BANK OF AMERICA
Cash visibility, yield enhancement, cash concentration, account rationalization and mitigation of counterparty risk identified as key treasury priorities
Cash flow forecasting cited as a primary challenge across the Asia Pacific region
Adoption of innovative treasury technology tools remains a work in progress
Bank of America Merrill Lynch Global Transaction Services (GTS) and SunGard today announced the key findings of their inaugural Asia Pacific Treasury Barometer survey. The opinions expressed in the Asia Pacific-dedicated survey provide one of the most comprehensive examinations of the present and future priorities of the rapidly evolving regional treasury management industry.
Foremost, the results reveal that the five key priorities for treasurers in Asia Pacific over the next 12 to 24 months will be improving cash visibility, yield enhancement and interest expenses, cash concentration, rationalizing bank accounts, and mitigating counterparty risk.
Cash flow forecasting, a modeling method used by corporations to determine future financial liquidity, was identified by treasurers as a specific pain point of operating in the Asia Pacific region. Only 14 percent indicated complete satisfaction with their cash flow forecasting processes. Additionally, 66 percent of respondents indicated that they don’t utilize treasury tools for cash flow forecasting.
The survey results demonstrate that unsatisfactory cash flow forecasting processes are largely due to complications arising from internal platforms, policies and procedures rather than the solution suites currently provided by banks and technology vendors. The top five factors inhibiting accurate cash flow forecasting are identified as inaccurate sales targets and projections (35 percent), lack of internal systems integration (35 percent), limited availability of resources (23 percent), ineffective centralized reporting processes (23 percent) and inefficient collections processes (19 percent).
Furthermore, respondents offered insights into the role technology plays in enhancing regional treasury structures and cash flow forecasting. Across both emerging and developed markets, 69 percent of treasurers and treasury professionals still rely on spreadsheets to run their treasury management operations. Enterprise Resource Planning (ERP) and in-house systems are favored by 26 percent and 23 percent of treasurers, respectively. An additional 16 percent of companies opt for a specialist vendor for technology requirements such as hosted or cloud-based solutions.
“The Asia Pacific Treasury Barometer survey stands as one of the most comprehensive treasury-specific research projects ever undertaken. The results clearly show that sophistication is developing in treasuries across Asia Pacific, but plenty of work remains. Encouragingly, corporations are committing themselves further to improving cash visibility, enhancing yield and concentrating cash priorities. In anyone’s language, these are extremely positive developments for the larger treasury management space and trends that play to our global strengths as a leading treasury management solution provider,” said Ivo Distelbrink, head of Global Transaction Services, Asia Pacific, Bank of America Merrill Lynch.
“Domestic reform and increasing internationalization will continue to be the key challenges facing treasuries across Asia for the next 12 to 24 months, a sentiment echoed in their unanimous top priority of ‘cash visibility.’ Few treasuries are satisfied with the status quo of manual processes and spreadsheets which remain entrenched largely due to internal systems integration issues. Across the board, treasurers have identified clear plans for change across their bank relationships, cash forecasting, treasury management and connectivity. The learning curve will be steep, and technology will take a critical role as an enabler. The quickest wins will also have the deepest long-term impact: treasurers must critically challenge their own biggest barriers, internal processes and policies,” said Michael Fullmer, senior vice president, Asia for SunGard’s Corporate Liquidity business.
The results were framed by the opinions of over 900 treasurers and treasury professionals, who were asked to identify business priorities, pinpoint market challenges and emerging trends.
The survey was conducted in the first quarter of 2013. Respondents to the Bank of America Merrill Lynch SunGard Asia Pacific Treasury Barometer represented companies across 14 industries across Asia Pacific, and also included opinions from treasurers covering the region from Europe and North America.
Survey respondents represented companies of all revenue sizes. Approximately 60 percent of respondents considered themselves mid-market companies with less than $1 billion in annual sales. Twenty-five percent of respondents’ companies post revenues in the $1-10 billion category, while 15 percent had annual sales above $10 billion.
To ensure relevance to Asia Pacific treasurers and treasury professionals, Bank of America Merrill Lynch and SunGard drew upon their respective regional and global strengths to frame the content and identify key themes when developing the survey.
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