The idea of real-time treasury – including real-time payments, liquidity management, foreign exchange management and cash flow forecasting – is often seen by treasurers as a long-term vision but with little practical implications in the short term. This says Shahrokh Moinian, head of cash products at Deutsche Bank, in Treasury Today’s article.
”This is far from the truth,” he counters. ”There are tangible steps that treasurers can take now to start building their real-time treasury capabilities – whether it’s integrating instant FX conversions and even instant hedges, or establishing instant cash concentration through solutions such as virtual accounts. These solutions can all add value today.”
Goes beyond payments
Real-time payments is a strong trend, although real-time information does not automatically require them for everybody. ”Unless a company is consumer-facing, its business is not about 24/7 operations,” says Marcus Hughes, director of business development at a firm called Bottomline. ”In any case, switching to real-time requires a big shift in culture and business practices.”
Promises – and risks
Organisations getting their incoming flows, and accompanying data, in real-time will be able to access funds quicker, plan outgoing payments based on these flows more accurately, and reduce the liquidity management buffer, notes the Treasury Today article. This could result in reduced counterparty risks and, where credit lines are quickly cleared, improved sales opportunities.
Yet real-time systems also carry new risks of real-time crime. Employees still do things they should not do. Unless there is a major educational programme that brings about a cultural change, IT risks will form a growing threat.
Whitepaper listed opportunities
In the past autumn, Deutsche Bank published a whitepaper on the topic, called ‘Preparing for real-time liquidity’. It suggests an industry-wide framework for real-time liquidity management, saying it would enable banks to provide value-added services including real-time currency conversion and hedging, instant cash concentration solutions, intraday cash pooling and optimised short-term investments.