Simeon Parker, Relationship Director at AccessPay.
Modern corporates need comprehensive, real-time financial information to aid their decision-making.
For the corporate treasurer, funding and liquidity requirements are wholly connected with understanding and managing working capital. They need to be able to view real-time balances and transactions, conduct automated reconciliation, and manage liquidity and transfer money proactively.
However, some treasurers are struggling to achieve their goals; fragmented banking practices mean that they have to manage and maintain different processes for each of their multiple banking partners.
Fragmented banking is a serious hurdle to corporates looking to achieve sustained growth, but straight-through processing can provide a compelling answer. Here, we look at the problem and the proposed solution in detail.
The problem: fragmentation
It is essential for the modern corporate treasurer to be able to view balances and transactions on the accounts they have with their banking partners. They also need the ability to conduct automated reconciliation.
Corporate treasurers must also raise payment instructions from those accounts. And it is equally vital to be able to manage liquidity with those banking partners and to transfer money as required.
To achieve this, corporates need global account visibility – both inter and intra-day balance and transactional reporting from their banking partners. However, many are struggling to achieve this level of insight.
The typical modern corporate has to maintain a number of different links provided by their banks, including proprietary banking via the internet, host-to-host and fax link.
Managing these proprietary channels, gateways and networks means incorporating different log-on procedures, protocols, formats and messages standards.
There is an obvious danger that the disparate information above could lead to fragmented working practices that makes standardisation impossible. And without standardisation, there is no opportunity of taking advantage of automated processes such as straight through processing.
The solution: Straight through processing
Straight through processing is a business process automated by technology. It allows organisations to process financial transactions from beginning to end without manual intervention (unless approvals are required).
Straight through processing automates payment generation, reporting and back office workflows and drives efficiencies throughout the value chain. It offers a range of impressive benefits, including reduced error rates, greater visibility of transactions and cash positions, and increased staff efficiency and productivity.
Transaction processing times are faster, operational risk is reduced due to the minimising of manual intervention, and improvements are made in data availability, reliability and accuracy. With no bank interfaces to support, it also allows treasurers to become “bank agnostic.”
All-in-all, the solution to fragmented banking practices is centralised, single platform cash management. Cloud-based services such as those offered by SWIFT can also prove cost-effective, giving forward-thinking corporates better cash flow, increased cash visibility and key competitive advantages designed to support growth and future success.
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
Tim de Knegt, strategic finance and treasury manager for the Port of Rotterdam, discusses how he is using blockchain, the challenges he will face in his role of treasury over the next 12 months and the advice he would give to someone starting out their career in treasury.
Treasurers are more interested in cross-border payments and automation than real-time payments, as they are consistently asked to do more with less, argues Rick Burke, head of corporate payments at TD Bank in an exclusive interview.
With rising interest rates being a hot topic at this year’s AFP conference, many treasurers were discussing how they can structure their ... read more