The First Step to Cash Optimization: The Crucial Role of Real-Time Cash Visibility

Written by Sergio Garcia
February 16, 2024

Consider this, according to a recent report from PwC on Global Treasury, finance professionals gave an average rating of 2.9 out of 5 for the maturity of their digital and analytical capabilities. Yet, cash & liquidity management is a top priority on the agenda of both CFOs and Treasurers. Cash optimization is a focal point, with goals to improve access to internal cash, as well as automation and control.

One truth is apparent looking at this data: cash is king. However, the true value of cash can only be realized when businesses have real-time cash visibility into their cash positions and liquidity forecasts. Unfortunately, many treasurers find themselves grappling with fragmented banking structures and sprawling geographical footprints, making it challenging to achieve comprehensive cash visibility.

These challenges are compounded by a lack of technological maturity. Treasurers are often faced with labor-intensive manual processes amidst their complex responsibilities. There is a clear disconnect between new initiatives and responsibilities of treasurers and the resources available to them to meet expectations. The first step to optimizing liquidity is improving visibility. Cash visibility is a strategic imperative. Without it, businesses are left vulnerable to a myriad of risks. 

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The Consequences of Poor Cash Visibility

The negative strategic impacts of inadequate cash management processes are far-reaching. Inaccurate forecasts can lead to suboptimal business decisions, increased financial risk, and missed opportunities. Without a clear picture of cash flow, businesses may experience:

  • Inadequate cash returns
  • Failure to meet KPIs
  • Elevated borrowing expenses
  • Unnecessary bank charges 
  • Poor hedging decisions
  • Absence of a cushion to offset unexpected expenses

In essence, poor cash visibility cripples a company’s ability to manage cash effectively, impacting everything from forecasting to investment decisions.

Technology’s Role in Enhancing Cash Visibility

Technology is the linchpin in the quest for full cash visibility. Manual techniques are outdated and time-consuming, hindering treasury departments from executing proper cash management practices efficiently. Even with access to sophisticated treasury technology, businesses still face visibility challenges due to legacy infrastructure and integration issues.

In the current environment of Treasury and Finance departments, where they are increasingly expected to be strategic partners, the need to have real-time visibility of cash balances, payments and other key information is a critical business requirement. 

Traditional connectivity methods like Host 2 Host, Bank Portal login, and Email fall short in meeting this demand. Treasurers However, the utilization of open banking APIs addresses this gap. APIs function as conduits, facilitating seamless communication between systems by relaying requests and responses. 

Notably, APIs are increasingly employed to exchange information with bank portals. Through API integration, treasurers can enhance operational efficiency and agility, leveraging automation to access real-time transactional insights and payment statuses, thereby ensuring optimal cash management.

APIs play a pivotal role in aligning business objectives with digital ecosystems, offering a myriad of advantages. Notably, APIs excel in integrating real-time balances and transactional data across diverse channels, including Enterprise Resource Planning (ERP) systems.

  • Integrate real-time balances and transactional data across multiple channels
  • Gain instantaneous transactional insights
  • Achieve real-time visibility over payment statuses and transactional balances

APIs represent the cornerstone of modern financial connectivity, offering a level of agility and responsiveness unmatched by traditional methods.

Check out our recent episode of Fintech Corner where our very own Joseph Drambarean and Brett Turner interview John Bolden, Treasury Director at City Storage Systems, to discuss how APIs are revolutionizing treasury operations and how this cutting-edge technology is creating a wave of new possibilities in finance. 

Leveraging Real-Time Visibility for Strategic Advantage

Real-time visibility isn’t just about making better decisions; it’s about transforming the way businesses operate. By providing continuous insights into financial and operational activities, real-time visibility empowers organizations to:

  • Identify and mitigate risk factors promptly
  • Optimize business processes for maximum efficiency
  • Make informed investment decisions based on up-to-the-minute data
  • Proactively address challenges before they escalate

In essence, real-time visibility isn’t just a tool for decision-making; it’s a catalyst for innovation and growth.

Embracing the Next Generation of Treasury Technology

As we look to the future, the importance of real-time cash visibility will only continue to grow. Financial management teams and boards are demanding faster access to data, driving the adoption of treasury technology across industries. This shift towards automation and digitalization isn’t just a response to current challenges—it’s a strategic imperative for long-term success.

With an API bank feed, you have your own multi-bank data lake that you can access in a centralized dashboard at any point in time. 

real-time cash visibility

This eliminates the need to manually log in to each bank account and record transaction data. The entire process is automated and ensures everything is consolidated.

As transactions across the globe come in, the data is continuously updated, enabling you to view in near real-time how much cash is available. No need to reconcile, either, as data is automatically normalized through machine learning. This is possible across hundreds of bank accounts and dozens of currencies.

real-time cash visibility

In essence, leveraging API-based software translates to significant time savings, which can then be redirected towards strategic analysis and decision-making initiatives.

APIs Remove the Risk of Inaccurate Data

As we touched on earlier, many treasurers spent hours a week on manual processes. This increases the risk for human error. A simple typo in a spreadsheet formula or a copy and paste error can significantly increase the risk of major financial problems. One such error cost $10.5 million, all due to a typo spreadsheet error.

Furthermore, inaccurate data impedes decision making. The data shows that many finance departments are not digitally mature, so it’s not surprising to see that CFOs make decisions on bad data. In fact, 89% of CFOs say they are making decisions based on inaccurate or incomplete data on a monthly basis.

As APIs feed bank data directly into the data lake, machine learning algorithms normalize that data based on custom tags and categories. This ensures 100% accuracy and removes the need for rigorous quality assurance checks.  

real-time cash visibility

How Eventbrite Enhanced Cash Visibility with Trovata

Since 2006, Eventbrite has played a pivotal role in uniting people worldwide through immersive live experiences. Before Trovata, Eventbrite’s treasury team spent 2-3 hours daily logging into various banking portals, downloading statements, and manually consolidating transaction data for their TMS.

Despite the TMS’s promise to streamline data processing, manual normalization was often needed, limiting time for analysis. Eventbrite’s legacy TMS struggled with inconsistencies, requiring frequent workarounds to address system gaps.

By leveraging Trovata, Eventbrite saved 48 hours monthly through automated streamlining of repetitive data tasks, enabling a shift towards strategic initiatives driving business growth. They gained confidence in the accuracy of their cash data with Trovata’s Direct-to-Bank APIs, which delivers intraday transaction updates. With Trovata, the team at Eventbrite achieved 100% data accuracy through eliminating human error with automation.

Read the full Eventbrite case study to learn more.

real-time cash visibility

Trovata: Liquidity Optimization Through Real-Time Cash Visibility

As finance departments work towards cash optimization, the first step is obtaining real-time cash visibility. Increased visibility is a strategic imperative for navigating the risks of the current economy with confidence. By embracing API-based technology, finance teams can unlock the power of real-time data, empowering them to make informed decisions, mitigate risks, and seize opportunities for growth.

Trovata provides access to the latest in treasury technology in a single platform, connecting all of your financial data into a single data lake, in real-time, without any manual data processing. From there, Trovata offers a suite of sophisticated modeling and forecasting tools, helping your team answer all of the ‘What if’s’ that can possibly be thrown at them, at the click of a button.

To find out more about all the ways Trovata can help you achieve your cash optimization goals, book a demo today.

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