The BNP Paribas Corporate Treasury and CFO Outlook polled 30 Australian treasurers and CFOs about their concerns and outlook in August 2014.
The report found that one third of Australian companies had less than 50 per cent visibility of their cash balances.
Speaking at a luncheon in Sydney yesterday, BNP Paribas head of cash management sales Chrystie Dao-Szabo, who co-authored the report, said many companies had their excess cash in traditional bank accounts that "didn't pay a lot of interest".
"So not only did they not know [where a majority of the cash was], those who knew didn’t know how to manage it optimally," Ms Dao-Szabo said.
"This means a lot of companies do not know their solvency position at any specific point in time."
BNP Paribas head of client advisory Filipe Simao pointed out the lack of cash visibility means companies cannot manage their foreign exchange risk.
"You don’t really know the currencies that your positions are in, and in a volatile market that can be really quite serious," Mr Simao said.
However, he added that two thirds of corporate treasurers also report their boards and management are "paying closer attention to cash management and liquidity".
"Half (54 per cent) reported that meeting compliance and regulatory requirements takes between 10 to 30 per cent of their day, while for one in five respondents it takes between 30 to 50 per cent of their time," Mr Simao said.
"It is unlikely that reporting pressure will decrease in the near future; rather, it is becoming part of the 'new normal'," he said.
Lack of cash visibility is not just limited to Australia, said Mr Simao, but companies are starting to look at solutions – with "greater centralisation" being a popular approach.
"Centralisation can bring more control and efficiencies in payment processes, in particular with developments such as payment hubs, shared service centres and 'payments-on-behalf'," Mr Simao said.
"By viewing cash as a corporate asset that is to be managed centrally, liquidity centralisation can dramatically improve liquidity management, optimising the remuneration of surplus balances and cost of funding across subsidiaries."
