1. Home
  2. Cash & Liquidity Management
  3. Cash & Liquidity Mngm in Europe

Cash flow forecasting importance highlighted in survey

A survey of treasurers conducted by the European Association of Corporate Treasurers (EACT) has again reflected the importance of cash flow forecasting to treasurers during the COVID-19 pandemic. The survey of 200 treasurers, conducted between 11 March and 15 April 2020 found that, over the next 12-24 months, cash flow forecasting is the highest priority for treasury, indicated by 55% of respondents. This was by far the top priority, coming in some 16% ahead of the next priority, treasury technology infrastructure review/replacement (39%). Other priorities in the top 5 for the next couple of years included working capital management (37%), digitisation of treasury (33%), and funding (31%).

In terms of innovation, 62% of treasurers use, or plan to use, data analytics over the next 12 months. This is a significant increase from 2019, where 43% indicated this was the case. Other popular innovations included robotic process automation (RPA) at 46%, and application programming interfaces (APIs) at 35%. A mere 2% of treasurers indicated that they use or plan to use cryptocurrencies in the next year.

Real-time treasury

Over half of treasurers (52%) are interested in the opportunities to exchange information in real-time, while real-time liquidity, and real-time payments and collections, both are of interest to 47% of treasurers. This reflects the changing pace of treasury, driven by developments in real-time payments infrastructures.

The EACT survey also found that 37% of treasurers report that working capital management is a significant priority for treasury. Despite this, only 30% say that treasury is responsible for working capital management. The biggest trend is for treasurers to have influence over working capital but no direct responsibility (45%). While 13% say they have partial responsibility for working capital, for 12% this is outside of the scope of treasury completely.

Centralisation and ESG challenges

Although treasury centralisation has been a long-term trend, it remains a priority for 28% of treasurers who responded to this survey. Difficulties in standardising processes and controls (43%), multiple bank relationships (33%), and a lack of resources (29%) remain the biggest challenges to centralisation.   

Treasurers are motivated to support their companies’ environmental, social and governance (ESG) agenda, but most of this involvement is at an operational level, such as shifting from manual, paper-based processes (50%), and reducing business travel by encouraging home working (41%). Tactics on the financial management and hiring side look like lower priorities at the moment. Just over one-quarter (26%) of treasurers said that they are issuing or planning to issue green bonds or other sustainable borrowing, while 20% said they are investing in sustainable investment instruments or are developing a plan to do so. Only 17% of treasurers said they are proactively encouraging applications and career development in under-represented groups.

Assessing the COVID-19 impact

In a survey conclusion on its website, the EACT notes that the COVID-19 crisis has highlighted the importance of treasury’s role in managing existential issues around liquidity and risk, the value of digitisation to support automated processes and decision-making, and the potential for real-time data and transactions to accelerate supply chains and cash cycles. Real-time and on-demand intelligence also enhances treasurers’ visibility over, and response to, fast-changing conditions. The crisis has also rapidly changed the way that treasury functions operate, perhaps heralding a more permanent change in working practices.

The conclusion also notes that treasurers have been adaptable and responsive to the immediate demands of the crisis. At the same time, their priorities, challenges and areas of interest have remained largely consistent. This suggests that treasurers are motivated by a longer-term, strategic view of the needs of their business, as opposed to reacting impulsively to the day-to-day demands of the crisis. The survey results illustrate, however, the growing role that technology innovation is likely to play in equipping treasurers with the automation and decision-making tools they need to fulfil their responsibilities more effectively, and deliver greater value to the organisation.

Like this item? Get our Weekly Update newsletter. Subscribe today


This item appears in the following sections:
Cash & Liquidity Management
Cash & Liquidity Mngm in Europe
Cash Flow Management & Forecasting
Environment, Social, Governance
Working Capital Management
Best Practices & Benchmarking
Europe
News

Also see

Comments

No comment yet, why not be the first?