Why cash visibility is critical – and not just if you’re cash-strapped

By Kyriba December 8, 2014

The financial crisis of 2008-9 brought the necessity of accurate cash visibility to the forefront. Many companies found themselves cash-strapped, and it became necessary for balances to be known not just at the end of the day, but several times during the day as well. And all of this was just to ensure business operations could keep functioning!

Many organizations have become cash rich in the years following the credit crisis, as treasurers have necessarily become more cautious about ensuring the organization has an ample cushion to keep everything running during future challenges.  However, the requirement for more thorough cash visibility has remained, even for organizations that have adequate levels of funding. Why is this? Put simply, visibility is an enabler – it gives the opportunity to make informed, effective financial (and strategic) decisions, for example:

  • Borrowing and re-financing
  • Cash optimization
  • Risk management and hedging

Visibility is also more than just knowing bank account balances (although this is critical). For example it involves:

  • Cash and liquidity
  • Forecasts, exposures and financial positions

Cash visibility and forecasting are a major element of the treasury’s role – three quarters of treasury pros are involved in it on a daily basis, and it typically takes up half of their day, according to the Kyriba / ACT 2014 Treasury Survey.  However, many treasury teams still face challenges in developing an accurate, real-time cash position. There are several reasons for this, but two of the most common reasons, (as expressed in the 2013 AFP / Oliver Wyman Risk Survey) were the difficulty in capturing relevant data from both internal and external sources. The solution to this challenge is obviously a more effective solution for extracting and managing external (bank) and internal (ERP) data, combined with the implementation of workflows and processes to make the best use of the data.

For more information on how to improve your organization’s cash visibility, Kyriba will be hosting a webinar – An Action Plan for Improved Cash Visibility in 2015 on December 11 at 2 pm EST / 11 am PST. The webinar, run in conjunction with Treasury & Risk magazine, will feature a range of “how to” best practice tips, as well as real-life examples of how treasury teams have improved their cash visibility in order to minimize their financial costs for external borrowing and overdrafts, not to mention optimizing returns on surplus cash. More information, and details for signing up for the webinar, can be found on Kyriba’s site.

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