield and fewer bank accounts. That’s according to a survey from Bank of America Merrill Lynch Global Transaction Services and SunGard.
“Restricted cash visibility often results from limited connectivity between different systems within the company and having a large number of banks and bank accounts,” the BAML-SunGard survey said, mainly the result of subs or business units opening multiple accounts for various reasons, or as a result of M&A. This creates difficulties for treasury centers in keeping track of balances across the enterprise.
Therefore, the survey said, it wasn’t surprising that one area of focus for companies this year cash concentration. “This treasury function simplifies cash management and ultimately, improves cash visibility.”
And the ways to improve visibility was to focus on the cash forecasting and culling bank accounts, the survey said, all part of cash concentration. But Asia-Pacific treasurers have ways to go in this regard. According to the survey, the Bank of America Merrill Lynch SunGard Asia Pacific Treasury Management Barometer survey 2013, cash-flow forecasting “remains a work in progress.”
Cash forecasting has also been a consistently challenging issue for members of the NeuGroup universe, particularly in the last several years of slow economic growth. The stop-and-go nature of the recovery has put pressure on free cash flow, which has in turn upped the ante on reliable forecasting at treasury and even CFO levels. As such, senior managements continually are on the hunt for ways to get a better grip on liquidity and working capital to project earnings.
In the Asia region, the BAML-SunGard survey revealed, few are happy with their forecast efforts. Only 14 percent of respondents indicated that they were totally satisfied with their cash-flow forecasting processes and models, the BAML-SunGard survey revealed. “Furthermore, the majority of respondents (70 percent) remain only moderately to somewhat satisfied in their cash flow forecasting capabilities, indicating that across the industry, there is substantial room for improvement.”
In the report accompanying the survey results, BAML-SunGard suggested that along with better forecasting, rationalizing bank accounts, a priority for 38 percent of respondents, was another way companies can better manage cash
The result of improving these areas is better returns and lowering expenses, according to the survey. “Yield enhancement and minimizing interest-rate expenses, another highly-ranked goal, are achieved through consolidation and concentration of assets,” BAML-SunGard said. “Overall, the picture is one of a move towards streamlining, concentration, and enhancing treasury functions.”
The survey polled more than 900 treasurers who offered views on their primary areas of focus for 2013 and beyond.