- Small business and middle market companies are now taking advantage of technology in a way that only large companies could in the past.
- Small and middle market businesses are increasingly shifting away from reliance on online banking systems to treasury workstations, accounting packages and other programs to directly connect to their banks for information reporting and transaction capabilities.
- The trend toward direct connectivity will likely continue due to the introduction of lower-cost and cloud-based systems.
Trends in Treasury Management
Treasury management, the corporate process of collecting, disbursing and investing a company’s cash, is becoming an increasingly complex process. Banks, as well as many fintechs, are offering more and more options to help ease the burden of day-to-day banking. In today’s world, there are three primary trends taking place in the area of treasury management:
- The ever-increasing shift from paper to electronic payments (ACH and card)
- The demand for faster payment capabilities
- The drive toward direct connectivity to banks
In this article, we’ll address the drive toward automation and direct bank connectivity — trends that are likely to increase at a rapid rate over the next few years.
Direct Bank Connectivity
Years ago, only the largest companies made use of the most sophisticated banking technology available. Today, due to the widespread use of computers, cloud-based systems, and less expensive accounting packages and treasury workstations, both middle market companies and small businesses are now striving to use the same technology to achieve efficiency in banking.
Decision makers today are used to technology. Not only are they used to it, they embrace it. This widespread use of technology and the introduction of lower-cost treasury workstations and Enterprise Resource Planning (ERP) systems are paving the way and drive toward direct connectivity in banking.
What do we specifically mean when we say, “direct connectivity and automation?” Companies are shifting away from the use of online banking systems, or dependency on online banking systems, for information reporting and transaction origination (for example, wires, ACH, check payments and card), to relying on other financial packages and services for the same purpose.
Why enter a payment into your general ledger only to have to then log in to a bank’s online system to enter the same transaction again? When you use multiple banks, why log in to each bank’s online banking system to get balance information when you can pull all of your banking information into one report on your own software or system with the click of a button?
Treasury workstations, accounting programs and other financial packages, both software and cloud-based, provide these types of functions. Direct connectivity eliminates the duplication of tasks and improves reporting and reconciliation practices in a company’s day-to-day banking.
Benefits of Direct Connectivity
Today, businesses have become increasingly reliant upon technology to improve the flow of information and efficiency, reduce costs and optimize the use of their company’s cash. Companies using treasury workstations, accounting packages and other financial systems can connect to their banks for multiple information reporting and transaction options.
On the information side, for example, they can import data-enriched files to improve internal reporting and expedite the reconciliation process — an enhancement over what most online banking systems offer. On the transaction side, companies can originate wire, ACH, check and card transactions directly from their own systems to the bank. The following are just a few examples of direct connectivity capabilities:
Information Reporting / Data Enrichment
USD Wire Transfers (Domestic and International)
Foreign Currency Wire Transfers
Enhanced ACH Reporting (ACH Detail)
ACH Origination Reporting
Check Outsourcing and Positive Pay
Card Payments (Virtual Cards)
Direct connectivity using treasury workstations, accounting programs and other financial packages can eliminate and/or reduce the need to use online banking systems. Again, direct connectivity creates efficiencies by eliminating dual entry and allowing for the import of more detailed, data-enriched transaction information.
In today’s market, there are many treasury workstations and accounting packages that allow business customers to directly connect to their bank. When considering such programs, businesses should explore all of their capabilities to make certain that they select the program that best matches their own company’s unique needs and requirements.
Treasury Management for Small and Mid-Market Business
The trend toward automation and direct connectivity is well underway and is expected to continue at a rapid rate over the next few years. At First Republic, our treasury consultants have the knowledge and expertise to discuss and advise customers in a holistic fashion across the full array of products and services — liquidity, account management, receivables, payables and fraud prevention solutions.
Our treasury consultants also advise customers on what to look for when considering the purchase of a treasury workstation or expense reporting system — product use, integration, cost, implementation and after-sale support are all items that our consultants encourage clients to consider when upgrading and purchasing systems for direct connectivity to their bank.
First Republic’s treasury management product set is designed to help corporate treasurers, Chief Financial Officers and controllers manage their cash through every part of the cash flow cycle. Connect with First Republic today to learn more about direct connectivity and automation.
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