DigitalCFO Newsroom | 16 November 2022
61% agree that understanding cash flow in real time will be crucial – but just under 4% of those surveyed by BlackLine are completely confident in the visibility they currently have .
A global survey of C-suite executives and finance and accounting (F&A) professionals commissioned by BlackLine, Inc. (Nasdaq: BL) has revealed a significant lack of confidence among the C-suite and F&A professionals when it comes to the visibility their company has over its cash flow, suggesting that many global organizations could be making decisions without an accurate, up-to-date view of company liquidity. This comes despite findings that suggest that visibility over cash flow and other financial metrics could be the key to businesses weathering the growing global economic storm.
The survey of 1,483 business leaders and F&A professionals (conducted by independent research agency Censuswide across the US, Canada, UK, Germany, France, Singapore and Australia) also found that organizations globally are anticipating growing pressure and scrutiny over company financials as a result of ongoing economic uncertainty, with 22% of C-suite respondents globally indicating it will take 7-12 months before they start to feel confident about the economy again. As a result, optimizing working capital and processes is high on the agenda, as companies look to bolster their financial resiliency to combat market instability.
Keeping Track of Cash
With recessionary fears on the rise, more than half (57%) of Singapore respondents surveyed are concerned that prospects or customers will have less income to spend, which could impact sales/ revenue. About half of them (51%) are worried that their organization will face higher costs, while 48% are worried that they will need to look for new ways to optimize working capital without borrowing funds.
Perhaps as a result, 61% of Singapore respondents agree that understanding cash flow in real time is going to become more important for their company in the face of economic uncertainty. But nearly all respondents (96%) said they could be more confident in the visibility they currently have over cash flow.
This suggests that the majority of Singapore organizations could be at a serious disadvantage when it comes to making strategic decisions. Of those that believe visibility could be improved, 56% are worried their company is making decisions based on inaccurate or out-of-date information and 50% say the lack of visibility over cash flow makes them less confident that their organization can remain competitive over the next 12 months.
“Economic instability and volatility have increased over the past few months, adding more uncertainty to an already challenging and unpredictable global business environment. Once again, Finance & Accounting is caught in the eye of the storm, with CFOs and those who report into them feeling the pressure,” said BlackLine CEO Marc Huffman. “There is widespread acknowledgement that better visibility over financial data, processes and working capital is needed if organizations want to weather the storm. Company leaders across the world will need to carefully consider how their organization can respond and remain competitive, agile and resilient in the coming months.”
Financial Data Under the Spotlight as Organizations Brace for Recession
With external pressures that are hard to predict, real-time visibility over financial data, processes and working capital will be key to survival, leading to greater pressure on CFOs and those who report into them, according to the research.
Over half (54%) of C-suite and F&A professionals in Singapore predict that their companies’ financial reporting will come under increased scrutiny over the next year. Half of these respondents (50%) believe that financing will be harder to secure, and a similar number (55%) expect the ability to view their companies’ financial data in real time will be a “must-have” for business survival over the next 12 months.
Against this backdrop, over two-thirds of (68%) CFOs in Singapore said that they were responsible for ensuring their company’s wellbeing during an economic downturn, compared to less than a third (30%) who said that this was the responsibility of their CEO. This indicates that as company finances come under the microscope, pressure to deliver insights to leadership in near-real time could weigh heavily on CFOs and the finance function.
The Biggest Pain Points
When asked about the biggest pain points for the F&A currently, identifying manual/human errors during the month-end close process was a pressing issue for more than a third (37%) of Singapore respondents. Similarly, 37% said they faced overdue and unsettled intercompany balances, while 36% said they do not have enough automated controls for the volume of data. C-suite and F&A respondents said the three biggest challenges they will face in the coming year are:
- Reduced budget for their department
- Increasing regulations and scrutiny
- Being able to provide accurate data quickly enough to help the organization respond to market changes
Looking Internally to Optimize Processes and Working Capital
In response to increasing financial pressure, responses suggest that organizations now need to look internally for ways to optimize working capital and processes, with 51% of local respondents saying that they will invest more in digital transformation initiatives and 49% wanting to implement or scale automation solutions to help optimize and increase working capital within the next year.
Mr. Huffman continued: “There is no doubt that those who are using robust and comprehensive data to make rapid, intelligent decisions will be in a stronger position to adapt. In this environment, it’s likely that greater emphasis than ever will be placed on the strategic insights which F&A can offer to the business.”