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2017 Will Be All About Cash Visibility, Treasurers Say

  • Published: 11/21/2016

LONDON -- Attendees of the corporate treasury forum at the Payments International conference got a good look at what problems treasury professionals want to solve. It quickly became clear that better visibility into cash positions is high on practitioners’ priority lists.

Kieran Hines, head of industries for the technology analyst firm OVUM, revealed the results of a survey that his organization administered in coordination with Temenos to better understand the priorities of corporate treasurers as we head into 2017. OVUM spoke to about 200 practitioners from large companies in the United States, Europe, the Middle East, Asia, Latin America and Africa.

Priorities and challenges in 2017

OVUM asked practitioners what they are most concerned with as they prepare for 2017. They identified managing liquidity as their top priority, followed by maintaining an accurate view of their cash positions, and managing FX risk.

But having an up-to-date view of their cash positions is of particular significance; corporate treasurers that named it as their top challenge to executing their core responsibilities. “Contributing to that challenge is managing multiple bank accounts and relationships, so it was very hard to separate those two [challenges],” Hines said.

This plays into another challenge that treasurers cited in the survey—being forced to make decisions based on partial or non-real-time data. A lack of real-time data availability was named as a significant operational issue for 35 percent of all corporates and 42 percent of those with revenues of $10 billion or more.

“I think some of this comes back to the conversation around PSD2,” Hines said. “Although PSD2 was conceived largely as retail/consumer-facing piece of regulation, I see a huge amount of applicability in it for the corporate space, particularly when it comes to addressing the challenges to obtaining up-to-date user balances.”

Hines added that the structure put in place under this directive could create huge opportunities for banks to become an information service providers for their corporate clients. “They could use this as an opportunity to pull together clients’ information from across multiple bank relationships and address that need,” he said. “Equally, there’s also an opportunity for nonbank third parties trying to do much the same thing. I think this is an area for corporate treasurers to be watching very closely over the next 12 months or so.”

A real issue

Just under half of the practitioners surveyed revealed that they plan to seek out new banking partners in 2017. That varied a bit by region; most of these treasurers reside in the U.S., Middle East and Asia-Pacific. “There is very much a sense that there are gaps treasurers are seeing in their services, and looking for new partnerships and new solutions is part of that,” Hines said.

So what services would treasurers like their banking partners to offer? Practitioners named obtaining data and insights in real time as the bank offering that would be the most valuable to them.

A lack of visibility into that data is a major problem for corporates. OVUM found that only 13 percent of multinational corporates can see their entire cash position in real time, and only 45 percent said that they can see more than half their cash in real time. Fully 34 percent of respondents have more than 11 bank relationships, and 14 percent use more than 30 banks.

Hines noted that for corporates with revenues over $10 billion, the issues that arise from making decisions based on partial or non-real-time data are fairly light. However, the accuracy in cash flow forecasting is a far bigger problem. “About 45 percent of corporates at that size reported that the accuracy of their cash forecast is a major operational challenge.

For smaller corporates with revenues between $500 million and $1 billion, the results were reversed. “Cash flow forecast accuracy, presumably because there is less complexity, is far less of a problem,” Hines said. “But the problems around making decisions based on that partial view are far more significant.”

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