|
|
25 Aug 2009
Most companies will fail to accurately forecast cashflow over the next three months because they still rely on spreadsheets and don’t utilise communication links with business units, suppliers or customers to get a sense of their financial position.
Research from finance function adviser The Hackett Group, conducted in association with the US National Association of Corporate Treasurers taking a sample of 85 US and European companies with revenue of $14bn or more found only 22% can forecast operating cashflow two to three months out to within 5% accuracy. Less than half can make the same claim about their sales forecasting, the study found.
Hackett Group added that it saw better cashflow forecasting among companies at the top quartile by revenue, noting a common style of cross-functional teams with significant operational involvement “critical given the number of groups outside of finance that have a role in the forecasting process.”
This drove better forecasting results by fostering closer relationships with clients and suppliers to understand their financial positions and keep regular tabs on their credit positions. It added that the more successful cashflow forecasting businesses have more structured and interactive dispute resolution processes for customers and suppliers.
The study also revealed that 80% of companies don’t set forecasting accuracy targets and 85% do not have any form of incentive to promote improved forecasting accuracy.
To see how other FDs leverage working capital, click here.
advertisement
Have similiar articles delivered to your email box
Our experts provide practical solutions to a number of challenges associated with successful cash management
This webinar assesses methods to ensure you have the internal processes fine tuned to monitor compliance with published standards in corporate and financial governance
advertisement
Email Newsletters
Email Newsletters
Please enter your email below to receive your profile link
advertisement
Search by job title, salary, or location - we only list senior financial roles
The Financial Director Summit 2012 will provide a unique platform in which to share, compare and contrast experiences whilst learning and networking with peers
Our experts provide practical solutions to a number of challenges associated with successful cash management
This paper delves into the many benefits that can be obtained by automating the supplier statement process
UNIT4 works with a huge variety of different organisations across several sectors, and this guide has been built on its experiences and knowledge.These tips will provide you with the tools you need to improve
David Cameron’s veto of the EU Treaty has been hailed as protecting UK business, but will frosty relationships with the EU harm trade, asks Neil Hodge...
