cash forecasting trends in asia

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Cash Forecasting Trends in Asia 2013 (SURVEY RESULTS)

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Page 1: Cash Forecasting Trends in Asia

Cash Forecasting Trends

in Asia 2013 (SURVEY RESULTS)

Page 2: Cash Forecasting Trends in Asia

Optimising cash flow forecasting offers tremendous potential for companies to improve their financial performance. By employing industry best practices, corporations can have a better view of their cash position, which enable them to manage liquidity risk more effectively. In the aftermath of the recent financial crisis, corporations have learned the importance of effective cash and liquidity management. As banks and lending institutions become more restrictive in their lending policies, companies had to turn to their own internal resources to smooth any gaps in their cash flow curve or invest in business expansion. In order to optimise the use of their own resources, reliable data representing actual and expected cash position must be available. Without efficient cash flow forecasting, it would be very difficult to track, analyse and manage risks. While 100% accuracy may not be possible to achieve, aiming for the highest level of precision in forecasting cash positions should be a top priority for corporate treasurers and CEOs. The latest and most comprehensive treasury management survey revealed just that.

The BIG Question:

Where’s the Cash?

Page 3: Cash Forecasting Trends in Asia

Survey Says: Cash Flow

Forecasting, Primary

Challenge Across Asia Pacific

Bank of America Merrill Lynch and SunGard recently released the Asia Pacific Treasury Management Barometer Survey 2013 wherein five key priorities for treasurers in Asia Pacific over the next 12-24 months were identified. These are: 1. Improving cash visibility 2. Yield enhancement and interest expenses 3. Concentrating cash 4. Rationalising bank accounts 5. Mitigating counterparty risk “Asia is not alone in highlighting visibility and connectivity as a key challenge and focus for the next 12 – 24 months,” notes Steve Evans, COO, Treasury, Payments and Messaging, SunGard. “But while attitudes towards technology in treasury remain conservative across the region, it is interesting to note that when asked: ‘What are the greatest barriers to accuracy in forecasting?’, the vast majority identified, not technology limitations or their banking partners, but their own internal processes and policies. The key message here is that technology can be both an effective tool and a long term enabler, but the quickest wins will come from reviewing and restricting your own policies and procedures.”

Cash flow forecasting, a modeling method used by companies to gauge future cash positions, was identified as a ‘pain point’ by treasurers operating in the Asia Pacific region. The survey revealed that only 14% indicated complete satisfaction with their existing cash flow forecasting processes, while the majority (70%) remain only moderately to somewhat satisfied, a clear indication that across the industry, there is substantial room for improvement. Among the key challenges cited were inaccurate data, lack of integration, cumbersome reporting processes and inefficient staff.

Page 4: Cash Forecasting Trends in Asia

Following are the results of the survey of over 900

treasurers who shared their views and pinpointed their

primary focus for the next 12-24 months. Conducted by

Bank of America Merrill Lynch and SunGard, these

results were part of the Asia Pacific Treasury

Management Barometer 2013 report released recently.

Page 5: Cash Forecasting Trends in Asia

Do you use cash flow forecasting tool?

67% of respondents do not currently use any

form of forecasting tool for cash.

Page 6: Cash Forecasting Trends in Asia

What system does your treasury use for cash flow

forecasting and overall treasury management?

Of the respondents who use cash flow forecasting programs, a

huge bulk (69%) rely on spreadsheets.

Page 7: Cash Forecasting Trends in Asia

What are the key challenges to accurately

forecast your cash flow?

There are several key challenges to accurately forecast cash flow. Inaccurate sales

target projections and lack of systems integration were among the top concerns.

Page 8: Cash Forecasting Trends in Asia

What are the primary areas of focus for your

treasury in the next 12 months?

The priority is visibility. One quarter (25%) of total respondents

pinpointed improving cash visibility as their main treasury priority.

Page 9: Cash Forecasting Trends in Asia

How would you describe your level of

cash visibility?

Over 73% of treasurers polled believe that their level of

cash visibility is sub-optimal.

Page 10: Cash Forecasting Trends in Asia

Correlation between technology usage and

cash flow management

Company Revenue

>$10 billion $5-10 billion $1-5 billion $500 million - $1 billion

$100 - 500

million

Spreadsheets 60% 48% 69% 77% 78%

Specialist treasury workstations 28% 22% 17% 11% 9%

Hosted/cloud-based treasury management

systems 11% 26% 12% 11% 1%

Treasury module from ERP vendor 32% 56% 33% 25% 9%

In-house applications 23% 19% 29% 23% 21%

End-to-end treasury & liquidity solution

provided by banking partner 9% 4% 2% 2% 1%

Treasury applications provided by banking

partner via eBanking portal 9% 7% 0% 5% 2%

Other 4% 4% 0% 5% 5%

According to the 2013 Asia Pacific Treasury Barometer, a significant portion of those that do use cash flow

forecasting tools, utilize spreadsheets. With spreadsheets, there is no connectivity to other systems. Frequently,

results are often received in other spreadsheets. The information must then either be consolidated or even manually

re-keyed. This process clearly opens up the possibility of operational risk. Furthermore, spreadsheets used for

processes like cash flow analysis often have multiple macros that come with certain operational risks. To address

these issues, several banks have started offering offline cash visibility and global cash position tools based on excel

spreadsheets.

Page 11: Cash Forecasting Trends in Asia

How satisfied are you with your cash

forecasting processes?

*With cash flow forecasting tool

20% of treasurers who are already using cash flow forecasting

tools are very satisfied with their cash flow forecasting process…

Page 12: Cash Forecasting Trends in Asia

How satisfied are you with your cash

forecasting processes?

*Without cash flow forecasting tool

…while of those treasurers who are not using cash flow forecasting tools,

only 10% are very satisfied with their cash flow forecasting process.

Page 13: Cash Forecasting Trends in Asia

Want to learn more?

Page 14: Cash Forecasting Trends in Asia

Learn how to optimise cash flow through effective

cash forecasting and improved visibility in developed,

emerging and cash trapped countries at

19-20 November 2013 | Singapore

www.cashliquidityasia.com

To attend the conference, email [email protected] or call +65 6722 9388