2025 Public Sector Perspectives

• Cash Forecasting Challenges: Despite efforts to centralize financial processes, SOE group treasuries often struggle with cash forecasting at group level. This limitation puts extra pressure on treasurers and cash managers to maintain a clear picture of cash flows and working capital across the organization. • Exchange Rate Volatility and Geopolitical Uncertainty: Sudden exchange rate shifts can impact profitability and complicate forecasting. Additionally, geopolitical and logistical disruptions to supply chains are becoming more common, adding further uncertainty. • Trapped Cash: Unlocking trapped cash has become increasingly important for SOEs operating in countries with complex geopolitical and economic environments, especially in emerging markets. Regulatory restrictions on fund repatriation and foreign currency exchange are key contributors to trapped cash accumulation. Overcoming challenges with effective solutions There are several specific solutions that can help to address the challenges described above, including: • Enhanced Risk Management: To mitigate the impact of sudden exchange rate fluctuations, companies can implement hedging strategies, manage currency exposure effectively, and use tools like forward contracts to stabilize cash flows. • Cash Pooling: By consolidating cash frommultiple subsidiaries into a central account, companies can optimize liquidity, ensuring funds are available where they are needed most. • Supply Chain Management: Global disruptions can hinder order fulfillment. Solutions such as supply chain financing and inventory financing can improve resilience, reduce disruptions, and support stable cash flows. • Streamlining Payment Processes: Delays in receiving international payments can disrupt cash flow. They are often caused by the use of multiple banking systems and complications that result from local regulations. To address this, SOEs can adopt payor identification solutions, funds tracking tools, and digital methods to expedite and streamline receivables collection. • Unlocking Trapped Cash: Beyond standard repatriation methods like dividends, shareholder loans, and royalties, several strategies can reduce trapped cash and improve liquidity. These include setting up netting, procurement, or re-invoicing centers to bridge unrestricted and restricted markets. 60 Going Global: Best Practices for State-Owned Enterprises