Five barriers to effective cash visibility – and how to overcome them

By Bob Stark June 11, 2015

Any treasurer will tell you that visibility is a critical enabler to making better financial decisions. Without detailed visibility into an organization’s cash, liquidity, and financial exposures, CFOs and treasurers are driving blind in a snowstorm. However, executive management and shareholders do not see that as an excuse for organizations to avoid maximizing the use and deployment of cash, optimize hedging programs, and fully leverage the balance sheet to drive business value.

This makes deep visibility a non-negotiable mandate for the CFO to give to the treasurer – yet it can often be difficult to achieve in practice, even for organizations that have a treasury management solution in place.

The top five barriers to perfecting visibility include:

1. Wrong tools for the job: Put simply, if spreadsheets are your primary tool for the treasury team, you will neither have the timely availability of accurate cash balances, nor the analytical capabilities required to develop an accurate and reliable forecast.

2. Limited / partial connectivity to banks: not seeing all cash balances on a timely basis.

3. Bad cash forecasting technique: Forecasting without a detailed measurement of its effectiveness through proper variance analysis is a waste of everyone’s time and will yield poor results.

4. IT resources: especially where older solutions are involved, treasury can’t get on IT’s calendar and when they do it’s so cost prohibitive that it’s just easier to do it on spreadsheet.

5. For organizations that are still using spreadsheets to manage treasury but wish to implement technology, a further challenge could be an unrealistic cost / benefit of implementing treasury technology – a poorly constructed business case that overemphasizes automation as the primary benefit will never be prioritized.

Fortunately, there are solutions to each of these concerns which can deliver needed visibility to the treasurer, CFO and the entire organization:

1. Treasury in the cloud: Software as a Service (SaaS) solutions better enable global visibility – making technology easier to implement, cheaper to invest in, and they can be fully supported without an ounce of internal IT effort, to achieve global visibility.

2. Cost-effective connectivity: connectivity is automated and secure, but only if the cost is right will it make sense to invest in. There are many options to connect to a bank. Some are unnecessarily expensive, so doing your research is a must.

3. Good cash forecasting: we spoke about bad forecasting practices above; good forecasting entails leveraging the right sources (e.g. extrapolating historical data trends, in addition to just an average) to develop the forecast and then automating forecast variance analysis to calculate forecast accuracy. Only this step allows you to improve forecasting to make it reliable.

4. Consolidated picture: it’s critical to have all visibility data maintained globally in a centralized repository. If you have part of the picture, you will achieve only part of the results.

5. Focus on value: a good business case looks at the value treasury technology delivers to the organization, not the costs that it saves.

While on their own, none of these elements is the panacea for deep, reliable cash visibility. When combined, they will enable treasury teams to drastically improve their insight into their cash, enabling the CFO and executive team to make more informed, data-driven financial decisions for major corporate transformation initiatives.

Find out how you can improve visibility and gain better control over bank accounts in our upcoming webinar, Gaining Complete Control over Your Bank Account Management on June 23rd. The webinar will feature valuable insights from Kyriba’s experts, as well as a case study from the BBC, highlighting how it maintains control over more than 500 bank accounts worldwide using Kyriba.

If you would like to know more about how Kyriba’s treasury management system, combined with a empowered and educated treasury team, can enable smarter financial decisions for your organization, read our guide to maximizing cash visibility.  

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