Cash & Working Capital

Payments Ownership by Treasury and Other Founder KTAs from GCBG 2020 H2 Meeting

By September 25, 2020 No Comments

By Joseph Neu

During NeuGroup’s second meeting of the fall season, Global Cash and Banking Group members discussed a variety of cash and payment topics in sessions sponsored by TIS. Below are a few takeaways I wanted to share.

Cash forecasting: one size doesn’t fit all. One member shared the conclusion reached after six months of benchmarking to find an appropriate third-party vendor to improve cash forecasting, that there is no one-size-fits-all solution.

  • The approach has to be tailored to each company and how simple or complex their cash flow model is, how many legal entities they have, etc. This realization has driven the member’s company to approach cash forecasting in a more detailed way for the first time.
  • Their aim, like that of most, is to lower the resource burden and get the same or better forecasting accuracy. This means much-improved access to data to model their cash flows.
  • Once you have the data, you can find the algo, through backtesting, that fits the cash flow stream you want to forecast using AI. A portfolio of different cash flows will logically require a portfolio of algos to get the forecast right–a point driven home in another member’s sharing about the implementation of an AI-cash forecasting tool.

Remote work for higher pay.  Several members from companies based in lower cost of living locations noted a visible trend of top talent choosing to work from home at a new company that pays more. This is particularly pronounced with West Coast tech companies poaching talent.

  • The war for talent is no longer limited to geography, nor by relocation packages to equalize the cost of housing and other costs to maintain an employee’s standard of living.

Own all your payments. While treasury may not own the processing of all payments flowing in and out of the enterprise, the idea of getting more oversight and control over them is compelling.

  • Global transaction banks, meanwhile, are increasingly adding payment solutions of all kinds, especially digital offerings. Covid-19 has just accelerated the trend.
  • Technology firms like TIS and others recognized it early and for years have been building gateways to bridge the divide between banks and their enterprise customers. 

Take full advantage of the opportunity.  Treasury, as the primary bank relationship manager, needs to rethink how it interacts with internal payment functions (AR/AP) to coordinate or manage teams to procure, implement and integrate payment and related data solutions from banks and technology solution providers in a smarter way. 

  • This is important as banks revamp transaction banking services to incorporate merchant services (serving B2C, B2B and the omnichannels in between), into treasury and trade/payment solutions.
  • Looking across the procure-to-pay-cycle for all payment forms and incorporating payment data will make treasury that much better at cash and exposure forecasting/management. That includes by deploying ML, algos and AI on the data.
  • New ideas bred from these efficiencies will flow to supply chain and customer delivery models to open new business opportunities. 
  • And of course, a global bank/digital technology overlay on all transactions, will help keep payments more secure from fraud and other cyber and security risks. 
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Joseph Neu

Author Joseph Neu

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