The need for corporations and SMEs to have in place proper cash management practices has never been more pronounced than in recent times according to Oversea-Chinese Banking Corporation Limnited (OCBC Ltd) deputy head of Cash Management Ricky Lim.

Speaking at the inaugural "The Power of Cash Management" seminar jointly hosted by ACCA (The Association of Chartered Certified Accountants) and OCBC Bank (Malaysia) Bhd in Kuala Lumpur on July 21, he said the recent global economic slowdown highlighted why companies cannot afford to ignore cash management solutions in order to survive, remain profitable and even thrive.

“The time is ripe for companies to recognise cash management solutions as not just a “nice-to-have” but a “must-have” business tool that helps promote cost savings and operational efficiencies.

“It is crucial that companies monitor their cash flow effectively in order to ensure survival of their business. Idle funds could very well be sitting in different accounts at different banks due to inefficient cash management practices.

“So, companies need to look at their current financial operations and ask whether they are keenly aware of their total cash positions and forecasts of their cash positions,’ he said.

Sharing the same sentiment, Datuk Mohd Nasir Ahmad, president ACCA Malaysia Advisory Committee, said: “The condition of a company’s cash flow is considered one of the most important indicators of its financial health.

“A well-managed flow of cash – like a strong heart – is usually indicative of a healthy business, while poorly managed cash flow, or a weak heart, can cause problems that affect the entire business.”

“It is a common mistake for people to think in terms of profits at the expense of cash. The reality is that we don’t spend profits in a business – we spend cash. Profitable companies go broke because they had all their money tied up in assets and couldn’t pay their expenses. That shows how critical working capital is to business health,” Mohd Nasir said.

According to Lim, a bank could support a company’s cash flow management by providing a deeper understanding of its transactional needs and the typical challenges faced in their industry, utilising the right solutions not just for current business operations but that are also scalable to support the company’s future growth in a cost-efficient way.

“The Power of Cash Management” seminar also covered topics such as latest trends of cash management practices in Malaysia and Singapore, the importance of implementing effective cash management solutions in managing cash flow and some simple guidelines on how to implement cash management solutions and partner bank selection.

The seminar also featured several case studies focusing on the implementation of cash management solutions for a number of household corporate names in Malaysia.

ACCA and OCBC Bank recently formed a synergistic partnership to enable accountants to master the latest developments in practical cash management in an effort to equip them as even more well-rounded advisors to companies and organisations.

Mohd Nasir explained that the collaboration is part of a professional development effort to ensure accountants are constantly updated on the options and solutions available in the ever-evolving field of cash management.

“We are seeing that organisations are increasingly relying on the expertise of accountants – at all levels of their business – to help them navigate through both good and bad times. With ACCA members acting as trusted advisers to companies across Asia and the world, we fully appreciate the role they can play in strengthening companies’ sustainability and survival under any economic conditions.

“Therefore it is important for our members to have the latest information and solutions in cash management so they are able to advise their organisations more effectively,” he said.

He added that ACCA is pleased to be collaborating with an awarding winning bank such as OCBC on this initiative.