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Revenue is Vanity. Profit is Sanity. Cash Flow is King.

Few financial vital signs are as important as cash flow. Some of the best minds in business have coined cash flow quotes musing about keeping an eye on money coming in and going out of business …

The first modern mention of cash flow dates to 1863 in the United States and was the first accounting of cash receipts and disbursements of its kind. Since then, business magnates and people from all walks of life have held an opinion on the value of cash flow.

Given ongoing inflation, rising interest rates and the worrying thought of a recession, economic growth in Asia-Pacific is expected to slow down amid tightening global conditions, inflationary pressures, and recession fears. The Monetary Authority of Singapore predicts that economic growth will slow ‘below trend’ in 2023, weighed down by key external-facing sectors. The uncertainty surrounding this possibility elevates the need for Finance and Accounting (F&A) to focus on cash flow and working capital priorities.

CFOs worldwide can be expected to ask organisations in 2023 to optimise and maximize cash across the enterprise. In turn, this demand requires F&A professionals to obtain clearer visibility into where cash is originating and exiting the business. A recent global survey of some 1,500 Finance and Accounting professionals suggests a lack of significant confidence in cash flow visibility. In Singapore, less than 4% of F&A professionals surveyed are completely confident over their visibility over cash.

This despite nearly two-thirds of the survey respondents saying that understanding cash flow in real time has become more important in 2023. One of the biggest challenges they face is being able to provide accurate data quick enough to help the organisation respond to market changes.

The survey also found that more than half are concerned that customers will have less income to spend, which will affect sales and revenue; while about half are worried that their organisations will face higher costs.

To mitigate these concerns, F&A professionals will need to seek better understanding of the timing of accounts receivable to make speedier and more productive interventions and invest in automated processes and software to assist strategic working capital aims. Close to half of Singapore respondents plan to implement or scale working capital automation solutions in 2023.

Last word? Cash flow is a critically vital measure across all industries and businesses worldwide. And come 2023, more so than ever, it’s time to think inside the box!