The Skinny: Hackett's primary audience - CFOs - appreciate articles detailing the latest trends in finance. This piece details the importance of cash management, citing relevant statistics from Hackett's renowned benchmark studies. Appearing in AFP Exchange, it strengthens the firm's position as a valued resource.

Style: Hard-hitting and factual

Excerpt:

Cash is Still King

After years of steady growth, today's economy is uncertain. Forecasts and projections can change overnight, as evidenced by the 900 companies that negatively pre-announced earnings in the fourth quarter of 2000. Given the economic turbulence, it's more important than ever for companies to coordinate an effective, value-building cash management program through integrated processes, reliable forecasting and a commitment to shareowner value.

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Timely, accurate information improves the speed and quality of decision-making which, in turn, helps companies deal with economic complexity and improve efficiencies. While some world-class companies have implemented best practices to address this area, many have far to go to achieve gains in reliability.

Our ongoing finance benchmark study shows that 40 percent of business units submit inaccurate, unreliable cash forecasts to treasury, and only 10 percent can claim their reports are useful 90 percent of the time. In addition, firms with a significant company-wide understanding of effective cash management practices receive forecasts from business units that are 40 percent more reliable than those with minimal understanding. Unfortunately, only five percent of firms achieve a high level of knowledge company-wide -- most companies have crippled decision-making ability.

The problem? Most companies lack a cash focus, effective planning and decision-making processes, and systems that facilitate visibility. According to findings culled from our renowned database of over 1,600 global companies, only one-quarter of companies in our database consider their processes tightly integrated with adequate information and process flow from one to the other. This isolation results in little continuity in assumptions or practice. And what data is available for distribution is often hoarded and only shared with significant limitations.

Copyright Association for Financial Professionals

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