81 percent of companies in Singapore do not have 60-day cash flow visibility: Visa study

Zafirah Salim

Despite the fact that most global organisations view cash flow as the key determinant of business profitability, it is ironic that many of them lack efficient processes, systems and tools to deliver real-time visibility and predictability in their cash situation, according to a recent Visa study.

The 2014 Cash Flow Visibility Index study released today by Visa polled 811 organisations across 10 countries last September, including 83 in Singapore.

The study revealed that 81 percent of companies in Singapore do not have 60-day visibility of their cash obligations, and almost half of them (41 per cent) do not have a 30-day visibility.

In fact, 89 percent of companies in Singapore do not have access to up-to-date analytic reports that could give snapshots of their cash flow, according to the study.

Given the lack of the right processes, systems and tools, these companies require time to manually work on and generate cash flow and analysis reports. Hence, these reports may be at least 10 days old.

"The findings from the study highlight that businesses are in need of solutions that will greatly enhance their cash management processes. Real-time visibility and predictability is a must-have for all Chief Financial Officers (CFOs) and Treasurers so that they can make accurate decisions on reinvestments or expansion of their businesses, both leading to better profitability for their companies," said Olivia Leong, Head of ‎Commercial and Prepaid Payment Solutions, Visa Asia Pacific.

Another key finding from the study is that regional organisations spend up to 253 man hours per week manually entering data and preparing cash assessment and analysis reports because of the lack of appropriate tools and systems. Singapore companies fare better, but still require more than 120 man hours a week to perform these tasks.   

The study also highlighted the low adoption of electronic collection and payable platforms in many businesses. 72 percent of companies in Singapore use electronic collection platforms to manage their revenue, but only 21 percent of revenues are managed electronically by a collection platform. The lack of real-time digitised data of receivables and payables means that businesses are unable to predict their future cash obligations accurately.

"Real-time digitised data from a single, reliable and clean source is critical to achieving profitability objectives for businesses. Our discussions with finance professionals suggest that their challenges in obtaining such data may arise from a lack of optimisation on existing systems," said Lachlan Colquhoun, CEO of & Partners Asia, who conducted the study for Visa.

"Finance professionals also hesitate to source for new solutions due to the perceived time and resource investment that they believe is required. However, easy-to-deploy and cost effective solutions are available to companies, and they can start by changing the way businesses pay and get paid," he added.