For Treasury Management, Global Visibility Matters

Treasury management used to be just about managing cash, but the job is no longer just about knowing where the dollars (or euros or any other currency) are. The role now is more strategic, and executives must think about the position of the company and how it is growing — not just financial accounts but as an enterprise, too. This is no job focused on bill payments. With that more holistic view of the firm itself comes the need to have deep knowledge of risk and liquidity.

In an interview with PYMNTS, Jiro Okochi, CEO and cofounder of Reval, noted that innovation is a necessary component of successful treasury management, especially as firms see “rapid growth, either through organic means or mergers and acquisitions, where it can be hard to get data.”

And, he noted, the progression of technology (and the need for accurate data) has meant that firms have also needed to go beyond simply gathering data. Think of it, he said, as moving from “Treasury 1.0, where getting data isn’t simple to get, to Treasury 3.0, where data is now strategically used.” And of course, that is where the cloud comes in.

Within the middle market, where firms typically reside with annual revenues of $500 million or less, “what has clearly been happening is the evolution of the global markets,” and firms must navigate across different platforms. For example, SWIFT, the messaging network used by banks, may include some financial institutions used by some enterprises but not others.

Okochi noted that middle-market firms have seen “growing emerging market exposure” without SWIFT connectivity and, along with that exposure, may come more bank accounts (as they do business in more locations). However, noted Okochi, as treasurers strive to get global cash visibility, the continued exposure across currencies and locales means a tough juggling act for treasury management. The key, he said, is for continued risk management with consistent tracking of exposure across borders and an eye on different scenarios.

Consider Brexit, he offered as an example. While the conventional wisdom held that the U.K. would remain in the EU, the surprise that transpired had treasury executives scrambling to figure out worst-case scenarios for the pound and other currencies that experienced extreme volatility.

For firms staffed in a lean manner — say, with minimal IT professionals on-site — the cloud offers a way to make sure of exactly “what cash is on hand today and what cash is going to be needed tomorrow.” The cloud, with a single-version platform with multiple tenants, allows for movement beyond the manual processes that can bedevil firms still mired in paper (for example, coordinating multiple bank statements or printouts of transactions).