The Rise of Real-Time Treasury: Why Businesses Can’t Afford to Wait

In an era defined by volatility, unpredictability, and rapid changes, finance and treasury teams are experiencing ever-growing pressure to perform with agility, speed, and precision. From market shifts, regulatory changes, currency instability, and rising interest rates, businesses are tasked to optimise liquidity performance and still deliver growth.

With financial transactions now, both outgoing and incoming, happening at all times, it becomes strategically imperative to have real-time insights into cash positions and treasury functions in order to respond appropriately and act proactively rather than reactively.

This is why real-time treasury systems and strategies have become paramount in how modern, global businesses maintain a competitive advantage and unlock efficiency and resilience in their financial and treasury operations.

In this article, we delve into why treasury and finance teams in mid-size and large global businesses should consider real-time treasury to be a strategic priority and how technology, including real-time payments, can be leveraged to overcome the challenges posed by the market.

In a nutshell, real-time treasury means integrating existing technologies and processes, and automating them to provide instant visibility into financial data, at all times. This is a stark contrast to traditional treasury management methods that rely on manual uploads, transaction processing, reporting, and periodic updates.

With greater and instant visibility into transactions, cash movements, and cash positions comes greater control and governance, which can be extended not just to one account but across all entities or groups of companies and significantly optimise liquidity management.

Centralising liquidity management into one system ensures that accounts utilised for instant payments are appropriately funded to facilitate quick transactions. Accessing live financial data allows the finance and treasury team to respond strategically and in a timely manner to risks such as payment delays or currency fluctuations and to capitalise on any market opportunities.

Real-time treasury is the modern way of managing cash proactively rather than reactively or retrospectively, based on outdated data. It improves decision-making and gives a competitive edge, allowing businesses to grow in a highly competitive and volatile market.

The increasing need for real-time solution for treasury is heavily influenced by multiple macroeconomic, technological, and operational factors that encourage a growing number of companies to adopt it:

Market Volatility

We live in a world of intense geopolitical tensions, and those have a major impact on the economy and finances. Where wars or political instability are present, supply chains are disrupted and currencies fluctuate. For businesses operating cross-border, it signifies being more attuned to potential risks and agile in responding to them. Adopting real-time treasury processes and tools unlocks the ability to stay ahead and identify the threats before they turn into a significant issue. That way, treasurers and finance teams can adapt and ensure stability in uncertain environments.

Inflation and Rising Interest Rates

The past couple of years have seen the trend of central banks around the world adopting a stricter monetary policy. For treasury management, this means that idle cash comes with a higher cost. Managing treasury in real-time gives full visibility into available cash, meaning it can be managed in a timely manner. It also opens doors for redeploying funds into high-yield investments or reducing expensive borrowing, thus optimising liquidity.

Real-Time Payment Systems and Open Banking

The finance landscape is evolving fast with new innovations in the payments and banking space. The most notable ones that improve the speed and transparency of transactions, streamline workflows, and reporting include SWIFT GPI, real-time gross settlement (RTGS), as well as open banking APIs. Advanced payment processes, including instant payment systems, eliminate the need for manual interventions and support automated cash management, which collectively optimise business operations. Wider adoption of these technologies by financial providers and finance tools means that, in order to stay competitive, businesses need to embrace the change.

Liquidity Optimisation Needs

Markets move fast, and just-in-time liquidity management is crucial. Having an instant overview of cash positions with real-time treasury and the right tools in place enable businesses to take advantage of solutions like dynamic cash pooling, intra-day sweeping, and instant intra-company funding to optimise liquidity on an ongoing basis.

The shift to real-time treasury isn’t just about faster processes and instant insights; it’s about creating tangible, long-term value across all financial operations.

Traditional methods of planning and cash flow forecasting rely on manual aggregation of data from multiple sources and historical data, which can lead to, firstly, delays and, secondly, inaccuracies if forecasts are based on outdated inputs. With live data coming from real-time systems, treasurers can generate accurate reports and more detailed, accurate short or medium-term forecasts that feed into better, company-wide decision-making.

Additionally, as cash is fully visible, cash surpluses and deficits can be swiftly identified and reallocated to where they are needed most, improving liquidity and access to working capital, and reducing any potential reliance on external borrowing.

A similar principle applies to transactions and money movements. Having live insights into incomings, outgoings, and currency fluctuations means finance teams can spot potential risks, whether from currency risk, counterparty exposure, or fraud. They can then respond in a timely manner before issues escalate and implement appropriate measures for the future.

Finally, traditional treasury processes remain reliant on manual, labour-intensive processes which are prone to errors. Real-time treasury systems automate a significant portion of financial operations such as payments, reconciliations, and approvals to free up operational budgets and team resources for strategic activities.

Real-time treasury systems all share similar technology pillars that enable greater visibility operational efficiency, and agility:

1. Banking and Financial Institutions Tool Integrations

API and Open-Banking technology enable seamless integrations with existing systems to centralise and consolidate financial and operational data. With all information in one place, accessible at all times, finance and treasury professionals can generate dynamic, self-serve reports to support their decision-making.

2. Intra-Day Sweeping and Virtual Accounts

Intra-day sweeping enables real-time liquidity management by allowing treasurers to consolidate cash multiple times a day. Virtual accounts streamline cash concentration and simplify bank management, especially in multiple jurisdictions, by aggregating physical accounts into a master account.

3. Treasury Automations

Automating traditional treasury processes such as the reconciliation of payables and receivables and the expedition of payments not only increases the real-time visibility of accurate cash flow but also increases efficiency across the business, unlocking cost savings.

4. Cash-Flow Forecasting and Cash Management

Real-time treasury systems can support your cash flow forecasting in two ways: either through in-built tools powered by AI and machine-learning algorithms that leverage historical trends, payment data, and even external market conditions to produce forecasts, or by extracting rich data from the system using API and transferring it to your Business Intelligence tool to build even more advanced models.

5. Real-Time FX Management

For businesses operating cross-border, getting access to real-time currency conversion and hedging solutions can reduce FX exposure and minimise costs. Setting up automated workflows that execute hedges in response to triggers allows businesses to quickly shield themselves from adverse currency movements or take advantage of favourable conditions.

The benefits of real-time treasury processes and tools are undeniable and are becoming widely recognised and adopted within the industry. Many companies, unfortunately, still face challenges on their route to adopting real-time treasury management.

A vast number of larger organisations still operate on outdated technological infrastructure, where the quality of data is poor; therefore, real-time capabilities may not be supported. Before making further changes, upgrading legacy systems may be necessary, which would involve extensive change management and implementation projects.

Change management can indeed be another bottleneck. Without a clear vision and training, it may be difficult to get buy-in from leadership and employees.

Finally, there are compliance risks that need to be addressed. Increased access to data elevates the risks of compliance breaches and cybersecurity attacks, which means that with a move to real-time treasury, organisations need to adopt stronger security measures.

The journey to real-time treasury is an exciting one as it unlocks opportunities in better liquidity optimisation, risk management, and cash visibility. It begins, though, with an honest evaluation of your current systems and capabilities:

Evaluate existing treasury processes and systems to identify inefficiencies and delays.

Partner with technology providers and financial institutions that specialise in real-time, unified treasury and cash management solutions, like Fyorin, that will help you find a solution to your pain points and tailor the system to your needs.

Pilot new technologies like automated workflows, forecasting, hedging, or API integrations on a smaller scale before rolling them out to the entire business. This will help you build a case for broader organisational goals such as revenue growth and risk reduction.

Real-time treasury is not just a technological upgrade; it’s a strategic necessity that empowers businesses to adapt to market conditions, optimise liquidity, and thrive in the long term.