Report: Banks Put CFOs In The Cash Management Driver’s Seat

Increased uncertainty is one of the greatest impacts the pandemic has had on businesses, and it weighs heavily on the treasurers and chief financial officers (CFOs) responsible for making sure companies have the liquidity and working capital to meet their daily obligations and adapt to changing conditions. Firms may be able to maneuver quickly to find new suppliers who may require upfront payment, for example, or their own customers may seek more flexible payment terms.

All of this raises the question: Do corporates’ financial partners — their banks — have the technical infrastructure to support the real-time account controls and visibility that enable firms to move nimbly in tumultuous economic times? The Corporate Cash Management Playbook provides a roadmap illustrating how banks and their technology partners can leverage cloud technologies, application programming interfaces (APIs) and microservices to get a firm grip on cash management and liquidity. The Playbook is based on in-depth market research and interviews with leading banks.

PYMNTS research shows that digital technology has made only limited inroads when it comes to corporate cash management and forecasting, despite its central importance in many other facets of firms’ operations. One survey found that only 14 percent of CFOs are using digital technology for capital management, for example. This contrasts with the scale of the challenge that cash flow and accurate forecasting represent for many finance leaders, as nearly 80 percent of corporate finance executives view pandemic-related economic uncertainty as their biggest hurdle.

A growing number of firms are turning to real-time payment tools to meet these challenges, however. This includes United States-based bank and financial services company J.P. Morgan, which has seen transactions involving RTP — the real-time payment network operated by The Clearing House — double since the start of the pandemic.

“Current economic conditions have caused an explosion in the demand for real-time payments and real-time services generally,” Cyrus Bhathawalla, managing director and global head of Real-Time Payments at J.P. Morgan, told PYMNTS. “We’ve seen plenty of cases where merchants are using RTP to immediately cash out on sales proceeds as well, looking to reduce the overall time it takes money to reach their end bank accounts. This is essential for them to make payroll, pay their invoices and keep their businesses running.”

There is no shortage of digital solutions being promoted to help CFOs and other corporate leaders better control cash management — and this can pose challenges for companies since it can be difficult to distinguish between genuine capabilities and hype. Banks may have an opportunity to cut through this noise because corporates already look to them as trusted financial service providers.

“New solutions hit the market constantly, creating a fog of confusion for some clients,” Derrick Walton, head of Emerging Payments and Innovation at Bank of America, told PYMNTS.

Banks can be essential partners in helping CFOs and other finance leaders leverage powerful cash management solutions — provided they have the technical capacity to support them, of course. This may not be an easy lift for banks with internal processing systems that date back decades.

Cloud technologies and APIs have opened new paths for banks to offer real-time corporate financial services, but they must be strategic in how they bring these types of services to market. They must at once prioritize speed while meeting strict standards for security and compliance. To learn more about how banks can move forward on this path, download the Playbook.

About the Report

The Corporate Cash Management Playbook, a collaboration with Red Hat, Infosys Finacle and Intel, is a research-based report examining how banks can bring real-time account control and visibility to the C-suite.