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Visibility on a Shoestring

Hackett Group study shows cash management is still considered a priority, but budget and staffing remain tight. As a result, some companies are outsourcing strategic tasks, including treasury.

By Treasury & Risk Staff | Updated on May 19, 2014
Ever since the financial crisis heightened companies’ awareness of the importance of cash flow management, treasury activities—and treasury managers—have been inhabiting larger roles in many organizations. “The focus on cash escalated during the crisis; everyone was fairly tied up with that particular topic,” says Sherri Liao, practice leader for the enterprise performance management and business intelligence executive advisory program at The Hackett Group. “Cash is still something that companies are looking at, especially organizations that have tighter payment cycles. Also, we’re finding that companies making larger capital investments are being pressed to show how they’re going to make those cash outlays and returns on those investments because there’s a heightened sensitivity around risk now.”

The 2014 “Key Issues Study” from The Hackett Group indicates, predictably, that cash is taking a back seat to revenues and profits. When asked about their company’s strategic financial priorities for 2014, two-thirds of respondents said that growing revenue is either their number-one or number-two priority. Nearly as many cited improving margins and profitability as either number one or number two. Improving cash flow scored quite a bit lower, with only 7 percent citing it as their top priority and 15 percent claiming it’s their second-most-important objective. (See Figure 1, below.)

This doesn’t mean, though, that cash management has fallen by the wayside of the corporate agenda. “As organizations are able to improve visibility to margin management and product or customer/channel profitability, they’re going to have more of a way to link that kind of information to cash flow,” Liao says. “It’s just that now there’s limited visibility into seeing where performance is coming from. Once that visibility becomes more transparent, they’re going to be able to make better cash flow analysis, better leveraged insight into that area to give them line of sight.”

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