The 5 Competitive Advantages of Real-Time Treasury

FinLync | February 14, 2022

A desire for real-time access has become the norm – consumers expect things faster and want to be able to track the progress of everything in their daily lives, from their pizza orders to their medical records.  

So, there is no reason treasury should not expect the same.  

Real-time treasury gathers data from all sources, reducing manual labor, decreasing errors and improving the decision-making abilities of treasury and other business areas for day-to-day operations, forecasting and more. 

60% of treasurers believe their organizations would benefit from faster and real-time payments.
AFP 2019 Electronic Payments Survey

Made possible by bank APIs, real-time data for cash management, payments reconciliation and forecasting better places treasury to be seen as an advisory role, empowering you to: 

  • Brief the CFO on scenario-specific impacts 
  • Determine appropriate risk management actions as needed 
  • Track solvency 

However, some organizations have been slow to adopt this approach. But, the need for treasury to support real-time operations and deliver accurate information to shareholders, business units and other internal stakeholders is not going away. Treasurers need to embrace digital transformation or risk getting left behind. 

The organizations that have leaned into real-time treasury are at an advantage and are reaping the benefits across cash, payments, same-day reconciliation, trade and accounts.

Free eBook: The Essential Guide to Real-Time Treasury

Cash 

Investing in real-time treasury allows teams to work off of an up-to-the-minute available balance – not ledger balances – that they can refresh anytime, as frequently as they want.  

And, instead of being beholden to the bank’s schedule, you can obtain balances on-demand whenever you need them. You no longer need to get stuck chasing down missing statements, giving you more time to make informed, agile, accurate and timely decisions. 

  • Borrow less & invest more 
  • Fund business & subsidiaries on time, whenever you need 
  • Decrease charges from overdrawn accounts
  • Make better use of employee time & talent 

Payments 

To ensure safer payment processing, treasury can view the exact account balance before initiation and pre-validate payment information and beneficiary bank details ahead of transmission. From there, payments can be made immediately with instant confirmation of successful execution, end-to-end tracking and automatic rejection alerts with rationale. 

You will always know your real-time account balance and if/when your payment has reached the bank, allowing you to: 

  • Eliminate payment-related interruptions to business operations 
  • Quickly react to failed or potentially fraudulent payments  
  • Instantly execute payments for urgent settlements 
  • Immediately concentrate cash 
  • Reduce bank fees 
  • Minimize reputational risk 

Nearly 80% of treasury teams are going to have to focus on managing cash flow, working capital and liquidity so they can assist their organizations in mitigating future risks.
2021 AFP Risk Survey

Same-day reconciliation 

With better, more comprehensive data available on-demand, it is easier and faster than ever to get through the reconciliation/cash application process, enabling you to near-instantaneously clear customer invoices and release credit limits. And there is no risk of lost files or missing bank transactions.  

Same-day reconciliation enabled by real-time treasury can: 

  • Positively impact revenue thanks to increased capacity for sales orders 
  • Save time in the accounting close process 
  • Reduce costs from goods blocked in warehouses 
  • Increase customer satisfaction by delivering products/services faster  
  • Uncover fraud as soon as it occurs

Trade 

For trade, real-time treasury enhances both receivables financing and supplier financing, providing an additional source of cash when needed (e.g., instant financing for internal business and supply chain partners) and enabling the tracking and monitoring of financing limits and fees. 

Enhanced, real-time trade results in:  

  • Reduced banking and interest fees 
  • Lower cost funding for business activities  
  • Freed up cash for investments 
  • Increased awareness of risk exposure 

Free eBook: The Essential Guide to Real-Time Treasury

Accounts 

With real-time visibility, you have an accurate picture of the available balances and statuses of all global bank accounts, both active and closed. Additionally, visibility into user entitlements enables you to make changes to users with non-compliant employee bank products and limits, and you can react to changes in user employment status by instantly activating and deactivating user entitlements. 

This detailed view means treasury can: 

  • Easily uncover fraudulently opened or unknown accounts 
  • Reduce bank fees by closing dormant accounts 
  • Decrease the risk of fraud resulting from non-compliant users 

Benefits Beyond Treasury

Real-time treasury is the present and the future – soon to be the new normal. Historically, one of the business functions to benefit most from emerging technology, treasury can be one of the last to adopt it. But bank APIs are the future of treasury, and the visibility they provide is invaluable, not just to treasury but also to the rest of the finance function and other areas of the business.  

For the CFO, instant access to cash balance data can support strategic business actions and provide a significant competitive advantage.  

For the treasurer and assistant treasurer, real-time treasury capabilities can improve KPIs, bolster the department’s ability to recruit new talent and eliminate the hassle of bank file management.  

For the broader treasury team, automatic same-day reconciliation eases operations, and richer data leads to faster issue resolution.  

For IT, bank APIs are more secure and require less setup and maintenance. 

All in all, the benefits of real-time treasury for cash, payments, same-day reconciliation, trade and accounts are clear. But bank APIs can have a positive impact beyond just treasury and increase the success of the business as a whole.  

FinLync Essential Guide to Real-Time Treasury