Kyriba Data Reveals CFO Readiness in Japan After Price Hike
Reaction times from companies vary: sometimes slow is the way to go, and other times, speed is absolutely of the essence.
Kyriba, a software development company specialising in liquidity performance, has revealed new research that highlights a readiness gap between decision making and decisive action.
Bank of Japan sparks insight
The research comes as the Bank of Japan raises its short term policy rates to 1% from 0.75%with more raises signalled. The hike is a 31-year high.
According to a Reuters survey, half of Japanese firms are experiencing negative business impact due to the sharp incline in rates.
Reuters also reports that the bank has signalled readiness to tighten due to price pressure that has resulted from the impact on the energy market from ongoing conflict in the Middle East.
According to its research, the higher borrowing costs are not only discouraging capital investment, but also hurting bottom lines.
Kyriba surveyed 101 CFOs among other senior decision makers in Japan, and the results highlight a spotlighted focus on key risks relating to ongoing policy decision.
The Kyriba report signals that 63.4% are concerned about tariffs and interest rates. Kyriba also note that this sits next to other top concerns such as inflation – with 78.2% of respondents marking this as a concern, alongside 69.3% of respondents flagging political instability as a concern also.
Yoko Otsu, Managing Director, Japan, Kyriba, says: "Japanese CFOs are more focused on currency and rate risk than at any point in recent memory.
“What our research shows is that awareness alone isn't enough. Most organisations need days, sometimes a week, to translate that awareness into action. In a market moving as fast as this one, that gap has a cost."
Concerns on reaction time
Kyriba notes that there is a gap between readiness and the ability to act, according to Japanese CFOs.
The report highlights that less than a fifth (19.8%) of those surveyed could quantify the financial implications of an emerging external risk such as FX or rate shock, in real time.
Only 45.5% rate their organisation as having a high level of preparedness. Just over a quarter (25.7%) indicated a high level of confidence in their real-time ability to analyse exposure across liquidity, cash and working capital.
This directly translates to a gap in cost. Around 78% of Japanese CFOs surveyed said that as a result of inadequate risk visibility/ a delayed response to emerging risk, the organisation experienced a “material financial impact” in the last year.
Only 15.8% of respondents can adjust financial strategy once a risk is identified on the same day. Kyriba says that the majority of CFOs need anywhere from two days to a week to adequately respond.
Kyriba’s research pays much-needed attention to the conversation about readiness: most finance teams are not fitted with the tools needed to navigate the current risk environment at pace.
