From new payment rails to the challenges of legacy infrastructure, there are plenty of issues keeping treasurers awake at night. Fortunately, cash management solutions can help by addressing three key points of intersection, explains Leo Gil, VP of Product at Bottomline.

The challenges that treasurers face in today’s environment are nothing if not extensive. As Leo Gil, VP of Product at Bottomline observes, “It’s the economy. It’s legacy infrastructure. Digital transformation. New payment rails. A renewed focus on liquidity. If you’re a corporate treasurer these days it’s, well, everything.”

In fact, when researching ‘things that keep treasurers and finance leaders awake at night,’ it’s clear that around a dozen different issues arguably fit the bill. “As the executive in charge of finances, treasurers are used to these types of challenges – but the pressure right now is admittedly greater than it has been since the pandemic,” he says. “Fortunately, cash management solutions are up to the task, and feature a set of products that can keep pace with almost anything the financial world will serve up.”

According to Gil, these products allow a ‘back to basics’ mindset, with a focus on usability and quick implementation across the company. “Under the ‘back to basics’ heading, the key is to ensure cash managers and treasurers have a centralised view of their cash positions in real time, combined with accounts payable (AP) and accounts receivable (AR) data, in an automated way.” he says. “With a centralised view of their data, cash management solutions additionally can empower treasurers by providing solutions for cash forecasting, automated reconciliation and a better way to manage payments.”

At their core, cash management solutions are designed to help companies view their data via a centralised platform that can automate transparency and enable financial reporting. “As such, I would argue that an effective product suite and reliable solutions are built for this moment in time.”

Three intersections

There are three distinct points at which cash management solutions and the current economic conditions intersect, making life more manageable for the executives that depend on them:

1. Global cash visibility.

With the current economic and market conditions, especially with the risks and exposures in the banking sector, companies are looking to diversify their banking relationships to protect their cash and financial operations, which increases the complexity of managing their cash positions.

Through bank and local network connectivity, cash management solutions can provide treasurers with a single view of their cash positions globally and in real-time. This reduces the complexity of managing multiple bank accounts across geographies, subsidiaries, and currencies.

2. Centralise business payments.

Payments hubs allow companies to centralise and manage all the organisation’s business payments, and should provide a seamless payment experience to finance users regardless of the payment type or source.

In a nutshell, a payments hub can transform payments across countries and types, process those payments, secure them, and connect them to banks and external payment platforms like SWIFT, Bacs, SEPA and Nacha.

“In my experience, companies that need a payments hub are ones that have been logging into multiple banking portals to initiate payments and check their status, then extract that information into reports and spreadsheets to reconcile against payables and receivables in their ERPs,” Gil reflects. “This approach comes with a lot of pain points, not just because it’s inefficient and error-prone, but also because it prevents companies from closing their books faster.”

3. Cash lifecycle and working capital optimisation.

With the centralisation of cash positions and payments, cash management solutions can also extend beyond daily financial operations. This can help treasurers manage liquidity and the entire cash lifecycle, enabling them to make data-driven decisions to optimise working capital.

The key enablers and capabilities for cash lifecycle management are cash forecasting and reconciliation, which as Gil observes “are critical operational tasks that many finance teams struggle to execute efficiently because for the most part, these are still manual and fragmented processes inside organisations.”

With the automation of the cash lifecycle, and a focus on working capital optimisation, cash management solutions have also expanded into other treasury functions, including the management of financial instruments and even trade finance. This empowers treasurers to advise their organisations about how to respond to challenges and opportunities – for example, how and where to move funds across subsidiaries, or acquire external debt.

Future-proofing cash management operations

As the role of the corporate treasurer continues to evolve from an operational role to a more strategic player within the organisation, cash management solutions can be a powerful tool in helping treasurers respond to ever greater demands.

As Gil notes, the right solutions “can quickly and easily automate the business payments and cash lifecycle process without the overhead, and can sometimes simply be integrated into large scale enterprise-wide solutions as ERPs and treasury management systems.”