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Digital cash management: how to help corporates optimize their cash

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Banks offer a range of products to help corporates manage, reconcile, and report on cash flow and balances. These include cash concentration, loans, overdrafts, pooling, and reconciliation. All of these help the treasury team manage capital centrally. But, unfortunately, they need to move faster for the needs of corporates today.   

Without real-time data, there's only so much visibility banks can give corporates. Moreover, end-of-day batch processes limit the effectiveness of these products, holding corporates back from improving their cash efficiency.   

Overdrafts and other lending products can't be used in real-time. Capital efficiency is impacted as funds and currencies can't be swept intraday. Managing these challenges across multiple legal entities is operationally complex for larger corporates.   

Enabling intraday liquidity management 

Corporates must manage liquidity better intraday to optimize their funding and investment operations. 

Without a real-time (or near-real-time) picture of liquidity across entities, currencies, geographies, and banking providers, it's impossible for corporates to properly understand their position. This leads to inaccurate cash flow and position forecasts. With a clearer understanding of transaction in and outflows, corporates could determine the cause of liquidity issues faster.   

With a better view of a client's position, banks can provide faster advice and offer new services based on real-time activity.   

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The need for real-time cash management 

Real-time data changes the world of cash management. Clients can see where cash is held and where interest and fees are accruing in the moment. Not only does this remove manual tracking and reconciliation – plus the headache that comes with daily batch processes – it enables corporates to maximize their cash position on an intraday basis.   

Real-time reporting gives corporates an up-to-date picture of their cash position, which is becoming crucial as intraday liquidity becomes a chargeable commodity.   

Virtual Accounts, which are central to the transformation of corporate banking, help to clean up cash management. With cash held centrally – but logically ringfenced with owners – the headache of inter-company movements to maximize currency balances and minimize costly borrowing is taken away.  

Notional pooling, overdrafts, and limits can be managed much tighter, as the status of each account is visible in real time. All of this is possible today, but trying to retrofit your existing tech stack to achieve this won't give your clients the data they need fast enough. 

How to transform treasury operations 

Everything in this blog is realized with a cloud-native core banking platform that transforms banking operations from the core outwards.  

And it's not just corporates that benefit: By developing real-time actionable insights for your clients, banks can also be more proactive and relevant in provisioning the right products and solutions at the point of need.

As a result, relationships with clients get stronger as banks can actively minimize costs and maximize the most appropriate products.   

What could your clients achieve with this new-found freedom?   

With a real-time view of the company's cash position, the treasury can react to insights and utilize available cash globally. By automatically sweeping excess funds into money market accounts, cash earns interest intraday that's then swept back into the cash account. Or the same excess funds can be used to cover overdrawn account to reduce charges.   

This insight and flexibility gives a more accurate picture of risk, enabling treasurers to run comprehensive stress scenarios to model risk across their cash position.   

These are just a few examples, but the result is banks have strengthened relationships with their clients. It's easy for corporates to see the value their bank brings, with much more self-service and far less operational overhead. 

For more information, download our latest corporate banking report, or get in touch with the team today.

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