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Treasurers lose faith in cash-flow forecasting

Three-quarters of multinationals lack confidence in their own cash-flow forecasting, according to research by REL Consulting Group, a business consultancy.

The main cause, according to over 60% of respondents, is the lack of system integration across the business units. And more than half complain that the poor quality of internal communications is another cause for concern.

Collection processes are also to blame, as half of the treasury respondents say poor sales projections and collection techniques meant that cash collection from customers was causing further stress.

"It beggars belief - and after the high profile business failures in recent years is acutely worrying - that three quarters of multinationals have little or no confidence in their ability to forecast their own cash-flows," says Alexander Bielenberg, director of REL. "These businesses are often facing an uphill struggle against the often numerous business unit fiefdoms and it is now more than ever the responsibility of the board to ensure that forecasts are a true reflection of the future of the business."

The results will hardly comfort investors and analysts who often rely on cash-flow forecasting to assess the credibility of corporate performance.

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