Real-Time Treasury Management Pays Off for Multinationals

Today’s corporate treasurers face a dynamic set of demands.

These requirements, which have traditionally centered around core activities like working capital management, banking, investments, risk management for currencies and interest rates, and other operationally necessary financial exercises, are becoming increasingly scaled up as businesses expand and grow internationally.

Last week, Adobe and Adyen partnered to support global omnichannel enterprises, and international operations are in the spotlight.

Failure to keep up with the pace of treasury operations growth as balance sheets go across borders can leave finance teams and their businesses lagging behind, even in home markets. Visibility into cash positions across multiple accounts and currencies only grows more valuable the more regions a firm does business in.

Embracing and implementing a real-time treasury management system can help multinational enterprises transform their treasury functions into strategic units capable of influencing broader business direction.

Multinational businesses that have taken the appropriate steps enabling them to have a sophisticated understanding, in real time, of where their money is sitting and how it moves across different banks and regions can frequently find themselves at a competitive advantage relative to their global peers still relying on batch-driven treasury processes.

The modern world requires modern financial infrastructure, particularly for firms facing high-volume payments and ballooning complexities around the movement, tracking and reconciliation of those funds.

Read also: AI for Real-Time Treasury Delivers Up to 90% Efficiency Gains

A New Era of Real-Time Money Movement and Tracking

Many multinational businesses face long-standing problems around manual operations, slow reconciliation and complexity in their treasury operations.

The cost of doing business the way it has always been done is rising for corporate treasurers as they face a new era of real-time money movement driven by the FedNow® Service, RTP® Network and embedded payment solutions.

Particularly when it comes to international operations, not having immediate access to appropriate information can lead to lasting repercussions. Real-time treasury operations provide immediate visibility into cash positions across multiple accounts and currencies. This enables companies to optimize their liquidity by efficiently allocating funds where they are needed most, reducing idle cash balances and improving overall cash flow management.

Companies operating without this degree of granular intelligence may find themselves paying incremental interest expenses because of overborrowing due to inaccurate cash flow forecasting. More efficient management of receivables, payables and inventory levels can lead to improved cash conversion cycles and overall financial performance.

Enigma Technologies CEO Hicham Oudghiri told PYMNTS that if data, and in particular the right data, is harnessed effectively, it can help create a “half-operational, half-financial” setup where companies can fine-tune their day-to-day operations to run more efficiently.

See also: Embedded Finance Leads Treasury Management’s Digital Migration

Unlocking Liquidity Trapped Across Far-Flung Geographies

Companies without a clear, real-time view of their finances can find themselves paying unnecessary taxes when cash moves needlessly through tax-heavy regions.

Real-time treasury operations enable faster and more efficient payment processing, reducing transaction times and costs associated with cross-border payments. Companies can use real-time payment systems to make instant payments to suppliers, employees and other stakeholders, enhancing relationships and optimizing working capital.

Working capital and cash flow improves when real-time treasury solutions are implemented and businesses can take better advantage of favorable exchange rates with real-time visibility. The challenge for chief financial officers is always managing enterprise growth with spend, and business leaders need to have a transparent, high-level view of their own operations that informs where to continue to invest, where to pull back spending, and how to use modern technology to provide an optimal return on investment.

Increasingly, innovations using artificial intelligence are helping ensure corporate treasurers have timely access to accurate financial data and analytics.

“AI and ML are transforming everything treasury,” Jarrett Bruhn, managing director and head of data and AI in global transaction services at Bank of America, told PYMNTS last year. “It’s the equivalent of the Industrial Revolution 4.0. When you think of what a treasurer does, trying to find operational and cost efficiencies, these tools and technologies fundamentally change how they can do their daily job.”

According to findings in the PYMNTS Intelligence report “Digital Payments: Changing Economy Sparks New Priorities for Systems Spending,” at least 3 in 5 CFOs surveyed said their investments in digital payment processes have successfully resulted in improvements to business operations.

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