Despite being a fundamental element of corporate finance and treasury operations, gaining an accurate view of how much cash is available to your business at any one time is difficult; this is known as Cash Visibility. This is especially true for corporates operating across multiple banks, subsidiaries and countries.
Did you know? Today’s consumers have better access to their cash visibility than corporates do? There are countless apps and retail banking services available that enable consumers to consolidate multiple bank accounts, track their spend and sweep funds into investments or savings.
But for finance and treasury functions, it’s about much more than convenience; the stakes are far higher. Without short-term liquidity, your organisation would cease to function. Without long-term capital, your business could not grow.
A good cash visibility tool like AcccessPay provides the building blocks to help you achieve both. By having access to your global cash position; you can properly strategise and invest, conduct cash flow forecasts, and even uncover hidden cash stored away in various subsidiaries. Visibility provides a compelling use case for Embedded Corporate Banking. The modernisation of corporate banking services is crucial for businesses looking to fully achieve the objectives identified during digital transformation projects across finance and treasury functions. This starts with bank consolidation and effective cash visibility.
What is a Cash Visibility Tool?
A cash visibility tool empowers corporates with the tools they need to see a true, real-time picture of their company’s total cash flow. This gives treasury and finance teams the ‘full picture’ when it comes to how much cash is actually available to an organisation, meaning they can better control and manage their cash, and are able to make more informed and strategic decisions with surplus cash, or identify potential risks.
So, how does a Cash Visibility Tool like AcessPay work?
Through a single interface, tools like AccessPay can help you consolidate your balances and transactions across all of your Domestic and International bank accounts so that you have real-time insights which will allow you to streamline your banking reports, better manage your banking relationships and, crucially, better manage your cash flow.
You can also seamlessly link your full corporate banking estate with any ERP, TMS or Financial Close tool so that you can make accurate and strategic financial decisions for your company.
Who needs a Cash Visibility tool? Most corporates fall into two distinct camps:
- Those who are cash-rich and need to find a return for their cash balances
- Those who are debt reliant and dependent on credit facilities to maintain cash flow
Both scenarios have a requirement for automating cash visibility – so let’s explore them in more detail as we put two uses cases together to show you exactly how AccessPay fits in.
You’re a ‘Cash Rich’ Multinational
Cash-rich are keen to optimise the yield of idle cash balances.
The corporate treasury team at Finest Limited understand the opportunity to increase returns and manage risk as part of their cash management processes. Finest Limited are a global company with a decentralised treasury function responsible for managing 35 bank accounts across 12 banks and 15 currencies. Each account is managed locally, so it is difficult to know just how much cash the company has uninvested overnight on any given day. Whilst each local team manages cash daily, they only report their top five positions due to time constraints – they will also check their minor nostros as and when they get an opportunity.
They can’t justify increasing headcount and adding to the cost base to improve cash visibility. But they can look at using Embedded Corporate Banking to consolidate their global accounts and balances to get a real time breakdown of their total cash position. Idle balances left over can then be automatically pooled to a header account where funds can be invested overnight and returned the following morning.
Merger and Acquisition Led Growth
Extra Special Corp is a business that employs an acquisition-led growth strategy and is keen to minimise usage of credit facilities by understanding global cash positions in advance of any mergers and acquisitions. Based out of a centralised treasury department in London, Extra Special Corp has a global presence and a bank account network spanning six continents. Whilst having a consolidated treasury function has its perks, it often means that trading in local time zones cannot be achieved – meaning it’s difficult to move funds in good time, as positions change.
To counter this, the treasury team often leave a buffer on each of their bank accounts outside of Western Europe to avoid incurring overdraft charges and to ensure payment obligations can be met. While this is good practice, it comes at a price, as credit facilities must be used to fund growth.
They regularly leave idle funds on accounts around the globe, which are earning little to no interest. When a new acquisition is made, there is no way of gaining immediate access to the acquired organisation’s bank accounts to calculate any credit requirements. Leading to further usage of credit facilities, whilst arrangements are made, and company consolidation can begin.
Extra Special Corp is looking to adopt Embedded Corporate Banking to view their newly acquired company accounts in a consolidated view, alongside their existing accounts. This would provide visibility of cash balances by account legal entity and business type. Extra Special Corp could then use this information to automate the transfer of funds prior to currency deadline into overnight investment funds or FX into base currency.
Do you identify with either of the above?
While the above examples cover two treasury functions with totally different structures and goals, they both share the need for a consolidated view of their bank accounts to make better use of the cash available to them. Put simply, Embedded Corporate Banking would empower both organisations to make more accurate treasury and finance decisions – leading to cost savings and profit generation.
With Embedded Corporate Banking, you can ditch the manual processes and spreadsheets and even say goodbye to logging in to numerous online banking portals. What’s more, you’ll have access to a cash visibility tool which will allow you to see your true cash position across multiple bank accounts, countries and currencies in real-time, which will allow you to have increased security as you’ll be able to enforce system access and process controls across your full finance team.
You’ll also be able to automate your auditing process with auto-logged tasks and benefit from simple transaction searches across your connected accounts – you can trust that the data you’re auditing is accurate and in real-time. You’ll also be able to see your money through a single pane of glass, so you can easily move your money from one account to another for better cash management.
Read more about our cash management solution.
