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Best Practices

Instant Treasury: Definition and Basics

Branson Low | September 14, 2022


Corporate treasury has been under a constant deluge of change over the last several years, facing a plethora of disruptions spanning everything from fluctuating markets and halted supply chains to internal operation issues and that mainstay, technology. And with each of these disruptive forces, treasury has had to pivot – “on a dime” as it’s often described — to ensure their company’s continued good standing and financial position.

But with each of these disruptive forces, have also come new opportunities. Though some of these opportunities may require the longer view, there’s one area for treasury where global opportunity is flush with promise (and cash visibility) in the near term:  new technology.

You’ve likely heard that before about new technology, but in this case all those disruptions in so many areas of our business these last several years has resulted in the launch of disruptive technologies that are driving positive changes for corporate treasuries.

These are not, by any means, the technologies of old. And though they are called “disruptive” the truth is that moniker is more because they are faster, less expensive, easier to use, and have greater global impact, breaking many of the barriers — financial and otherwise — inherent in the kinds of legacy technology many of us grew up with in the corporate world and have been working with for years.

You are already using these “disruptive” technologies in your personal lives – every time you book a hotel or airline ticket, order Uber or Door Dash, or check your bank balance, you’re engaging with these new technologies.  Now, it’s the corporate world’s turn and corporate treasury is exploding with opportunities.

Case in point: the availability of Instant Treasury.

Living in an Instant Treasury World

In a world of instant everything, there are key areas like payments that grab all the attention. Rightly so because anything effecting cash visibility and liquidity should be at the forefront.

But what if you could extend that “instant everything” to include pretty much ALL of the critical treasury functions? Well, now you can — and much more easily than you ever thought possible.

Instant treasury is a move away from traditional schedule-based account reporting activities towards an on-demand model. This new model provides benefits that traditional models simply don’t allow for so easily.

With instant treasury, the data is available 24/7/365.  So treasury now becomes the driver with their data and the corresponding decisions that need to be made to use it effectively. No more waiting when critical financial decisions are on the line for your business.

Instant treasury provides benefits across all areas of the business. From the CFO who can gain instant access to cash balance data that supports strategic business actions to the treasurer and assistant treasurer who can improve KPIs and eliminate the hassle of bank file management to the broader treasury team, who get automatic same-day reconciliation that eases operations, and provides richer data that leads to faster issue resolution, the benefits of instant real-time treasury for cash, payments, same-day reconciliation, trade and accounts are clear.

Turning the "scheduled" world on its ear

Imagine as a treasurer that you could eliminate schedule-based account reporting activities and get all your information in real-time and on-demand?

No more dealing with prior day bank statements or end of day reporting and processing. Instead, the data you need is available 24/7/365 and its completely up-to-date as of when you request it. You go from waiting for data to be able to take an action to having immediately actionable real-time data, so now you are working on your schedule, not someone else’s with the most current data available

Or have the ability to make instant payments and make borrowing more efficient because the data to do that is readily available to you?

So now you have payments that are faster than a wire, inexpensive like an ACH, that not only give you a new level of faster reconciliation but are also traceable throughout every step of the payment process with confirmation within minutes from receiving bank, leading to better, more accurate cash flow management.

Or be able to have a single, standardized endpoint that connects all your global banks and PSPs directly to your existing systems?

No data mapping to different bank messaging formats or worrying about what varying data standards to use like MT or ISO. And, you can switch on new payment types fasts.

What would your treasury look like if you could get even one of those capabilities? More importantly, what would your company’s liquidity look like?

Instant Treasury, using Apps and bank API technology, provides an ease of data connection, richer, more accurate data collection and the ability to take immediate action unheard of with older technology, freeing treasury to take not only improved daily actions but also to make better informed, strategic decisions for their business.

The new must have: cash visibility across global accounts  

Getting up-to-date information about cash availability across all global accounts is the new “must have” for strategic thinking corporate treasurers. But all too often, treasurers can’t get the information they need, when they need it because of limitations within their systems which then cascades down into processes and hamstrings their efforts to provide an accurate picture of cash availability.  In most cases, Treasurers are bound by third party systems, legacy technology or manual processes that inhibit their ability to get this clear picture.

Instant treasury is one way to circumvent these challenges, while creating new opportunities for treasurers and banks to gain an unprecedented level of access, via APIs, to strategically manage their data, shift their business practices and move their liquidity management capabilities into a new realm.

Because instant treasury uses Apps and bank APIs to create real-time, on-demand results with your key financial data, treasurers become untethered from the processes and functions that have held them back in terms of time spent performing functions with stale data.

Read the 2022 Corporate Bank API Power Rankings Report

“A continuous real-time view on our cash position helps us to meet not just our daily cash management requirements but also our liquidity management demands,” said Sharon Wang, treasury director at Alibaba during a Sibos 2021 panel. “Credit limits can be freed up more quickly, enabling more business without adding risk.”

How do apps & bank APIs create instant treasury capabilities?

Apps embedded directly into the ERP leapfrog development and implementation obstacles to increase the value of your ERP while reducing the number of systems needed to run treasury, fast. These Apps eliminate connectivity challenges by connecting to bank APIs, automatically matching incoming data to internal formats, and transforms an otherwise complex IT challenge into a simple plug-and-play installation without maintenance burdens.

This then enables companies to access all their bank data instantly—at the click of a button – turning what used to be a scheduled business model used by most treasuries into an instant, real-time on-demand business model.

The bank API establishes a direct connection between the systems you work with—such as the core ERP system—and your bank. You can use bank APIs for balances, transactions, payment initiation, payment status, account entitlements, trade finance and more and it is a digital channel that offers the fastest and most secure way to connect to banks. By facilitating direct connectivity, APIs remove the need for intermediaries between the corporate and their bank(s). That means processes and workflows can become faster and more independent.

Treasurers can now make requests on-demand, in real-time and receive immediate responses. The combination of instant, real-time connectivity and rich data allows companies to carry out enhanced analysis, respond in real-time to current events, and support business growth.

The benefits of bank APIs include:

  • Instant real-time treasury. Bank APIs allow you to replace prior day statements with up-to the minute cash balances, get rid of bank files and benefit from same-day reconciliation and instant confirmation of payments, whenever you need it. All these things help you make faster and more informed decisions, based on the most accurate and up-to-date information.
  • Faster onboarding and development. Bank APIs enable banks to onboard clients faster. They can also roll out new products and offerings more rapidly—meaning treasurers can access the benefits of any new developments much sooner.
  • Automation of manual and repetitive tasks. Treasury teams can visualize if they have enough cash before releasing a payment, while bank API solutions embedded inside the ERP reduce the need to access multiple systems.
  • Cost reduction. Bank APIs eliminate the need for intermediaries to perform basic functions, like searching for a specific check or requesting specific slices of data—reducing the costs associated with these tasks. They also give treasurers increased transparency over their information in real-time, meaning there is less need to contact third-party providers, or even the bank.
  • Risk reduction. With fewer people coming into contact with transaction, fewer intermediaries between a company and their banks, the risk of fraud is also reduced. And, because APIs are a technology that makes the data and the transfer channel one in the same, they’re not vulnerable to malware injection attacks or data manipulation like legacy connectivity options.

How bank API aggregators have removed the API standardization issue for instant treasury

Premier bank API aggregators automatically normalize and standardize data, so you don’t have to. Each bank has its own data standards. Every API stream – from transactions to payments and trade finance– requires its own set of instructions running into hundreds of pages each. Building just one of these API connections can take years of work by dedicated IT specialists. Building multiple connections for multiple banks absorbs time and budget most companies are naturally reluctant to make. Bank API aggregators leapfrog development complexity, automatically normalizing all incoming data from your banks into one single, standardized format that is simple to connect to.

Additionally, effective bank API aggregators:

Deliver greater security. Any bank API must run the gauntlet of corporate IT security standards – no treasury can connect to a bank API without IT approval. Before acceptance, the bank API must meet your company’s rigorous security protocols, such as the ability to sign the JSON web token with an X509 certificate. An effective bank API aggregator delivers prebuilt connections with the most advanced security protocols, including end-to-end encryption of data at rest and in motion, accelerating corporate IT approval.

Provide seamless integration. Bank data is only as valuable as its utility, and utility means direct integration with existing corporate systems like ERPs and data lakes. These integrations can be complicated – but without them, corporations and their treasury teams cannot extract the full value of their incoming bank data. Effective bank API aggregators design their solution to easily integrate with existing systems, with end points that are simply plug-and-play, so you get all the bank data you need in real-time, without the connection headaches.

Make their solution maintenance-free. There’s no time for broken bank connections in today’s treasury organizations. Finance teams are tested by mounting expectations and decreasing headcount; having to fix bank connections hijacks treasury’s already-limited time. An effective bank API aggregator takes on all bank API maintenance, including future API updates from your financial institutions, enabling treasury to focus on their most valuable strategic work.

Won't implementing apps & bank APIs cause disruption?

New treasury technology should bring new opportunities, not new headaches. As a treasurer, you know the legacy technology drill: Draft requirements, consult with IT, cope with lengthy budget cycles, then sit and wait. Implementing legacy treasury technology is slow, expensive and a burden on already strained resources that would be better spent on day-to-day operations and forward-thinking initiatives. Too often, after all the wait and worry, the resulting implementation is neither what was promised nor expected. 

The good news is that getting to instant treasury is a pretty painless process because you can skip the development – as well as the traditional implementation. Effective bank connections are prebuilt and pretested using APIs for plug-and-play convenience and speed. Instead of enduring a nine- to 12-month black hole of development delays and costs, you get you up and running in no time at all.

When coupled with apps that are directly embedded into your system of record – the ERP –there are no installation costs or time delays, and you’re able to use your ERP logins and authorizations without duplication or disruption. These apps access data directly – improving security while achieving real-time visibility, easily. You gain total data integration between incoming rich bank data and your system’s data, resulting in one reliable single source of truth — and easy reporting and analysis.


Treasury as the driver of financial decisions - on their terms

Unlike new technologies of the past, unlocking instant treasury where you can have the data you need, when you need and in its most accurate state, is available today with minimal effort. The evolution of embedded apps and bank API technology have now made it possible for treasury to work within a business model that is based exclusively on their business needs within a timeframe that meets those needs. No waiting for the most current data; no inability to immediately take action when market conditions require it; no loss of better funding or finance opportunities. Treasury becomes the driver of financial decisions on their terms, no-one else’s.

Instant treasury is not a pipedream or a future state. It’s available now for those who want the kind of access and actionable data that improves their company’s financial management capabilities – today.