The 1-2-3s Of Real-Time Cash Visibility

Cash flow forecasting and real-time visibility are keys to corporate financial success. But new research from treasury service provider Reval finds that real-time financial visibility is hardly even in the line of sight for today’s corporate treasurers.

A survey of 150 global finance professionals conducted by Reval uncovered why corporate money managers still don’t have real-time cash flow insight for their companies. A discussion with these professionals across Europe, the Middle East, Africa, North America and the Asia-Pacific region, conducted in the second quarter of 2015, pinpointed three culprits that are blocking treasurers’ real-time views.

Part of the problem, Reval found, is a lack of automation. According to the survey, more than three-quarters (76 percent) of money managers are manually calculating their daily cash positions. This leads to significant time spent on figuring out just where a company stands with its finances.

[bctt tweet=”More than three-quarters of money managers manually calculate cash positions.”]

Less than one-quarter (24 percent) said it takes them just 10 minutes or so to calculate their daily cash positions. More than half, however, said it takes up to an hour, and 23 percent said it takes as long as a day to do so.

The second piece of the puzzle is a fragmented FinServ market. Reval concluded that businesses are using multiple tools and platforms to calculate their cash positions, with spreadsheets and treasury management systems as the most common services in use. ERP systems and bank portals are also common, the research found.

On average, treasurers are using two different tools to pinpoint their financial standings, while two-thirds reported using spreadsheets and other manual tools on top of their existing treasury management systems. Only about one-fifth of respondents said they use their TMS as the sole platform to gain cash flow insight.

“The lack of integrated systems is a behind-the-scenes culprit for many organizations trying to calculate their daily cash positions in real time,” said Reval Director of Solution Consulting Tracey Ferguson Knight in a statement. “Also, with manual intervention, you always risk error.”

In other words, a lack of streamlined and automated processes can create friction in more ways than one. But Reval found a significant source of challenges that prevent real-time financial visibility for corporate treasurers is simply the fact that these professionals accept the tools and processes they’re using — and that means manual, inefficient ways of doing business.

Despite the lack of a unified cash flow calculation tool and automated processes, a whopping 79 percent of money managers reported being either “very satisfied” or “satisfied” with the quality of their cash positions.

The findings could signal that treasurers are unaware of better options or have resigned to never achieving real-time visibility into their cash flows.

The survey results also correlate with earlier analysis conducted by Cashfac Technologies and Visa, which found that even some of the largest corporations across the globe struggle with real-time financial visibility. Two-thirds of the corporations surveyed by the firms reported not having access to a real-time view of their cash flow, according to reports published in March of this year.

And similar to Reval’s results, Cashfac and Visa concluded that part of the issue is fragmentation. Large companies have banking relationships with multiple financial institutions, making it more difficult to consolidate financial data.

But Reval’s conclusions may not be all pessimistic. Earlier research from Reval found that use of treasury management systems is actually on the rise. Last October, the company reported a 15 percent increase in the use of TMS software by corporate finance professionals in 2014 compared to the year prior.

According to Reval Regional Vice President of Solutions Consulting across EMEA Guenther Peer, the time spent on manual cash flow reporting is no longer a viable option for corporate money managers in today’s economic climate.

“The role of the treasurer has become broader and far more strategic over the years since the global financial crisis,” Peer told PYMNTS in a recent interview. He added that, today, automation “to free up valuable time to analyze results and make informed business decisions has become a must.”