Various studies point to increased demand for real-time insights into cash positions to improve the accuracy of cash forecasting. Instant treasury was also the subject of a panel discussion at last month’s SIBOS event, where representatives of Deutsche Bank, Société Générale and Amazon explored why corporates are so keen to know where their liquidity is at all times.
The Head of Treasury at a major energy services company observes that having visibility of company liquidity is critical. “It enables us to take liquidity management decisions, fund various disbursements, and invest surplus cash,” he explains. “It also helps in understanding and managing our counterparty risk.”
He adds that high inflation and high interest rates reinforce the importance of liquidity management, but there are a number of challenges to accessing on-demand treasury information.
“These include the high cost of intra-day reporting using global standards, the need to access multiple bank proprietary tools, and lack of bank capabilities in emerging markets,” he says.
Most corporates recognise cash visibility is critical for fulfilling core treasury and finance functions such as cash positioning and forecasting, reconciliation and exposure management agrees Jon Paquette, EVP of Solutions & Product Strategy at TIS.
“Many treasury technology vendors have adopted technologies (such as cloud hosting models, SaaS architecture models, plug-and-play multi-bank/multi-protocol connectivity, and format translation) that make foundational cash visibility achievable,” he says. “We expect the number of companies who achieve daily visibility – and then jump to intraday visibility – to grow substantially as APIs and other industry innovations become more prominent.”
Non-stop liquidity risk management is essential and becomes even more critical in situations involving high debt/funding facilities or the need to execute urgent payments.
Global liquidity centralisation initiatives continue to be a top priority for treasury departments, suggests Steve Wiley, Vice-President Treasury Solutions at FIS. “We see an increase in demand for treasury technology which automates the aggregation of global bank balances for reporting and decision-making purposes,” he says.
Improved liquidity visibility and forecasting capabilities can be achieved through bank interconnectivity according to Philipp Leitner, co-CTO and Managing Director at ION Treasury.
“By connecting bank statement information globally – often through a single platform – a closer to real-time overview of liquidity can be achieved, which vastly improves the time to onboard new banks and creates synergies in the process,” he adds.
While technology offerings from ERP and TMS providers (as well as banking partners) are rapidly evolving, there is still a long way to go before real-time payments and reporting functions become commonplace. Even as APIs become more mainstream there are still vast differences in their capabilities and the configurations required to support them.
“For companies with dozens of banking partners, it is common for separate API requirements to be established across each bank and some banks may only support APIs for information reporting, while others may offer both payments and reporting,” says Paquette.
On the bank side, the financial services necessary for liquidity management will have to be real-time and standardised to allow multi-bank organisations to benefit from them. Standardisation will be crucial in optimising costs and facilitating the adoption of these new services.
That is the view of Eric Aillet, Principal Product Manager, enterprise solutions at Finastra, who notes most corporates already have treasury management systems in place to provide control and support decision making for end-of-day management.
“The information is there but getting it from disparate systems can be difficult and expensive,” says Andrew Foulds, Director of Product Management for high value market infrastructures at Fiserv. “Virtual account management is one way to manage these challenges.”