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The economic uncertainties of the past few years have made cash forecasting far from an exact science, but it’s more important than ever.
Regardless of size, location or industry, the ability to organize funds to make the best use of them while ensuring liquidity is paramount to businesses and is therefore an important treasury function.
It’s no surprise that cash flow forecasting is the top priority for businesses for the next two years, according to the findings of the European Association of Corporate Treasurers’ 2021 survey of multinational enterprises. Meanwhile, nearly half of companies (48%) who participated in GTreasury’s 2021 Cash Forecasting and Visibility Survey indicate that they struggle with generating cash forecasts.
Forecasts help to understand future opportunities and risks, two pieces of information necessary for corporate treasuries to better understand their activities while making them more efficient and resilient. In addition, businesses are increasingly relying on the expertise, services and technology of their banking partners to help them better manage their cash.
“The new world of rising rates, tight supply chains and shifting trade corridors creates new liquidity challenges,” says Stephen Randall, global head of liquidity management services at our award-winning Citi Best Bank for Cash Management and Best Bank for Liquidity Management. rewards. “Technology is a key enabler as companies strategically manage cash to fund growing working capital financing needs and to increase trade flows in real time.”
Citi helps clients with industry-leading technology “to better forecast their cash flows, centralize and access liquidity in more markets than any other bank, distribute funds where they’re needed 24/7, within the cash controls desired by our clients and centrally invest excess cash in a range of short-term investment instruments,” adds Randall.
Recent examples include Citi’s Real-Time Liquidity Sharing, which makes it easier for companies to utilize real-time intraday liquidity across their entire footprint and currencies. Partnering with Cashforce enables Citi customers to extract disparate business data across their businesses, normalize their data, and support agile decision-making using provided analytics tools.
Bank of America (BofA), which won Best Bank for Payments and Collections, also sought to improve cash forecasting through technology.
“Artificial intelligence and machine learning technologies can automate the analysis of large datasets in seconds,” said Fernando Iraola, co-director of GTS Global Corporate Sales and head of GTS Latin America at Bank of America. “Not only that, but these technologies are dynamic and can continue to learn over time as patterns change in a company’s underlying cash flows. Innovative new solutions such as CashPro Forecasting are rapidly adopting these technologies as corporate treasury teams seek ways to automate, improve and simplify their cash forecasting processes.
Finance Integration
E-commerce platform providers are riding a wave of banking-as-a-service (BaaS) integration with their offerings, and businesses are reaping the benefits.
Stripe Treasury launched its BaaS application programming interface (API) in December 2020. The offering enables users of its platform to build comprehensive and scalable financial products. The vendor, winner of this year’s Best White Label System Vendor – Non-Banking award, has partnered with a network of global banks, including Barclays, Citi, Evolve Bank & Trust and Goldman Sachs, enabling markets to provide access to ACH and wire transfers, interest-bearing accounts, payment funds and other services to help manage cash flow.
For businesses that want to cut out the middleman, new direct-to-consumer channels enable businesses to collect valuable consumer data faster, bring offers to market faster, and increase sales opportunities while personalizing the ‘client experience.
For example, BofA launched its Recipient Select service in October 2021. The service allows recipient consumers, or “recipients,” to select how they receive their payments through a customer-branded web portal.
“Technological advancements in recent years have brought companies closer to their customers, who today can be located anywhere in the world,” says Faiz Ahmad, Head of Global Transaction Services (GTS) at BofA. “One consequence of this is that businesses must respond to customer requests for different payment options. Solutions such as Recipient Select allow our customers’ customers to choose how to get paid while relieving customers of the operational burden linked to the connection to each single payment system.
BNY Mellon, winner of the Best White Label System Provider–Bank award, offers private label services to North American banks that give those banks the ability to leverage BNY Mellon’s global network, experienced business experts, and services. state-of-the-art online. processing and trade finance solutions to better serve their customers.
BNY Mellon is also leveraging The Clearing House’s real-time payments system to provide businesses with an instant digital bill payment service, available through the bank’s white label offering.
More than 1,000 financial institutions trust Societe Generale, winner of the Best Bank for Financial Institutions award, to process a wide range of international transactions. Offerings include Instant Payment, Swift’s low-value payment initiative, WebClear and the International Information Network project, as well as the bank’s FX tools such as Pay FX and Auto FX. With a global customer base, deep market making capabilities and global market access, Societe Generale provides liquidity to its clients when needed. The bank ranks third globally in euro clearing for banks and provides clearing in five other currencies due to its long-standing presence in Eastern Europe and West Africa.
Money Market Funds (MMFs) can free treasury professionals from the activity of counterparty pricing and securities trading while providing a high degree of transparency. This year’s winner of this year’s best provider of short-term investments/MMF, JP Morgan Asset Management, won the award for two of its AAA-rated funds, the JPMorgan Prime Money Market Fund, which invests in short-term bonds high-quality, short-term securities that present minimal credit risk, and the JPMorgan US Government Money Market Fund, which invests exclusively in high-quality, short-term securities issued or guaranteed by the US government or US government agencies. Both funds adhere to environmental, social and governance (ESG) principles.
Greater cash flow visibility and more accurate forecasting enable treasuries to meet their short-, medium-, and long-term liquidity needs while helping them select the appropriate investment tools and services to match risk and return and make their cash flow work harder.
With ever-improving technology, treasurers can rely on greater automation to support their working capital operations. They also have an abundance of payment offers to choose from, as well as real-time cash and liquidity management systems at your fingertips. Meanwhile, banks are playing an increasingly crucial role in the march to real-time cash, while corporate treasurers will continue to seek banking partners who can help them navigate this ongoing transformation.
Methodology: Behind the rankings
Global Finance editors select the winners of the Best Treasury & Cash Management Awards with input from industry analysts, business executives and technology experts. The editors also use entries submitted by financial services providers, as well as independent research, to assess a range of objective and subjective factors. You do not have to enter to win, but experience shows that the additional information provided in an entry can increase the odds of winning. In many cases, participants are able to present details and insights that may not be readily available to Global Finance editors.
This year’s ratings are based on the period from January 1, 2021 to December 31, 2021. (Companies with different fiscal year reports have the option of submitting data from the fourth quarter of 2020 to the third quarter of 2021.)
Global Finance uses a proprietary algorithm with criteria such as knowledge of local conditions and client business needs, quality of product and service offerings, financial strength and security, market position, compliance and a excellent customer service, weighted according to their relative importance. The algorithm incorporates various ratings into a single numerical score, with 100 equaling perfection. In cases where multiple institutions achieve the same score, we favor local providers over global institutions, and private banks over public banks.
The winners are the financial services providers that best meet the specialized needs of businesses engaged in global trade. These top-notch financial institutions are not always the biggest, but rather the best, ones that possess the qualities businesses should look for when choosing a provider.
