Real-Time Treasury Management: The Impact on Corporate Treasury Operations!

Key Benefits and Use Cases of Real-Time Treasury Management.

With real-time financial data, the business will track liquidity with certainty and compress the complex process into one single click.

Real-time treasury is fast becoming a reality as greater levels of transparency and forecasting are required. The evolution of instant payment infrastructures worldwide is altering the liquidity landscape and creating the need for treasury processes and controls to turn ‘real-time’ ensuring that cash is being managed effectively.

Consider the value of an always-open channel connecting your accounts at your financial institutions to all the platforms your company uses to manage its financial operations. This will include a separate system for functions such as accounts paid (AP) and receivables (AR), or comprehensive treasury management systems.

Think about the efficiency, control and real-time insight you could gain. Through real-time treasury management, you’ll be able to:

• Eliminate duplicative data entry.

• Automate processes across platforms.

• Calculate your cash position at any moment.

At present, real-time treasury management is an ongoing job, but it changes. The financial industry works to develop the application programming interface (API) that is used to bind a shared system. Chasing The following use will give you a feeling about what will be offered by the world of real-time treasury management.

Managing Cash Flow Precisely.

Maybe the easiest way to understand the potential of real-time treasury management is to consider what it means to manage cash flow. It will be beneficial for almost every business to have a minute understanding of their cash balance. This is more valuable for those who participate in the financial markets every day.

At present, the company relies on electronic BAI files from their financial institutions, but this can arrive a few hours after the transaction is complete. To overcome this delay, the company's treasurer is forced to adopt several defensive strategies. They can maintain a cash pillow to avoid an overdue, which means they do not use their ConVista efficiently. They can rely on forecasting devices, which are only as good as the assumptions behind them. Or they can use a combination of both.

The introduction of API that ultimately connects financial institutions with the Treasury Customer Management System (TMS) in real-time can end this uncertainty. For a day, the company's treasurer will be able to constantly monitor transactions at their financial institutions, watching their cash position ups and downs when they make and receive payments.

This will allow companies not only to avoid lifts and use their cash more efficiently but also to make investment decisions that are smarter and faster.

Processing Application Fees.

Real-time treasury management could also be used to automate and streamline specific processes. One case of use that is often quoted is an invoice, where real-time payment systems can help businesses utilize potential discounts to pay earlier; However, other processes can benefit from real-time treasury management. For example, many businesses and the government use the application fees to cover the costs in advance to check customers, whether these customers rent apartments or update their licenses.

One problem for this organization is to track a lot of application costs they receive. With real-time treasury management, the process of monitoring and recording payments can be done without human intervention. That will happen automatically. Consider examples of this loan application for commercial real estate property:

Payment Request.

• The process begins in the lender’s customer relationship management (CRM) system. When the borrower agrees to move forward with the loan, two things happen: the CRM uses the borrower’s data to generate a request for payment (RFP) from the borrower’s bank. At the same time, the CRM sets up a receivable in the lender’s treasury management system (TMS).

Payment.

• The next step is actual payment. After receiving the RFP, the borrower bank sends the approval notification to the borrower. When the borrower approved the payment, the funds were transferred to the lender's financial institution.

Receipts.

• This event began a series of notifications. The bank immediately pushed the receipt to TMS, closing the transaction. And TMS encourages receipt to the CRM system, which tells the lender that the guarantee can be continued.

The Real-Time Revolution Is on the Horizon.

The introduction of APIs, which form the backbone of real-time treasury management, would be incremental. The first generation of APIs will be limited in their functionality and facilitate simpler kinds of information exchange. But as the decade passes, APIs will gradually grow in power and sophistication.

As this transformation takes place, treasury teams need to stay in touch with their financial partners to gain a better sense of their API plans and timetable. With a strong understanding of the kinds of problems that real-time treasury management will solve, you’ll be able to find more value in implementing these technologies.

Want to learn more about how Real-Time Treasury Management is changing the global landscape of Treasury Management? Read our article here: How Real-Time Treasury Management Can Modernize the Management Ecosystem.