Treasury: forecasting cash needs ups investment yields.

Companies that are able to forecast their cash needs realize significantly greater investment yields than firms that have no forecasting methodology, according to Treasury Strategies' 2004 Corporate Liquidity Survey. The study quantified the benefits of cash forecasting, confirming a long-held investment belief regarding the value of proper cash forecasting techniques.

The survey found that firms that forecast cash realized 30 basis points of added portfolio return over those that do not. "Developing a good forecasting program is difficult for most firms, but our findings clearly illustrate how valuable it can be," says David Robertson, a partner of Treasury Strategies. "A corporate investor with a portfolio of $50 million would gain $150,000 of added return per year."

The 2004 Corporate Liquidity Survey was conducted to study the portfolio structure and investment habits of middle market and large corporations. The study reveals that 50 percent of all firms use a formalized forecasting model or process, which produces superior investment returns.

In other findings, only two-thirds of all companies surveyed have a documented investment policy, and only half benchmark their portfolio performance against external standards. Treasury Strategies believes both practices would be important components of a response to The Sarbanes-Oxley Act.