Cash management is the process of collecting, managing and investing cash. Corporate treasurers and business managers who are responsible for overall cash management will often seek cash management software to help improve efficiency and security.
Successful cash management involves avoiding insolvency, reducing days in account receivables, selecting appropriate short-term investment vehicles, increasing collection rates, and improving a company's overall financial profitability, all which can be helped with the right cash systems tailored to suit specific requirements.
Corporates are often facing cash management challenges on daily basis as they deal with both ends of the liquidity spectrum – global and regional reporting challenges presented by single and multiple banks supported by various banking platforms.
So what criteria should procurement teams prioritise when considering updating their cash management systems? Three experts from across the spectrum of the industry tell us.
The industry view
Sonya Crites, Group Leader, Treasury Product Management, D+H
Treasury and finance professionals have been challenged to do more with less for years. Technology plays a crucial role in enabling treasury departments to capitalise on opportunities for efficiency and maximizing margins where possible. Banks that provide flexible, contemporary solutions to corporates should partner with technology vendors that are agile and able to quickly bring new functionality to technology—such as real time cash positions in one view across multiple treasury systems. Open APIs or application programming interfaces allow different systems and applications to easily share data, and provide the building blocks to connect new functionalities and financial insights quickly and easily. Banks are eager to harness this innovation within their own offerings in order to win and retain customers. Because of this, they increasingly seek vendors whose solutions enable open APIs.
This also aligns with corporates’ desire for a superior user experience. For bank provided cash and treasury management solutions, user experience has now become a key differentiator. In addition to enabling external systems to work with solutions, banks want solutions that are intuitive and easy to use. Customizable dashboards that align with end-users’ needs and work styles add to their experience with the technology and are increasingly being offered by vendors to varying degrees. Lastly, vendors should be able to provide a unified experience for a treasury management solution across desktop, mobile, and tablet devices.
Chris Shayne, CFA – Director, Calypso Technology
At Calypso we believe there are two key considerations when selecting a new cash management system. First, does the functionality of the new platform effectively address your near-term business challenges and, second, does the provider’s technology roadmap align with your own? The second question is particularly important right now, as fintech is in the midst of a disruptive cycle that will continue for the foreseeable future. Technologies like the Cloud, blockchain, microservices, artificial intelligence, and big data are enabling financial institutions to re-think how they organize their infrastructure.
Below are a few questions you should ask technology providers during the due diligence process:
What instrument types does the system support?
You should make sure any platform you select has the breadth to handle all of your key instrument types natively. Retail products behave very differently than corporate products (particularly derivatives), and vendors have historically had trouble integrating everything into a single system.
Does the system support real-time and/or intraday reporting?
End-of-day reporting is no longer adequate. You should look for a solution that provides real-time reports of your corporate transactions, and intraday snapshots of your retail products (which are extremely data intensive as they happen 24×7 in small increments.)
Does the platform integrate seamlessly with external systems?
Not all transactions will originate within your cash management platform, so you need to make sure that it integrates well with external systems. The key is to receive timely updates that flow into your cash management monitoring dashboard.
Does the system run on the Cloud?
Cloud computing is rapidly becoming the new normal, and you need to make sure your vendor can provide full support. Some institutions prefer a hosted solution, where the vendor takes care of the entire infrastructure. Others prefer a “do-it-yourself” approach where they deploy to a cloud environment that they manage themselves. Regardless, you need to be sure your vendor has the expertise and the industry partnerships to support your requirements.
Is the system future proof?
Given the seismic shift taking place in financial technology, you need to determine whether your vendor is well-positioned to keep you on the cutting edge. Are microservices part of their Cloud roadmap? What is their blockchain strategy, and how will their workflows integrate with your network? What is their artificial intelligence and big data strategy and how will it allow you to understand your data? All these topics will lead to substantial changes in how financial institutions operate, and you need to make sure your provider has both the vision and the ability ensure you do not fall behind.