Global Cash Visibility: An Engine for Strategic Growth
Corporate treasurers that achieve global oversight of their liquidity positions can reap significant cost and time savings, as well as improve risk management.
Corporate treasurers that achieve global oversight of their liquidity positions can reap significant cost and time savings, as well as improve risk management.
The daily lives of corporate treasurers have become increasingly complex due to the volatile economic environment and ever more fragmented technology stacks. Today, treasurers are under greater pressure to respond quickly to fast-moving market changes and provide actionable business insights to the board. To make same-day cash decisions and improve longer-term forecasting, they need an almost real-time grasp of their global liquidity positions.
However, often their ability to perform strategic cash analysis is impeded as they wait for the data to flow from treasury and finance teams across the globe. Many are still spending on average three hours a day on manual processes, such as gathering balances from numerous bank accounts and teams operating on different time zones, accessing up-to-date exchange rates, and analyzing the current day’s movements and expected in/outflows. By the time the data is gathered manually, it’s already out of date.
Companies with slow and error-prone manual processes are losing their competitive advantage because critical decisions, such as short-term investments or due diligence checks, are being delayed by hours of labor-intensive administrative work. In volatile markets, delayed decisions due to poor cash visibility could mean missing out on opportunities, failing to respond to threats, or incurring costly overdraft fees if there isn’t sufficient liquidity in an account to make payments.
Today, most cash management activities can be automated and streamlined. The benefits of automating reconciliation processes and achieving global oversight of liquidity positions include significant cost and time savings, more accurate decision-making, and better risk management.
For example, a treasurer needs to know where their cash is and whether the position aligns with treasury policy, which may restrict the amount of cash that can be held at a bank depending on its credit rating. Today, treasurers are having frequent conversations with their chief financial officers (CFOs) about managing the group-wide risk policy.
Global cash visibility data doesn’t just help the treasurer and CFO make investment and risk management decisions; it also impacts the accuracy of a company’s financial statements. Companies need to feed bank statement data into their enterprise resource planning (ERP) systems to be able to reconcile on time and keep company information up to date.
Automated importing of bank statements for reconciliation purposes also gives greater confidence to auditors. Plus, many investors prefer to finance organizations that can deliver strategic insights and data more frequently.
While not all companies require true real-time global cash visibility, with many satisfied with the current frequency of SWIFT MT account balance messages, getting 100% cash visibility even every 15 minutes provides a fuller picture to enable strategic decisions.
Just having the ability to automatically group MT940 and MT942 statement data, and analyze it by different banks, accounts, countries and entities, will provide greater levels of insight and control over global liquidity. Automated statement retrieval will also eliminate the need for treasury team members to manually pull data themselves, saving time on key treasury processes and improving productivity.
It’s estimated that a treasury team can save on average three hours a day by cutting out repetitive manual data entry from their workload. Plus, the team can meet strict security requirements to mitigate risk against both fraud and error.
Importantly, treasurers need to assemble the data in one place and have a single source of truth. Some organizations say that they have 100% cash visibility, but they must log into 20 different banking portals to retrieve the information. To see material improvement, treasurers need an automated data flow feeding into one centralized location.
In addition, most large companies will have more than one ERP or treasury management system (TMS), or multiple versions. It is a huge task to get the data into a format ingestible for each system. One option is to use third-party provider to pull the data into one place and convert it into a consumable format for different back-office systems.
Achieving global cash visibility doesn’t take long. Banks can send the information directly to a third-party provider, which can set up a portal for incoming bank statements that the treasury and finance teams can access from a single dashboard.
To drive even greater efficiency, many treasurers are now looking to deploy automated cash sweeping, which is a useful tool for companies with numerous banking relationships and accounts. This allows them to implement a rule that automatically sweeps cash into a higher interest account if the cash balance reaches a certain amount in a current account, for example.
The benefit of automated sweeping is that it saves time and improves cash utilization. In most treasuries, a team member will need to go into the internet banking portal or treasury management system to manually request a transfer from one bank to another. Automated sweeping removes the manual effort, particularly in terms of decision-making around when to make transfers, which allows a treasurer to move money around daily and achieve better interest rates on excess cash.
In today’s operating environment, where business decisions must be made quickly and expertly, global cash visibility is a critical tool for treasurers to deliver strategic insights to inform those decisions. While achieving visibility once a month might have sufficed a few years ago, treasurers now need that actionable information on an intraday basis.
If you don’t have the global cash visibility you need today, here are three steps to get you closer:
Treasurers who embrace global cash visibility today won’t just save time they’ll be the ones steering their businesses toward smarter, faster, and more resilient growth in the future.