It’s an unfortunate double whammy: Cash flow at many companies has both declined and become more difficult to forecast. Recent research from Hackett Group and the National Association of Corporate Treasurers found that just over one in five companies is able to develop a forecast of cash flow two to three months out that’s accurate to within five percent. About one-third of forecasts are accurate to within 10 percent and one quarter to within 15 percent.

Why the less-than-stellar results? To start, sales have become more difficult to predict, as both business and consumer customers have cut purchases and put pressure on prices. On top of that, instability is growing among both customers and suppliers, the study found. One result is a ballooning number of late payments; nearly half of the companies responding said that between 11 and 30 percent of their receivables were past due. more

Corporate treasurers whose companies use over-the-counter (OTC) derivatives to hedge interest rate, currency, or commodity exposures will want to look closely at reforms to the market now under consideration in Washington. A report issued by the Department of the Treasury titled “Financial Regulatory Reform: A New Foundation: Rebuilding Financial Supervision and Regulation,” contains a number of proposed changes to the U.S. financial regulatory system. Among them is “comprehensive regulation of all over-the-counter derivatives.”

Although it seems to have gone pretty much unnoticed among corporate financial types, the proposals would affect more than just banks and financial institutions, says Jiro Okochi, chief executive officer and cofounder of Reval.com, Inc., a provider of derivative risk management and hedge accounting solutions. “Awareness seems low,” Okochi says. “Corporations think it’s all about banks and credit default swaps.” more

In theory, management’s decision to buy back a company’s stock should boost the share price. After all, a buyback means fewer shares of stock on the market and higher earnings per share, both of which should lead to a higher stock price. more

Changes could impact corporate investors.

Last month, SEC Commissioner Luis Aguilar outlined proposed changes to Rule 2a-7, which regulates money market funds. These could have a big impact on corporate America, given that about four in five companies use money market funds as a cash management tool, according to the SEC.

The impetus behind the proposed changes is, not surprisingly, a desire to prevent a recurrence of the Reserve Primary Fund. Last September, the Fund “broke the buck,” with the net asset value of its shares falling to 97 cents. Management then instituted a subsequent 7-day freeze on investor redemptions. more

Treasurers and CFOs know that the extent to which creditors’ rights are protected in different countries affects just how much and to whom lenders are willing to extend credit. Indeed, a recent study, “Creditor Rights, Enforcement, and Bank Loans,” by Kee-Hong Bae at York University and Vidhan Goyal at the Hong Kong University of Science and Technology, illustrates the dramatic impact creditor protection can have. The study appeared in the April 2009 issue of the Journal of Finance.

As Bae and Goyal note, in countries in which creditor rights are weak or poorly enforced, banks can be expected to charge higher interest rates, lend less, and/or shorten loan maturities. To determine how much of an impact creditor rights have, the duo examined some 63,000 loans issued between 1994 and 2003 to firms in 48 countries. more