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Cash visibility tops list in first Asia-Pacific treasury report

Cash visibility tops list in first Asia-Pacific treasury report

Sungard and Merill Lynch present findings of the first Asia-Pacific Treasury Barometer Survey and find cash visibility is a top priority, yet technology adoption isn't adequate

Improving cash visibility is the top priority for treasury departments across the Asia-Pacific yet technology adoption remains inadequate, according to the first-ever regional survey of the treasury function.

Financial technology provider, Sungard, and Bank of Merrill Lynch’s inaugural and extensive Asia-Pacific Treasury Barometer Survey, found 60 per of respondents see cash visibility as their main priority over the next 12-24 months. The figure rises to 65 per cent in Australia.

Just 14 per cent claim to be totally satisfied with their cashflow forecasting approach, while 32 per cent rated their regional cash visibility ‘average’ (50-70 per cent). Among the main challenges are inaccurate sales targets and projections, inefficient collection processes, lack of centralised reporting, insufficient platform integration, and a resource shortage.

Technology adoption is one of the stumbling blocks, and 66 per cent of respondents admitted they still do not use cash forecasting tools. Australia proved to be an early adopter in deploying specialist technology systems, with 22 per cent of those surveyed using a cloud- or hosting-based treasury solution.

“Australia is well above the regional average in turns of consuming specialist treasury systems, many of these on a hosted platform,” commented Sungard’s senior vice-president of corporate liquidity APAC, Mike Fullmer. “Those with a system are also more satisfied with their ability to forecast cash accurately.

“However treasury departments remain very heavy spreadsheet users. Usage is heavier in Australia actually than the average regionally at 77 per cent.”

Fullmer attributed this striking figure to issues with disparate systems. Of the Australian treasury surveyed, 44 per cent cited a lack of internal systems integration as a key cash forecasting challenge. “Spreadsheets are being used as a ‘glue’, enabling treasury to bring information together from separate systems,” he claimed.

“The next phase for treasury in Australia is how to figure out where they are in the technology journey and improve these processes. Australian companies are embracing the right types of technology, but there’s a way to go to streamline operations and centralise reporting to help reduce the bottlenecks.”

Part of the improvement process also requires working with sales teams and other business units to improve the quality and accuracy of data, Fullmer said.

Consolidating bank accounts was another key priority for 44 per cent of treasury departments surveyed regionally. Although 60 per cent of companies had three or fewer bank accounts today, most recognise a need to centralise to improve efficiencies and better own relationships, Fuller said.

However, there is again a discrepancy between this desire and deploying automated or third-party BAM (bank account management) tools to address the problem. Just 23 per cent said they either were or planned to deploy these solutions in the next three years.

The Sungard research encompassed 14 industries in 17 countries, and responses from 913 treasurers during Q1, 2013. Sixty per cent represented sales turnover of less than $1bn per annum. Having had such a strong response to its first treasury research, Fuller said Sungard hopes to now conduct the barometer at least annually.

“Asia-Pacific is an amalgam of the market,” Fullmer added. “You have highly developed markets such as Australia, Singapore and Hong Kong, then emerging marketing putting in practices and processes for the first time. There are also very mobile offshore locations and highly restricted countries where currency is not handled offshore. This creates both problems and opportunities.”

Top regional priorities
  1. Improving cash visibility
  2. Yield enhancements and interest expenses
  3. Concentrating cash
  4. Rationalising bank accounts
  5. Counterparty risk

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Tags Treasury Operationscash visibility practicessungardMerrill Lynch

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