Eye-Opening: A Tech Treasurer Embraces APIs To See Cash in Real Time

By January 19, 2022No Comments

A growing tech company connects with FinLync as it juggles cash, debt and a need to improve visibility.

Real-time cash management made possible by wider adoption of APIs by banks has provided one tech treasurer the daily visibility into the company’s bank account balances that he craved for years.

  • “This has become more important to us not just since Covid, but since tax reform in 2017 when we were sitting on a couple billion dollars offshore, like most tech companies,” he told peers at a recent meeting of NeuGroup for Growth-Tech Treasurers. “We need to see our cash right away.”
  • But not every company shares that need. In an informal poll, less than half the members at the meeting said they require daily cash visibility, due in part to their companies’ relatively small size and stable cash flow.

Debt, cash and FinLync. One factor that could change that: debt. Taking it on through bonds or bank loans forces growing companies to focus more on prioritizing cash. “When I started, nobody paid attention to cash. You become a different company as you lever up,” the presenting member said.

  • To get greater visibility into cash in bank accounts, he turned to FinLync, a fintech focused on API connectivity, to build a custom solution. “I can now pull up FinLync, know my balances and it cross-references in SAP with our entities,” he said. “I can see by country, by entity, by currency; it’s a bank portal for nearly all of our banks.”
  • One member wished she had access to that capability at a previous company. “We were doing a ton in repurchases, we had a lot in debt, we had a CP program,” and needed to track cash on a daily basis, she said. “That just had to happen as real-time as possible, and this would definitely help.”

How it works. The presenting member’s solution connects his company’s bank accounts to its ERP through APIs for cash balances, transaction data, and wire and AP payments. “Those, to me, are the fundamental parts of treasury,” he said.

  • One member, who agreed that APIs “sound fantastic,” asked if they have gained enough momentum to be a widespread solution.
    • In just the last six months, the member said, they have. “I’m hearing from larger companies [than ours] that are considering it. I spoke to those same companies last May, and there was hesitation there that they don’t have now,” he said.
    • “You’re getting the fintechs that are big enough and have enough of a track record that you can be confident they’re going to stay around.”
  • The member said that the company’s solution has paid off, but “it’s still a process, you can’t just hire FinLync and be online in a couple weeks. It will take a few months.”

Real-time reality check. It’s likely to take longer than a few months to convince some treasury teams they need to jump on the API and real-time treasury bandwagon. Some members said that real-time cash visibility would be convenient, but they don’t find it necessary. “You just don’t need APIs for everything,” one member said. “Nobody wants to rip out processes that work.”

  • Another said he had put the brakes on a project to move to real-time. “In the end, I don’t manage cash on a daily basis, I only manage on a weekly basis,” he said. “If I have extra resources, I want them to focus on controlling the business, improving cash forecasting, working on capital structure and financial risk management.”
  • One alternative to real-time treasury is using a TMS to access a subledger account, an approach another treasurer at the meeting said he uses and doesn’t see any reason to upgrade. The current process updates daily and adopting APIs would be starting from scratch for only a slight improvement.
  • But we’ll give the final word to the presenting member, who recommended his peers look ahead to a day when real-time treasury may make sense for them: “If you will be in a situation where you need to see your cash right away, the only chance of achieving that is through APIs. When you have an opportunity to do a project, I’d encourage you to do APIs, because I really think it’s the future.”
Justin Jones

Author Justin Jones

More posts by Justin Jones