Cash Forecasting Produces Higher Short-Term Yields – Report

Companies that are able to forecast their cash needs realize significantly greater investment yields than firms with no forecasting methodology, according to new research by Treasury Strategies. The survey noted firms that forecast cash realized 30 basis points of added portfolio return over those that do not forecast. David Robertson, a partner of Treasury Strategies, said: ‘Developing a good forecasting program is difficult for most firms, but our findings clearly illustrate how valuable it can be. A corporate investor with a portfolio of $50 million would gain $150,000 of added return per year.’ The study revealed that 50% of all firms use a formalized forecasting model or process, which in turn produces superior investment returns. In other findings, only two-thirds of all companies surveyed had a documented investment policy and only half benchmarked their portfolio performance against external standards. Both practices would be important components of a response to the Sarbanes-Oxley Act, said the report.


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