Refining Cash Management Solutions to Meet Evolving Treasury Needs

Fragmented technology giving organizations an inaccurate view of their liquidity and cash position causes huge problems. To combat cash distortions in volatile markets, forward-thinking treasurers are not just upgrading tech. Many are redefining the role itself, keeping B2B payments balanced and strategic so that costs and profits can coexist. 

When views become distorted in finance – accidentally or otherwise – we get episodes like the market meltdown of 2008. Kevin Grant, Managing Director of Treasury Management at Bottomline, studies such Black Swan events that profoundly impact global finance.  

For those who watch the movements of markets and articulate treasury policy for banks or corporates with not just data but human experience, the pandemic was yet another opportunity, as is the current chaotic state of global economies.  

At these times, treasurers see a need for careful cash management melded with strategic goals, be that placing large overseas orders or building new facilities. That means knowing where your cash is, what your obligations are, and making sure the math works.  

The New Shape of Treasury 

That’s the turf of a more refined treasury function whose practitioners treat data differently, having learned unique lessons in the aftermath of major market mishaps. 

For example, Grant is a proponent of treasury tech, but only if its programs and predictions align with reality. When “the best” predictive risk models failed to foresee the 2008 crash in any way, Grant had an epiphany: Treasury needs to be more dynamic. Treasury should be looking forward and planning out how to pay for achieving strategic goals. 

“Where do we go and how do we get there? How do we finance it? How do we protect ourselves primarily from foreign exchange and interest rate risk, both intertwined,” he said. 

“We work in a world where we're selling to customers who buy in many different currencies, and we have suppliers who are globally distributed, and therefore we are buying from them in many different currencies.” 

Such are the concerns of today’s treasurers. They want help managing the complexity. 

From Treasurers to Tacticians 

New legislation and new technology often come in the wake of serious market disruptions, bringing a new set of hurdles and solutions to the fore. In treasury, more granular data and the use of AI tools are modifying the treasurer’s role with what Grant calls “a rush to simplicity.” 

“That rush to some simplicity has dawned the era of the modern treasury, but as a function and in the technology need, they have now become part of the mainstream financial operation,” Grant said. “At the UK Association of Corporate Treasurers (ACT) conference in 2024, they were talking about treasurers no longer being the geeks of finance. They are now partners within mainstream finance.” 

In this case, simplicity means less trading in exotic financial derivatives and more visibility into where money is and how it’s being utilized.  

Grant says treasurers will still engage in policy decisions and focus on complying with policy around where money is deposited, the rating of those accounts, the geographies where they’re located, the types of currency, and the tax implications of making stagnant cash liquid.  

New Treasury Ecosystems 

As treasury evolves and brings a streamlined and simplified view of finances that clears up complexities, decision-making should become more confident and accurate. 

“We can still borrow money,” Grant said. “We can still invest money. But let's not make it a complex story. Let's make it something that's easy to understand, borrowing from [the best sources], making sure that we're not doing complex derivative flip flopping in between all these interest rate swaps, FX swaps and all this other stuff. Make it simple, because the more layers you build, the more layers you have to unwind should a market shock effect your underlying business and hedging decisions.” 

Building in flexibility where financial agility is needed is a mainstream objective, and it’s a departure from overly complex treasury solutions that can become opaque over time. 

Grant’s market outlook for the next year signals a move away from complex mathematical models in treasury. “You need to get back to common sense and simple principles. We mentioned fragmented technology before. Simple is only possible if you have visibility of the information you need to run a process.” Poor access to data is often the root cause of complexity. 

What’s up next for the evolving treasury function and the software for processing it? Grant said he’s devoting thought to “setting up structures that automatically move money where we need it to be, in a tax efficient and regulatory compliant way.”