Corporate Money Managers Lose Their Grip

Let’s talk about money management. For businesses, it can be difficult to obtain a clear vision of finances and cash positions. But poor cash flow can ultimately lead to demise. Today, there are more technologies than ever that can help a company gain visibility into cash flow. But market conditions have also made it more difficult than ever to understand how much money a firm has, where it is, who it’s going to and what form of currency it’s in.

This week’s B2B Data Digest focuses on the flux and flow of managing cash. Digital currencies, cybercrime and complexities of the accounts payable process combine into a mountain of challenges for corporate financial chiefs. Examine the latest research to grasp just how cumbersome modern cash management can be.

$3 billion has been at risk to cyberthieves from U.S. businesses, the Federal Bureau of Investigation announced last week. Cybercrime involving email scams are on the rise, as businesses and their AP officials receive these fraudulent emails that seemingly request legitimate money transfers by posing as a corporate executive or a supplier requesting payment. The business email compromise has created more than 22,000 cases in the U.S. and elsewhere, the FBI found, leading to requests for $3.1 billion from cyberattackers since Oct. 2013. Most, the bureau noted, involved requests for wire transfers into bank accounts in Hong Kong and China, though 79 nations were identified within these requests, reports said.

$1.43 billion in losses hit U.K. businesses last year due to cybercrime, a figure that marks a 22 percent increase in cybercrime in the nation, reports from Get Safe Online and Action Fraud said. The data led industry experts to warn companies that they should report cybercrime as soon as possible to law enforcement, though some officials agree that the mechanisms to report such crimes are far from straightforward and streamlined. Like in the U.S., fraudsters are targeting U.K. businesses often by posing as a supplier to initiate a direct debit transfer into a bank account. Business email compromises are also on the rise in the U.K., reports said, as is corporate employee fraud.

70% of APAC businesses struggle from overdue payments by their corporate buyers, reported Coface in its annual Asia-Pacific economic survey. Across Australia, China, Hong Kong, India, Japan, Singapore, Taiwan and Thailand, 84 percent of businesses said they faced issues with overdue payments in 2015. The situation in China is particularly concerning, analysts noted, with a fifth of companies there reporting that their unpaid invoices are more than 90 days past-due, marking one of the highest percentages in the region. A decline in bank lending and rising competition were also cited as key factors that are challenging APAC businesses from gaining a better grasp of their cash flow.

73% of U.K. CFOs say exchange rate volatility will be worse than people think should the country move forward with its possible Brexit. FEXCO Corporate Payments released the results of its survey to assess how corporate money managers are dealing with the potential of an exit from the European Union and found that FX volatility could be a danger underestimated by the government. Nearly all executives surveyed agreed that exchange rate volatility puts their profit margins at risk. While no one can be certain how a Brexit would affect businesses and currency rates, analysts agree that it would almost certainly have an impact on companies’ cash positions and challenge their money management capabilities.

60% of U.K. firms think bitcoin is a flop, found Smith & William’s Enterprise Index survey. The report revealed that entrepreneurs and owner-managers in the country think bitcoin will fail to gain traction as a common currency among buyers; more than half added that they don’t predict bitcoin will ultimately have a “big impact” on the currency payments ecosystem. Reports described the findings as “surprising,” especially since the U.K. is a FinTech hub.

One-third of U.K. businesses said they’re stockpiling bitcoin in case of a cyberattack, reported Citrix. The data suggests corporate money managers and IT professionals are gaining interest in the cryptocurrency but not for investment purposes. Instead, they view the currency as a quick way to retain control of their systems should they be hit by a ransomware attack, in which cybercriminals hold a corporate’s systems hostage until a ransom is paid. Often, these ransoms must be paid out in bitcoin.

21% of accounts payable professionals are frustrated with manual processes, citing time-wasting and tedious invoice approval and payments as key sources of friction in their jobs. The finding was released in a new report by iPayables, which also revealed that paper-based processing is a major challenge for the AP department. Anecdotal commentary from the AP professionals surveyed also uncovered a pattern of frustration when suppliers or other parts of the enterprise make a mistake — for instance, if a supplier sends an invoice to the wrong department.