Ask a treasurer how much cash the business has, and they should be able to give you an accurate answer fairly quickly. But take things a step further and ask how much of it can be put to work, for how long, and at what risk, and you’re liable to stir up a bit of hesitation.
Some of the money may be needed by a subsidiary tomorrow. A customer payment might be running late, while a supplier invoice in another currency is approaching its due date. All perfectly normal in the often messy running of a modern-day business. Far too often, the information needed to make sense of it all exists somewhere in the business. But just because something exists doesn’t make it easy to find or readily available to use. Worse yet, by the time the pieces come together, it is all too possible that the numbers are no longer up to date and any decisions based on them are liable to be misguided.
This is the problem at the heart of a new whitepaper published by FIS titled The Unified Treasury. As treasury takes on a greater role in decisions about investment, funding, and financial resilience, the paper argues that its ability to contribute meaningfully depends increasingly more on how well things like enterprise data, payments, or risk information are able to connect and talk to one another.
A cash balance may be useful to give treasury a starting point, but the veracity of the decisions that follow depends just as much on what is due to come in, what is about to go out, and how reliably either will happen. In most organisations, that valuable context lives in enterprise resource planning (ERP) systems, where payables, receivables, and intercompany flows can offer an earlier indication of cash needs than a bank statement.
Getting it into the hands of the people making liquidity decisions is another matter. When teams rely on periodic reports or manual extracts, part of the working day disappears into assembling a picture that the business expects them to interpret.
And, of course, payments add another layer. A transaction that has already been approved, or even one that is currently in the process of being prepared, can, if leveraged well, provide a more up-to-date picture of future funding requirements, even though the account balance has yet to change. A payment held up along the way may warrant attention too, particularly if its delay affects other obligations.
All of this is to say that knowing what is moving through the payment process can make the difference between being able to anticipate a cash requirement before it is due to leave the account. Further, as faster settlement becomes the norm, the window available for responding to these pressures is narrowing as well. The pressure to catch up, therefore, is quite real.
The information that banks provide when serving their corporate clients becomes more useful when it can feed into the client’s daily decisions alongside its own data. How easily that happens is part of the value of the relationship.
The FIS whitepaper explores how an array of digital tools like application programming interfaces (APIs), ERP connectivity, and cloud-based treasury platforms can support these connections. Its broader argument, however, concerns how treasury works once the information is available.
A funding decision, for example, is going to carry an interest rate exposure. Moving cash between banks changes counterparty concentration while paying an overseas supplier merges a number of currency and liquidity considerations. Looking at each in a separate tool – or worse, a separate spreadsheet – leaves treasury with the unenviable job of reconciling it all before anyone is properly empowered to act.
The paper sets out a maturity journey towards intelligent treasury, giving readers a framework for assessing their own position and what could come next. When the business asks what it can do with its cash, how much work is needed before treasury can answer?
Read FIS’s The Unified Treasury whitepaper to explore the maturity model and what a more connected treasury could look like for your organisation. Access the whitepaper here.
