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Opinions and views from expert CFOZone members.

Tag >> liquidity
Dec 22

Key accounting issues for 2011

Posted by Stephen Taub in revenue recognitionliquidity, leases, lease accountingInternational convergencegenerally accepted accounting principlesGAAPCredit Suisse SecuritiescontingenciescomplianceAccounting

Stephen Taub

Credit Suisse Securities has sent clients a neat concise report detailing the "hot button" accounting issues for 2011that were discussed at the recent annual AICPA Conference on Current SEC & PCAOB Developments.

The report highlights four major topics: International Convergence, Liquidity, Contingencies and Restoring the Public Trust.

Nov 23

Corporate liquidity may tighten as Basel III hits banks

Posted by dbedell in liquidityFederal ReserveDaniel TarullocomplianceCashBasel III


US corporates may have an easier time that their European counterparts when it comes to future bank lending as banks begin to gear up for new capital requirements under Basel III.  

However, the actual impact is as yet unclear, in particular as few analysts can agree on the impact of risk-weighted asset reductions on the amount of equity that banks will need to hold to meet tier one capital ratio requirements under the new guidelines.

Sep 02

Vendor finance, peer-to-peer lending a perfect match

Posted by dbedell in vendor financesmall businesspeer-to-peer lending, liquidity management, liquidityDealsCashbiztech


Peer-to-peer lending, or community lending, is expected to grow 66 percent over the next three years, according to research by Gartner. Although this still makes it a very small market—at $5 billion in outstanding loans by 2013—it is becoming an increasingly-important funding source for small business and entrepreneurs.

And it may become even more important, as the first partnership between a peer-to-peer lending site and a vendor finance site takes flight.

Aug 25

Enhancing receivables processing

Posted by dbedell in STPreceivablesliquidityDSOdays' sales outstandingcash concernsCashA/R


With average days’ sales outstanding of 44.5 days, US companies could see vast improvements in their receivables processing, according to a new report from Aite Group. 

Given the need for most companies to make best use of internal liquidity, any solution that can reduce the DSO cycle—which establishes how long it takes for companies to collect on invoices—is of value. Looking externally for a solution that can shorten processing times and reduce errors or exceptions that would normally extend the payment cycle may be a worthwhile investment.

Jul 16

Banks must become ‘brokers of information’: report

Posted by dbedell in risk managementrisk analyticsloansliquiditydataCashbiztechbank relationship managementbank lending


The recent financial crisis has taught companies innumerable lessons, and one of the biggest is their reliance on banking partners—not just for funding but also for providing critical data needed to understand a company’s own liquidity and risk picture. As such, companies will become ever-more selective about their banking partners, and will expect more from those partners.

Even though sources of funding are unchanged, banks will be asked to be more proactive and entrepreneurial in their approach to service large corporate clients, according to a report from consultancy Celent.

Jun 09

Companies restructure treasury to reduce costs

Posted by dbedell in treasury management systemtreasuryliquidityERP, cash position, cash management, cash flowcash concentrationCashbank account management


With Treasuries at all-time lows and bank lending still declining, companies are reorganizing their treasury operations in record numbers as they strive to increase efficiency, reduce costs and make best use of their internal cash. According to a recent survey by JP Morgan Treasury Services, 61 percent of companies polled had either just completed a treasury restructuring, were in the process of restructuring, or were building the business case for a restructuring.

The poll of 182 treasury executives—primarily from large corporations--found that 35 percent were implementing systems that would allow the company to get a global cash balance, 25 percent were reorganizing their bank account structures to reduce their number of banking partners, and 19 percent were restructuring their cash concentration programs to make use of extra cash for self-funding or debt repayment.

Jun 04

Low rates make sweep accounts more valuable

Posted by dbedell in liquidityinvestments, cash management, cash concentrationCash


Cash concentration is a critical tool in the corporate cash management toolbelt, and companies are now faced with the need to figure out what to do with excess cash given ridiculously low rates on both accounts and short-term investment products.

Improved cash concentration can create value through process improvement —by moving excess cash from various bank accounts automatically into one account either for investment purposes or to manage deficits.

May 13

Bank relationship management critical for CFOs

Posted by dbedell in working capitalshare of walletliquidity, cash management, Cashbank relationship management


Before the financial crisis large corporates held much of the power in their banking relationships. Banks in a company’s liquidity group were happy to get ancillary business and many of the largest companies could dictate terms.

But then the crisis hit. Liquidity dried up - those banks that were still in existence started either reducing their participation or pulling out of credit facilities altogether when they came up for renewal. Many companies suddenly found their banking partners demanding more – a lot more – side business in order to provide liquidity. Suddenly, bank relationship management became a prime function of the CFO.

May 10

Lumbering EU giant awakes

Posted by dbedell in RiskliquidityIMFeurozoneEuropean Unioneconomybailout


The European Union has finally stepped up to the plate with a bailout package for member states - after months and months of hemming and hawing - and it only took the potential bottoming out of the euro and fears of another global panic to light a fire. Never mind troubles in Greece since last November, never mind Ireland, or the UK, or Portugal or Spain.

The bailout package agreed by EU finance ministers early this morning will supply countries in the region with up to $560 billion in newly-minted loans and $76 billion available through a current lending program. The IMF will also front up to $321 billion – making a total of $957 billion in loans available to help shore up ailing European economies.

May 07

Receivables finance alive and kicking

Posted by dbedell in securitizationreceivables financeliquidityfuture flow securitizationCashasset-based lending


All types of asset-backed financing faced some issues during the crisis, and asset-backed receivables finance is no exception. Regardless of the strength of the underlying collateral, investors pulled away from any type of risk that had the stench of ABS and either held onto their money or put it in products perceived as more secure.

As a result, receivables securitization and asset-based lending saw issuance drop and spreads widen during the height of the crisis. Yet the strength of the underlying collateral shone through, and even being touched by the taint of monoline involvement hasn’t stopped new issuance and new receivables-backed models from returning to the fore.

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