Navigating cash and treasury: 2. Generate cash positioning

July 22, 2020

Are you reducing idle cash while reducing risks?

Today, the most successful financial services organizations are more focused on what’s necessary to safeguard business continuity and solvency. Much of this begins with greater visibility and reliability of key data to help drive critical business decisions—especially during times of crisis.

Download the eBook: Cash and treasury: Best practices for navigating uncertain times

Our current blog series is reviewing cash and treasury best practices during uncertain times. Last week we looked at automating bank connectivity. In part two this week, we focus on generating cash positioning.

Consideration #2: Generate cash positioning

To satisfy both operational and regulatory requirements, financial services organizations need operating models for cash and liquidity management. To achieve and maintain this capability successfully, organizations need to focus on gaining greater visibility into their cash and liquidity.

Effective cash positioning provides predictive views into a company’s cash position at any moment in the current and coming hour(s) and day(s) by consolidating multiple sources and matching actuals to forecasts (replacing “old” data in real time or near-real-time) to speed up daily reconciliation. This also helps deploy cash throughout an organization more quickly and accurately.

Effective cash positioning reduces idle cash and creates opportunities to earn immediate yield, while minimizing the risks to which that cash is exposed. Building cash positions typically involve combining data from these sources: prior-day balance, current-day bank reporting, expected payables and receivables, and open treasury transactions.

After the initial step of building the cash position, it’s then necessary to maintain and reconcile it. Maintaining the cash position requires updating and replacing cash-flow data with more recent and accurate information via intraday updates from internal systems and banks. Reconciling the cash position involves matching the actuals to forecast flows—which is often done first thing in the morning as a part of typical treasury processes. Reconciliation helps identify and understand the unexpected.

For example, if a transaction didn’t occur yesterday then it may occur today—which means that the unreconciled variance needs to be rolled into the current day’s position.

For many organizations, this process can be time consuming. Rules-based automation and artificial intelligence (AI) can help simplify the process. AI can help increase the pace and scale at which financial services organizations can automate processes.

Next week, we’ll look at how best-in-class companies are improving cash and liquidity forecasting.

If you would like to discover more about cash positioning and other related topics, we invite you to download this eBook on how to navigate uncertain times and elevate cash and treasury.

Filed Under
  • Financials
  • Banking and Financial Services
  • CloudSuite Corporate
  • Liquidity Management (Realiti)
  • Infor Treasury Management
  • Worldwide
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