India’s Corporations Flying Blind In Money Management

Cash flow management is paramount for all corporations. While an inability to manage finances is often the cause for the high failure rate among startups, large corporations often struggle with gaining insight into their money, too.

New research reveals an especially dire situation in India. Reports published Wednesday (July 15) said that Visa’s new “Cash Flow Visibility Index Study” for 2014 found that 95 percent of corporations in the country have the lowest visibility of their cash flow.

“Indian corporations have been identified as having the lowest visibility over their cash flow, with many lacking efficient processes, systems and tools to deliver real-time visibility and predictability of cash flows,” the report’s authors concluded.

Specifically, researchers found that 95 percent of businesses in India cannot view 60 days into the future of their cash obligations. Further, 87 percent cannot see just 30 days ahead.

And this isn’t just a problem with SMEs. Visa’s analysis found that 97.5 percent of the country’s leading firms do not have access to analytics tools and reports that provide real-time cash flow visibility, meaning that these businesses must manually generate analysis reports. The report estimated that as many as 480 hours a week are spent by employees manually entering data and preparing financial reports because they do not have more sophisticated tools to do so.

Part of this lack of visibility, the report declared, is due to India’s ongoing dependence on paper cash. “Only 15 percent of companies use electronic collection platforms to manage their revenues, and close to 44 percent of the corporate’s operation is managed on spreadsheets,” the study found.

Without the ability to see, in real time, the current state of receivables and payables accounts, companies cannot adequately predict future payment obligations.

According to Visa Group Country Manager for India and South Asia TR Ramachandran, this is a big problem.

“Indian businesses are clearly in need of solutions that will greatly enhance their cash management processes,” he said. “Real-time visibility and predictability is a must-have for all CFOs and treasurers so that they can make accurate decisions on reinvestments or expansion of their businesses, both leading to better profitability for their companies.”

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