Instant Treasury for an Instant World

Published  5 MIN READ

How can real-time account information help make life simpler for corporate treasurers? Wim Raymaekers, Global Head of Corporates Strategy, SWIFT, explains.

Having up-to-date information about global cash availability is essential when it comes to making strategic business decisions. But all too often, corporate treasurers can’t get the information they need, when they need it.

Instant treasury is one development that could provide a way of overcoming this challenge – so what are the opportunities, and how can treasurers harness them effectively?

A close ally

While a treasurer may receive regular balance updates from their account holding banks, the actual numbers they receive may not have been updated since the previous end of day.

Broadly speaking, instant treasury is a means of moving away from traditional schedule-based account reporting activities towards an on-demand model. This would give treasurers access to the information in real time, making end-of-day processes a thing of the past. In fact, in a global digital economy where information is updated and available around the clock, the whole concept of ‘end of day’ starts to fade away, becoming merely the changing of a value date in many cases.

There are other benefits of instant treasury too. It has the potential to increase payment speeds and make borrowing more efficient. And it could help corporates make timely investments and more accurate cash forecasts for the future – quickly becoming a treasurer’s closest ally.

Mind the gap

Today, however, treasurers face a number of challenges that get in the way of this instant reality.

Rather than having a real-time consolidated view across all their accounts via the channel of their choice that’s available at their fingertips 24/7, treasurers are flooded by multiple reports every day from their various banking partners. These reports come in at different times, in different formats, and via different channels, with mixed standards and data quality.

Wading through this information is complex and time-consuming, leading to costly overheads and more than a few headaches. Manual, non-automated balance inquiries across multiple bank accounts are slow and, because of end of day or batch processing limitations, any discrepencies that require investigation only cause further delays in obtaining the critical cash and views that treasurers need.

Understanding the opportunities

In today’s digital economy, and with an eye on interest rate rises and inflation, having instant access to up-to-date information is more than a nice to have for corporate treasurers. It’s a must to be able to make smart strategic decisions and optimise payment timings to benefit from the most favourable cash management conditions.

For example, the Board might need an update on the company’s account balances at 10am to complete an acquisition. But in practice, the treasurer might have to wait until the end of the day to receive the latest information from each of their banking partners. With a lack of certainty over the funds currently in their accounts, corporates might need to borrow unnecessarily to make up for shortfalls that may never have existed.

Other issues can arise when a bank lacks real-time payment-processing capabilities. A corporate could send a payment without realising that the message contains an error. But, due to these limitations, they may not be notified of this until the bank returns it to them at the end of the day. Not only will their payment have been delayed, but their account balance figures will also have been incorrect during this time.

As such, instant payments, combined with instant treasury is an invaluable recipe for treasurers. Add APIs to the equation and things get even better. In the era of open banking, APIs offer treasurers the ability to tap into real-time account data that can be flexibly integrated into their ways of working.

And if those APIs are standardised across banks globally, then their multiple bank accounts with multiple banking partners spread out around the world suddenly looks a lot more like what they really are in the eyes of the treasurer: a single pool of liquidity that can be tapped into when needed and managed effectively.

Different needs, same goal

While instant treasury has the potential to make treasurers’ lives considerably easier, it’s also important to recognise that different companies will have different needs. This may affect how they choose to adopt such solutions.

Smaller businesses may see significant benefits in adopting new solutions, but want do so using their banks’ existing e-banking portals; while larger corporations with complex treasury activities may be more inclined to incorporate instant treasury information into their centralised treasury management system(s).

At the heart of any solution, however, is the need to provide corporates with an accurate view of their cash available across the company at any given moment, enabling them to reduce costs, grow revenue and increase profit margins. Beyond this visibility requirement, corporates also need to be able to move cash on regional accounts to and from their central treasury account; make and receive payments; obtain and manage FX; reconcile incoming payments with outstanding invoices; and forecast available cash, with real-time tracking of payments coming their way.

The ‘perfect solution’ would enable all of this. Equally important, though, it should also span a large ecosystem, covering all the banks a corporate uses; use a global API-standard with rich data and the ability to pre-validate information upfront; and run on a high-performing, secure, and easily accessible API platform (or platforms) that corporates can trust.

The way forward

What corporates need is a single connection, using a single standard, providing global account visibility with all the elements described above. But if that’s the goal, how do we get there? That’s the question we’ve set out to answer at SWIFT, together with an expert group of corporates, banks, and application providers.

Development and global adoption of such a solution means focusing on the right things: What does instant really mean for treasury in terms of reporting, payments, and liquidity? What value-added services are required? What enhancements are needed to banks’ systems and existing interbank systems? How can we acheive a global API standard? Will applications providers integrate it into their systems? And what role can AI, ML and other technologies play?

Tackling these questions and many more will set the path forward. As a neutral, global cooperative, SWIFT’s aim is to enable the seamless flow of value worldwide. And in an instant world, instant treasury is key to this.