Apac Corporates Lack Real-time Transparency of Cash

A survey of Asia Pacific (Apac) corporates suggests that no more than 35% have a transparent line of sight to their real-time cash positions.

The survey, conducted by research firm East & Partners Asia for Cashfac Technologies, cites high costs, proprietary banking systems and patchy work-around solutions as factors undermining the accuracy and confidence in data and impacting the ability to achieve real-time cash visibility.

To produce the Cashfac Operational Cash Index, 364 chief financial officers (CFOs) and corporate treasurers in the region were interviewed to create a snapshot on the true state of play for the treasuries of Apac major organisations.

The report highlights issues around clarity on cash positions and the realities of managing multi-bank systems for large corporate treasuries in the region, and found high levels of frustration with the linking of bank accounts and with the cost of bank product solutions and upgrades.

Key findings from the report include:

  • Only 35% of corporates surveyed had access to a real-time view of their transactions and cash.
  • Only 23% of cash is physically pooled in Asia Pacific and where notional pooling is possible it’s not fully exploited; with less than 50% of all cash being notionally pooled together.
  • The biggest shortcoming in multi-banking arrangements is in the linking of accounts between banks.
  • Self-serve functionality and reliance on banks for customised changes was cited as a major shortcoming of multi-bank arrangements.

Achieving a real-time consolidated understanding of transactions and balances remains elusive. Only 40% of Hong Kong corporates have a real-time consolidated view of their cash, while just 25% of Malaysian corporates are able to do so, despite having fewer bank relationships.

Among the corporates with systems that enabled a real time view, only 54.8% of all cash can be seen in real time. The balance of corporates cash resides “in the shadow” and needs to be manually consolidated in order to achieve a holistic view. Malaysian corporates had the lowest percentage of their cash visible at 44%.

“Due to the complexities and shortcomings of managing multiple banking relationships regionally, our research found that many Asia Pacific corporates lack a line of sight to their cash positions,” said Lachlan Colquhoun, chief executive (CEO), East & Partners, Asia.

“There are barriers, both regulatory and operational that firms need to wrestle with, but the survey showed that in every region there’s still room for firms to benefit from greater control of operational cash.”

Alastair McGill, managing director, global business, Cashfac, commented: “Corporates across Asia Pacific are often handcuffed by siloed, inflexible and bank specific systems, which restricts transparency of operational cash.

“There’s absolutely no reason why these firms shouldn’t be able to see the majority of their cash in real-time and have the tools and processes in place to maximise the value of cash in their business. And for innovative banks in the region there’s a fantastic opportunity to steal a lead and offer better multi-bank, cash management services to their corporate clients.”

A copy of the Cashfac Operational Cash Index may be accessed at: www.cashfac.com/cash-index/

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