Do you know even well-funded corporates may run into a substantial financial crunch if it addresses only some of the resources to comply with monetary obligations and compliance? In order to sustain itself in the marketplace, corporates need to allow their software to collate information for greater cash and liquidity visibility.In this post, we’ll address treasury management system solutions, why it is essential for businesses, and what challenges corporates face during deployment.
Corporations that work internationally are more vulnerable to volatility in foreign exchange currencies. Let's say Company A got an invoice from a US client today, and payment isn't due for 30 days. Meanwhile, the chances are high that the foreign exchange rate may change. The amount Company A invoice may be more or less than what they expected. Moreover, interest rate volatility affects the business' ability to lend money to finance its operations. Hedging proved easy for some treasures, but understanding and knowing exposure can be challenging.
Achieving real-time payments is becoming crucial for treasurers as they strive towards having "an instant treasury" instead of relying on older, end-of-the-previous-day information. RTP can affect processes like managing subsidiaries' payments to quicker access to cash, improving the company's liquidity. To achieve this, treasurers must evaluate whether they have the capabilities and processes to handle lightning-quick settlements.
Every treasurer needs to have forward-thinking for their companies' liquidity position on their radar. If treasurers can perfectly predict their future cash positions, they can make other anticipations based on this. According to statistics, companies lose 5% of revenue to fraud annually, amounting to annual losses of nearly $5 trillion across the global economy due to poor liquidity workflow and mismanaged cashflow forecast.
