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The evolution of real-time commerce for corporate treasury

“We live in a world where it is possible to track the delivery of a pizza from order, through preparation and baking, to delivery. Corporate practitioners want the same level of information about their transactions in the business world to help them manage operations, liquidity and financial risk”, as per the Association for Financial Professionals® (AFP) Executive Guide: What Does the Future Look Like for Treasury?, underwritten by Wells Fargo Bank.

In the US today, it's common to wait until the end of the day—or the following morning—to determine whether certain payments have been received. A real-time business environment changes this by ensuring transactions are settled instantly, allowing corporate balance sheets to reflect sales and expenses as they occur.

Although it may be some time before we witness a true real-time commerce environment, the AFP guide identifies two key components that will drive its development:

Shift to real-time supply chains

The AFP guide identifies the first component that will help bring the real-time commerce environment to reality as “The shift to real-time supply chains, of which our pizza experience is an example. Both the supplier and the customer can track the progress of the transaction in real-time. This experience is only possible because of the transformation of the underlying operational process, driven, in this case, by the desire to maximize the customer experience.”

As the adoption of real-time processes expands into the B2B environment, their impact will extend beyond improving customer experience. Real-time capabilities will enable corporate finance and treasury professionals to make risk management—both operational and financial—a primary focus. By leveraging real-time insights, these executives can respond to changes in business and market conditions as they happen, helping their companies assess potential threats and mitigate risks more effectively. Thus, the shift to real-time supply chains will not only enhance the customer experience but also strengthen the internal operations and resilience of businesses.

Real-time payments growth

The AFP guide points out the second component that will drive a real-time commerce setting is the anticipated rise in the use of real-time payments.

“At present, real-time payments (such as those offered by FedNow and other similar systems around the world) are only being utilized in a few use cases. However, as we shift towards real-time commerce, real-time payments will help treasurers align the physical and financial supply chains, and they will therefore be able to manage risks and plan the use of corporate liquidity more efficiently”, the AFP guide explains.

With cash and liquidity management expected to remain among the top priorities for corporate treasury, the significance of managing liquidity in real-time will only grow in the coming years. Given that treasury is responsible for and owns corporate cash, treasurers are well-positioned to play a vital role in guiding the operational side of the business on the cash and balance sheet implications of a variety of decisions.

“As these decisions switch to more real time, treasury’s input will help to validate the analysis of the real-time supply chain. Treasury will also be required to reposition cash, for example if anticipated cash is not received or when customers claim refunds on returned online sales. Helping the wider business understand the cash and balance sheet impacts of specific actions will support improved decision-making at the operational level and enhance the customer experience”, the AFP guide states.  

Amid the shift to a real-time commerce landscape, treasury also has the opportunity to assume a more prominent role at the strategic level. For instance, by updating corporate financial statements in real-time, treasurers can base their strategic decisions on actual cash positions “Rather than forecasted ones”, advises the AFP guide.

In conclusion, the AFP guide outlines the key macro trends shaping the future of treasury: the advancement of real-time commerce and the expanding importance of treasury as the bridge between a corporation’s physical and financial supply chains. However, the rise of a real-time commerce environment, and meeting its demands, will require treasurers to transform two pivotal areas. First, they must secure real-time access to accurate cash positions, continuously updated with the latest data on collections and disbursements. Second, they need to develop models that predict customer behaviour in real time, as such decisions will have an immediate and direct impact on the company’s cash and balance sheet positions.

Embracing these AFP recommendations will necessitate a heightened adoption of AI technology by corporate treasurers, particularly technologies that enhance cash visibility and forecasting. Ultimately, by integrating real-time payments and prioritising strategic liquidity management, treasurers can significantly strengthen their organizations' operational efficiency and maintain a competitive edge in a rapidly evolving marketplace.

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