37% of CFOs don’t completely trust their firm’s financial data

Nearly 40% of CFOs around the world do not completely trust the accuracy of their organisation's financial data, according to a survey commissioned by BlackLine, Inc. This creates challenges for strategic decision-making at a time when global business leaders are confronted with a wide range of external challenges. Confidence in cash flow visibility also remains stubbornly low, making it difficult for organisations to respond to unexpected market changes.

The survey of over 1,300 C-suite and senior finance and accounting (F&A) professionals in the US, Canada, UK, France, Germany, Australia, and Singapore reveals the factors business and F&A leaders globally are worried will disrupt their organisation and the broader business and economic environment. More than three-quarters (78%) of respondents are concerned about another global financial crisis. Respondents are also worried about the impact of cybersecurity issues (76%) and new disruptive technology (73%) on their business.

When asked what would help their company respond to business disruption, CFOs said one of the most important factors would be the ability to access and analyse financial data in real-time. However, 37% admitted they do not completely trust their own data. Levels of trust are even lower for those closer to the numbers, with 50% of senior finance and accounting professionals indicating they do not fully trust the financial data they are working with.

Additionally, for the second year in a row, a staggering 98% of overall respondents confirmed they lack complete confidence in their organisation's visibility over its cash flow. At the same time, 37% acknowledge that understanding cash flow in real-time will be critical for their company's ability to deal with unpredictable market changes.

The lack of confidence in cash flow visibility is causing challenges for business responsiveness. Close to half (48%) of respondents say this makes it harder to respond to market fluctuations, and a similar number (47%) are concerned they are making decisions based on inaccurate or out-of-date information.

Manual processes and the potential for human error also challenge organisational preparedness and decision-making. Almost two-thirds (64%) of respondents stressed that the overwhelming volume of manual day-to-day work leaves little or no time for proper financial planning and analysis. At the same time, more than two-thirds (68%) state that manual work leaves their organisation vulnerable to errors that could undermine business decision-making.

When asked why they did not completely trust their organisation’s data, almost a third (31%) of global respondents said the data comes from too many different sources, meaning they cannot be certain that all data is being accounted for. Other reasons include a reliance on clunky spreadsheets that leave teams in the dark until month-end (27%) and outdated processes, including manual data collection which is prone to human errors (25%).

In acknowledging the myriad of challenges with manual work, C-suite and finance leaders feel that modern business has to embrace new technologies like AI to streamline their financial operations, with a majority of respondents saying that cloud computing (80%), generative AI (78%), and new kinds of AI (76%) are essential for improving business resiliency in the face of future disruption.

 

US$6 trillion “wall of cash” holding firm as Fed delays cuts - Bloomberg

Bloomberg’s Alex Harris and Nina Trentmann have reported that investors are ploughing billions into money market funds (MMFs) by the day. Corporate treasurers are hoarding record amounts of cash. The market is digesting a glut of Treasury bills without a hiccup, Harris and Trentmann say.

According to Investment Company Institute data, investors have added US$128bn to US MMFs since the start of the year. Companies were sitting on a record US$4.4 trillion of cash at the end of the third quarter, and after a flood of more than US$1 trillion of T-bills since mid-2023, the market has room for more.

The Bloomberg report notes that traders have dramatically dialled back policy-easing expectations. The more time it takes the central bank to begin lowering its benchmark, the longer cash held in money-market funds should be able to earn 4%, 5% or more, keeping investors from looking further afield.

“The year of cash wasn’t a flash in the pan,” Peter Crane, president of Crane Data LLC, told Bloomberg.“The overall resensitisation to interest rates is still spreading and even a lot of money hasn’t moved or looked at it yet.”

The news comes shortly after ICD Portal, a platform for trading money market funds and other short-term investments, reported annual growth of 37%.

 

Contour Network resurrected by fintech platform Xalts 

The fintech Xalts, which is backed by Accel and Citi Ventures, has announced its acquisition of Contour Network, owned by a consortium of global banks, to accelerate digitisation in trade and supply chain finance.

Contour started in 2017 as a pilot by eight global banks with a focus on digitising trade. Currently, over 22 banks and more than 100 international businesses use Contour for digital trade finance solutions. CTMfile reported on Contour’s closure in November 2023.

Xalts, which institutions use to build multi-party applications for digitisation and tokenisation, plans to leverage Contour’s workflows and integrations to facilitate communication and transactions between businesses and financial institutions in the network.

As global trade goes from strength to strength and traditional supply chains reorganise, Xalts said in a statement that it is taking inspiration from Silicon Valley startups to accelerate digitisation in trade and supply chain finance. The initial focus for Xalts will be on embedded solutions for trade and supply chain finance. These should enable banks, logistics companies and technology companies to offer integrated solutions to businesses using a single platform.

“We want to create a Plaid for Trade,” outlined Ashutosh Goel, CEO of Xalts. “Our vision is to expand the scope of Contour's network which is trusted by banks and corporates, and build it into a rail that enables businesses to access digital solutions for trade and supply chain finance offered by banks, fintechs and technology partners. Combining our platform with Contour’s Network will allow participants to develop and deploy customised solutions quickly.”

 

What to look for in companies’ 2023 accounts - Moody’s

In an in-depth credit report, Moody’s Investors Services has highlighted five aspects for investors to pay close attention to in 2023 corporate accounts. The first area in the accounting spotlight is that insurance reporting is being transformed. Life insurers reporting under IFRS or US GAAP will apply IFRS 17 or long duration targeted improvements (LDTI), respectively, depending on jurisdiction. The introduction of IFRS 17 and LDTI in 2023 represents the most significant change to insurance accounting in a generation, according to Moody’s. High-quality disclosures will be crucial to investors to understand the extent to which financial reporting has changed. However, insurers' underlying performance, cash flows and financial position remain unchanged.

The subsequent report insight is that supply chain financing disclosures in US GAAP 10Ks are unlikely to give investors an insightful picture. US public companies were required to provide disclosures on supply chain financing arrangements for the first time in 2023. While it is helpful to know which issuers use these arrangements, the limits of the required disclosures mean that Moody’s is unlikely to have enough insightful information to assess the extent to which these programs are debt-like or constitute a future risk to liquidity.

Elsewhere, going concern reporting remains an area of focus. Moody’s says it expects increased focus on going concern generally, and in certain under-pressure sectors specifically, such as the China property sector.

Crypto is also flagged in the report, specifically that accounting for crypto assets is inconsistent because of GAAP differences. IFRS reporters might measure their crypto asset holdings at fair value, amortised cost or something in between. US GAAP reporters, until now limited to a cost-less impairment model, can early adopt a fair value through profit and loss basis in their 2023 accounts and must adopt it for the 2024 year-end. Given the many possible accounting models, Moody’s suggests that users should check what the policy is or risk missing out on material value adjustments.

Finally, enhanced sustainability disclosures are looming but are not yet mandatory. European Sustainability Reporting Standards are mandatory for large EU-based public interest companies, banks and insurance companies for financial years starting on or after 1 January 2024. The International Sustainability Standards Board (ISSB) has issued two standards effective from that date. Use of the ISSB standards is voluntary unless mandated in individual jurisdictions. Although these reporting frameworks are not in force for 2023 reporting, existing disclosure guidance such as the Task Force on Climate-Related Financial Disclosures (TCFD) remain a key focus for investors in the increasingly hot area of sustainability reporting.

 

Instimatch and Frontclear plan to revolutionise African electronic repo trading

Instimatch Global has announced a strategic partnership with Frontclear to deliver an end-to-end global repo trading solution designed to support developing countries in creating an effective money market and further integrating into the global economy, thereby increasing trade and investment opportunities.

Transactions on the Tradeclear platform are guaranteed by Frontclear, which should ensure that money markets can be stable and inclusive. In a statement, the two companies state that their partnership will connect African financial institutions to both domestic and cross-border interbank markets and, in turn, facilitate global counterparties’ access to domestic parties. It may also improve price discovery and matching processes, thereby reducing the bid-ask spreads and the risk of market frictions.

The partnership should also deliver market transparency, providing information and data on the African repo market, enhancing market surveillance and oversight and improving the compliance and reporting of market participants. It could also complement and (further) automate repo trading processes, enabling the integration and interoperability of the African repo market with other financial markets and instruments.

The jointly developed platform is targeted for launch in Uganda in Q1 2024 and Zambia in Q3 2024 on the back of extensive technical assistance provided by Frontclear in recent years to remove market development barriers.

 

India and Nepal exploring instant cross-border remittances

The Reserve Bank of India and Nepal Rastra Bank have signed and exchanged Terms of Reference to integrate the two countries’ fast payment systems, the Unified Payments Interface (UPI) of India and National Payments Interface (NPI) of Nepal, respectively. The integration aims to facilitate cross-border remittances between India and Nepal by enabling users of the two systems to make instant, low-cost fund transfers.

The collaboration between India and Nepal in linking their fast payment systems through the UPI-NPI linkage aims to deepen financial connectivity further and reinforce the enduring historical, cultural, and economic ties between the two countries.

Based on the Terms of Reference exchanged between the two central banks, the necessary systems will now be put in place for interlinking UPI and NPI. An RBI statement said that the formal launch of the linkage and commencement of operations will be done at a later date.

 

Adyen and Billie to bring BNPL to European businesses

Adyen and Billie have partnered to let Adyen’s customers enable B2B Buy Now, Pay Later (BNPL) payment services. Through the partnership, Adyen says it is helping its merchants and their business customers tackle everyday hurdles in B2B commerce. This includes managing cash flow for buyers and sellers, eliminating payment defaults and fraud risks, and simplifying dunning and collection processes. Billie's BNPL solution therefore offers an alternative to corporate credit cards.

With the integration of Billie’s solution into the Adyen platform, the partnership makes online payments simple for buyers via e-commerce and m-commerce channels. It allows merchants worldwide to offer their business customers the option to pay later by invoice. The technical integration for Adyen’s customers to offer Billie in their B2B checkout takes just a few clicks, according to a statement announcing the partnership. 

With Billie, business buyers of shops that run on the Adyen platform can make purchases and defer payment for up to 30 days. At the same time, merchants receive payment upon the shipment of goods, making Billie’s payment method a beneficial tool for the cash flow management of both merchants and business buyers. Billie performs real-time credit approval of buyers at checkout and provides default and fraud risk protection for merchants. In this way, Adyen’s B2B sellers can offer their business customers flexible payment terms while reducing their own credit risk and administrative burden of commercial credit collection to zero. 

The first countries to go live today as part of the partnership are Germany, Austria, Sweden, and the Netherlands. France, UK, and Switzerland will follow in the coming months. This refers to the countries of buying companies – the integration is already available to all Adyen merchants globally, both for domestic and cross-border transactions.

 

Cloud tool launched to help businesses navigate tax and regulatory environments

Sovos has launched Compliance Cloud, a solution that unifies tax compliance and regulatory reporting software in one platform and provides a holistic data system of record for global compliance. 

In a press release accompanying the launch, Sovos said that the move to a unified cloud empowers companies with greater visibility and more economies of scale into their technology infrastructure across the enterprise – saving time, money, and reducing risk.

The Sovos Compliance Cloud also helps CFOs and CIOs maximise their existing investments by embedding itself into a rich ecosystem of partners and technology providers. To date, the company features more than 75 embedded integrations into key enterprise resource planning (ERP), accounts payable (AP), and accounts receivable (AR) systems, as well as over 425 Connectors in the Sovos App Marketplace. This should mean companies do not need to replace or modify costly infrastructure to deliver more accurate tax compliance and reporting.

The company says its cloud platform will facilitate over six billion tax and e-invoicing transactions across over 80 countries this year. It provides capabilities that address the full breadth of a global business’s needs, ensuring companies file accurately on employee, vendor and partner income.