Survey: CFOs Require Greater Cash Flow Efficiency

Receipt and application of remittances, determination of cash positioning and forecasting most inefficient processes

Receipt and application of remittances, determination of cash positioning and forecasting most inefficient processes

San Francisco — November 3, 2003 — Visa USA today announced the findings of a cash management survey that revealed less than 10 percent of corporate chief financial officers (CFOs), treasurers and controllers believe their current cash flow and cash management processes to be very efficient.

While identifying inefficiencies within existing cash management processes, the study also found a strong need to further evaluate the usage of corporate payment cards as effective B2B payment solutions.

The survey involved several hundred executives from more than 20 industries responsible for the financial, treasury and cash management decisions of their organizations. Visa said it was specifically designed to take a look at the effectiveness of cash management within today's business environment.

Key findings of the study reveal that the receipt and application of remittances, as well as the daily determination of cash positioning and forecasting, were considered to be the most inefficient elements of the overall cash flow process. These inefficiencies were due primarily to a predominant lack of operational integration and labor-intensive administrative work.

The research found that corporate payment cards were used by 41 percent of respondents for, on average, 20 percent of their total commercial payments. Most respondents acknowledged the cards' value in each step in the cash management process as measured by the following summary of responses:

  • 60 percent believed they were relevant or very relevant for cash disbursements

  • 48 percent believed they were relevant or very relevant for short-term money management and the collection and application of receivables

  • 43 percent ranged from relevant to very relevant for cash positioning and forecasting

The findings bring into question the effectiveness of the common tools used today for the collection and disbursement of funds: checks, wire transfers and automated clearinghouse payments (ACH). While more respondents used checks than any other form of payment (81 percent), 64 percent of respondents indicated they were either neutral or only somewhat satisfied with the tool. Likewise only 39 percent of respondents were very satisfied with ACH, and just 31 percent rated wire transfers as providing marginal satisfaction.

"The survey results demonstrate that while companies seem to seek the integration, efficiency, visibility and information management capabilities associated with electronic payments, they are still using inefficient payment methods like checks," said Mike Dreyer, senior vice president of commercial solutions, Visa USA. "Satisfaction with paper-based payments like checks is low because they are difficult to integrate into the e-procurement process and offer virtually no capability to carry useful transaction information vital to effective cash management."

Results also confirmed the growing need for businesses to develop greater electronic disbursement capabilities. Using data to further improve the cash management process is an ongoing goal for businesses, with respondents rating the following electronic disbursement capabilities to be somewhat important or very important to their business:

  • Visibility into payables and receivables (73 percent)

  • Online access to payment and invoice-related detail (70 percent)

  • Automated information reporting and back-end integration (67 percent)

"Compared with checks and other forms of payment, today's corporate payment cards represent more efficient electronic payment solutions aligned with business cash flow needs," said Dreyer. "The transaction information that is captured and delivered to existing financial systems when using corporate payment cards enables businesses to not only better control their expenses and monitor spending, but also track the very movement of funds."

The Cash Management Survey was conducted through and involved the responses of 382 executives from more than 20 industries. Executive roles ranged from CFO and other top-level financial position (168 respondents); Treasurer (56 respondents); Controller (132 respondents); Accounts Payable/Receivables Manager (23 respondents)

The majority of respondents (75 percent) had annual sales of more than $50 million per year, of which nearly 50 percent represented more than $500 million per year. The survey itself ran for 16 days from September 29 through October 13, 2003.