Smarter Payments, Better Insights: Why Treasurers Should Embrace ISO 20022 Sooner Rather Than Later
This article is a contribution from our content partner, Salmon Software With the move to ISO 20022, cross-border financial messages are becoming richer, smarter, and more structured – leaving legacy formats, and their limitations, behind. For corporate treasurers, this is a rare chance to rethink how data flows across treasury. And with the transition deadline set for November 2025 (for financial institutions using the SWIFT network), corporates must also prepare for a shift that enhances payment processing, cash visibility, and automation in reconciliation processes. Understanding the Key Differences Between MT and MX Messages ISO 20022 introduces a new generation of messages – commonly referred to as ‘MX’ in the SWIFT world. While MX is specific to SWIFT, the ISO 20022 standard is also being used in other payment systems globally, such as SEPA and domestic real-time payment schemes. MX messages offer a significant improvement over SWIFT’s traditional MT formats. Unlike text-based MT messages, MX messages use XML, which provides greater flexibility, enriched data fields, and improved interoperability. The structured data format (compare the two examples below by following the links) allows for more transparency, supporting Unicode and including structured addresses, Purpose Codes, and Legal Entity Identifiers (LEIs). Additionally, automation is significantly enhanced through Straight-Through Processing (STP), reducing manual interventions and errors. Message comparison – MX vs MT Example camt.053.001.02 – XML version Example MT940 This transition also improves cash visibility by enabling real-time transaction tracking and enriched remittance data that streamline reconciliation processes (see table for more details). Feature MT Messages MX Messages (ISO 20022 via SWIFT) Benefits of MX for Treasury Data structure & format Text-based, fixed-length fields XML-based, structured and flexible Easier integration, better machine readability Data capacity Limited Rich and extensible More detailed payment/remittance data Interoperability Proprietary to SWIFT Globally standardised (via ISO 20022) Easier cross-border and multi-bank integration Character set Latin-only (ASCII) Unicode (multi-language support) Handles global languages and special characters Flexibility Rigid and hard to adapt Flexible and extensible Easier to meet changing regulatory or business needs Efficiency Manual processing common Supports automation (STP) Reduces errors, lowers operational costs Cost Often higher due to manual steps Lower with automation Saves time and resources on reconciliation Information richness Limited field usage, often free text Structured fields (e.g. LEI, Purpose Code, structured address) Enables advanced reconciliation, analytics, and compliance checks The Business Impact: Faster Payments and Better Cash Management As the table outlines, ISO 20022 offers treasury teams a range of operational and strategic benefits that go beyond compliance. These include faster settlements, thanks to standardised, structured data helping to reduce delays in both domestic and cross-border payments. This cuts processing times from days to hours, or even minutes. Improved cash flow visibility can also be achieved as a result of enriched statement data (e.g. camt.053) which supports near real-time insights, enabling more accurate forecasting and reduced need for buffer reserves. In addition, liquidity management can be enhanced as a result. With better visibility and control, treasurers can optimise working capital and deploy cash more efficiently across entities. Elsewhere, smarter reconciliation can be achieved as detailed remittance and structured references reduce manual effort and speed up matching between bank statements and internal ledgers. And risk management can be improved, through the use of standardised identifiers like LEIs and Purpose Codes to help with screening, fraud detection, and audit trails. Finally, the richness of ISO 20022 messages enables true data-driven decision making, resulting in better analysis for investment planning, intercompany funding, and FX hedging. Why Acting Early Pays Dividends While corporates aren’t subject to a hard deadline for migrating to ISO 20022, there are some important changes on the horizon. For example, from November 2026, all international and SEPA payment instructions must include structured or semi-structured addresses for counterparties. Unstructured formats will no longer be supported, meaning that treasurers will need to ensure their ERP or TMS is ready to capture and transmit address data in the correct format. At a minimum, this includes fields like ISO country code and town name. So, although corporates can technically continue using MT101 files for now, forward-looking treasurers are already planning ahead. Migrating to ISO 20022 XML formats, including pain.001.001.09 (customer credit transfer initiation), ensures alignment with both regulatory expectations and operational best practices. This version supports enhanced data elements including LEIs, Unique End-to-End Transaction References (UETRs), and structured remittance fields, all of which help strengthen reconciliation processes and audit readiness. With most banks set to phase out MT messages by November 2025, relying on dual formats (MT and MX) beyond that point introduces additional operational complexity and risk. For treasury teams, early adoption is the best route to smoother operations, improved compliance, and better long-term efficiency. 5 Steps to Ensure a Smooth Migration To take advantage of the benefits on offer, it’s important to recognise that migrating to ISO 20022 is not just about systems upgrades. It requires a wider business transformation, too. Following a structured migration plan can help: Addressing Common Migration Challenges Despite the many benefits of ISO 20022, the path to full adoption isn’t without obstacles – especially for corporate treasurers who sit downstream of their banking partners’ progress. One of the biggest challenges is inconsistent adoption across the banking ecosystem. Not all banks are progressing at the same pace. Some may have already migrated to MX formats, while others continue to use legacy MT messages or apply temporary translation layers that convert ISO 20022 messages into MT formats. This creates data quality gaps, format inconsistencies, and a potential loss of enriched information during translation. To help mitigate these risks, treasurers can take a proactive and collaborative approach. For example, best practice suggests that treasury teams should engage early and often with banking partners to help smooth the migration. Ask relationship banks for a clear roadmap of their ISO 20022 implementation, including timelines, supported message types (e.g. camt.053, pain.001), and any interim conversion strategies. Understanding which banks are sending native MX and which ones use MT back-conversion will also be key to managing expectations. Assessing internal systems readiness is equally important. TMSs and ERPs, as…
Franklin
Nordics and Estonia Develop Offline Card Payment Systems: A Wake-Up Call for Corporate Treasury
In response to recent undersea infrastructure damage and rising geopolitical tensions, Finland, Sweden, Norway, Denmark, and Estonia are making strides to develop offline card payment systems. This initiative aims to ensure uninterrupted payment capabilities during times when internet connectivity is compromised. Sweden, in particular, has set a deadline for implementing this system by July 1, 2026, for essential transactions, aiming to support outages lasting up to seven days. While this may seem like a necessary precaution in the face of unexpected internet disruptions, it also raises critical questions about how reliant we have become on digital payment infrastructure—and what this means for the world of corporate treasury. Why Are We So Dependent on Digital Payment Systems? Corporate treasury operations have become deeply intertwined with technology. From managing liquidity to handling payments and foreign exchange, everything today operates through highly integrated, tech-driven systems. As businesses scale and grow globally, online payments have streamlined processes, improved cash flow management, and reduced errors that might arise from traditional, paper-based systems. Technology allows companies to connect with banks and financial institutions across borders, using platforms that support real-time transactions, instant payments, and automated treasury management systems (TMS). However, as we place more trust in these systems, we also increase our vulnerability. A disruption to internet connectivity or technical glitches can cause immediate ripples throughout the business world. In fact, the pandemic showed us just how vulnerable we are when systems fail or become compromised. The dependency on tech-driven payment systems makes any disruption in connectivity a potentially catastrophic event for global businesses. The Risk of Being Too Reliant on Tech One key lesson to draw from the Nordic countries’ shift to offline card payments is the recognition of just how fragile our digital infrastructure can be. Financial institutions, payment systems, and even our everyday business functions are tied to internet connectivity. The reality is that without access to the internet, treasurers may find themselves unable to access funds, settle payments, or execute critical financial transactions. For corporate treasurers, this reliance creates a scenario in which liquidity management, treasury reporting, and cash flow forecasting could become severely compromised. For businesses, this means that disruptions could affect everything from employee payroll to vendor payments and even customer transactions. The possibility of a system downtime lasting hours—or even days—could severely hamper treasury functions, potentially leading to missed opportunities, delayed payments, or even lost business. Why Treasury Teams Should Pay Attention Corporate treasurers, responsible for ensuring smooth financial operations and managing cash flow across the business, are becoming increasingly aware of the growing reliance on digital systems. The need for operational resilience has never been more critical. These recent developments in the Nordics are a wake-up call, signaling that businesses must account for offline capabilities in their treasury and payment systems. Here are a few takeaways for treasurers: The Bigger Picture: Geopolitical and Infrastructure Risks The recent efforts by Nordic countries are not only driven by technological considerations but also by the broader geopolitical environment. Geopolitical tensions and infrastructure vulnerabilities, particularly in undersea cables, are increasing the potential for disruptions. Treasurers need to stay ahead of these risks by not only investing in backup systems but also by monitoring geopolitical developments that could impact their payment infrastructure. Conclusion As the world becomes more interconnected through digital systems, businesses must ensure that their treasury operations are resilient enough to handle disruptions. The efforts of the Nordics and Estonia to develop offline card payment systems should serve as a reminder of the importance of planning for system failures in an increasingly tech-dependent world. For corporate treasurers, the time has come to reassess risk management strategies and ensure that payment systems—both online and offline—are integrated and prepared for whatever disruptions may arise. In the end, the question is not just about building smarter, more efficient payment systems; it’s about preparing for the times when those systems fail, and ensuring that business continuity is maintained in every scenario. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Leveraging Data for Treasury Decisions: A Single Source of Truth
This article is written by Treasury4 Treasury operations are more complex than ever before. Treasurers must deal with everything from cash and liquidity management to compliance and risk reduction—all across multiple global entities. Adding to these challenges is the issue of siloed data. With accounts across multiple banks, departments, and entities, treasurers are often tasked with tracking down, compiling, and comparing isolated data points. This task is time-consuming and can lead to data disparities, which can, in turn, limit the ability to make timely and accurate strategic decisions. To overcome these challenges, treasury teams need a unified data platform for all their various data. By integrating entity, cash, and banking information into one single source of truth, treasurers can gain comprehensive, real-time insights that reduce inefficiencies, allow for more agile, informed decision-making, and foster alignment with broader organizational goals. In this article, we’ll delve into the problems caused by siloed data, the value of a centralized platform, and the actionable steps to implement one effectively. Challenges of Siloed Data in Treasury Fragmented data systems remain a pervasive problem for treasurers—limiting their ability to manage operations effectively. The ripple effects of siloed data impact critical processes, from cash flow forecasting to compliance and risk mitigation. Common issues include: 1. Disconnected Data Sources Data silos typically result from the use of multiple standalone systems, such as ERP modules, bank portals, and entity-specific spreadsheets. For example, a multinational corporation might operate in dozens of countries, each with its own banking relationships and financial systems. Consolidating this scattered data manually can be an arduous and error-prone task, leading to incomplete or outdated reports, compliance issues, and other risks. 2. Inefficiencies and Inconsistencies The manual processes required to consolidate fragmented data can lead to significant bottlenecks. These inefficiencies are compounded when discrepancies arise between systems, such as mismatched transaction records or differing formats for cash flow data. 3. Limited Visibility Siloed data severely hampers the treasury team’s ability to gain a real-time view of cash positions, leaving them in a position to be reactive instead of proactive. This lack of visibility can lead to: The Concept of a Single Source of Truth To address these challenges, a centralized platform consolidates all treasury data into a single source of truth, providing a reliable, real-time view of the organization’s financial health. Having a single, integrated dataset enables treasury teams to: Key components include of a centralized data platform include: By leveraging centralized technology platforms like Treasury4, treasury teams can create a clear, accurate data flow, breaking down silos and ensuring all stakeholders operate with the same information. Benefits of Data Integration for Treasury Decisions Integrating siloed data into a single source of truth delivers several strategic advantages, including: 1. Enhanced cash visibility A unified platform provides a clear, real-time picture of cash positions across all entities and accounts. This visibility allows treasurers to: 2. Improved forecasting accuracy By integrating historical data with real-time insights, treasury teams can: For example, predictive analytics tools built into advanced platforms can analyze past trends to suggest actionable insights, such as identifying recurring cash flow patterns or potential shortfalls. 3. Streamlined compliance and reporting Compliance is an area where siloed data can cause significant risks. Integrated platforms simplify regulatory and internal reporting by: Treasurers can respond quickly to requests for information, saving time and reducing the risk of non-compliance. 4. Faster Decision-Making Treasury operations often require swift decisions, whether it’s seizing investment opportunities or addressing unexpected liquidity needs. By consolidating data, teams can: How Technology Enables Data Integration Modern technological solutions can give treasurers the tools to centralize data and automate processes. For instance, modern treasury management systems (TMS) like Treasury4 provide: Application programming interfaces (APIs) are critical to providing unified data. APIs connect separate systems in real time, allowing data integration across bank portals, ERP systems, and external compliance or investment tracking tools. Case study: How an integrated system transformed decision-making for one global organization For years, one $4 billion global enterprise relied on various spreadsheets to keep track of its entities spanning over 50 countries and its 150-plus bank accounts. These spreadsheets were often outdated, making it difficult to gain consistent, reliable insights from treasury data. The team needed a system to provide a single source of truth for their banking data, with a reliable audit trail. The team decided to adopt Entity4. Not only could it provide the treasury team with the system of record they needed, but it could also act as a single source of truth for other departments, including legal, tax, and more. After spending a quarter transitioning their spreadsheet data to Entity4, the finance team had access to accurate, reliable reporting on their banking data. The team now has full control over and visibility into their accounts—including the interactions and relationships between accounts—significantly reducing both operational and credit risk. Steps to Transition to a Single Source of Truth Shifting to a single, centralized platform requires a well-thought-out strategy to ensure a smooth transition. 1. Assess current data silos: Conduct a comprehensive audit to identify where data resides, who owns the data, and how data flows between systems. This step helps pinpoint gaps and inefficiencies. 2. Select the right platform: Choose a treasury management system that aligns with your organization’s needs. Consider compatibility with existing systems, real-time reporting and analytics capabilities, and scalability to accommodate your organization’s growth. 3. Foster cross-functional collaboration: Collaboration between treasury, IT, and finance teams is essential to align technology implementation with operational goals. Ensure all stakeholders are involved in decision-making and rollout plans. 4. Implement role-based access: Role-based access controls ensure secure sharing of data, enabling stakeholders to access relevant information without compromising sensitive data. Conclusion Siloed data can present a significant obstacle to treasury operations, creating delays, inefficiencies, and risks. Transitioning to a single source of truth transforms the treasury’s ability to manage cash, liquidity, and compliance. It enhances visibility and forecasting capabilities, allowing for easier compliance management and faster decision-making. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or…
Why was Treasury 2.0: Future-Proofing Finance with AIWritten and Why It Matters Now
In the treasury world, change is no longer a slow evolution. It’s a fast-moving reality. New technologies, shifting expectations, and global complexity are reshaping treasury’s role at a pace most traditional playbooks can’t keep up with. This is exactly why one of our Board Members, Bojan Belejkovski, wrote Treasury 2.0: Future-Proofing Finance with AI. The idea for Treasury 2.0 came from real-world frustration. Despite a wave of technology marketing across finance, treasury teams are often left behind. Even some of the largest technology vendors, when asked how their tools support treasury management, admit that their solutions focus mostly on accounting administration, not on the liquidity, risk, and cash management challenges treasury teams face daily. For too long, treasury professionals have had to rely on outdated materials focused on basics: treasury 101 guides, certification handbooks, or academic theory. Very few resources address the realities of treasury leadership today where AI, automation, and strategic agility aren’t future concepts, but daily necessities. What Treasury 2.0 Provides a Resolution To Treasury 2.0: Future-Proofing Finance with AI directly tackles the growing gap between what treasury professionals need and what traditional resources offer. The book doesn’t just outline the changes happening but it offers practical tools for navigating them. Readers will explore how AI can be used to automate cash forecasting, predict liquidity needs, manage risk in real time, and strengthen decision-making across treasury operations. In particular, the book introduces practical techniques for AI prompt engineering — a skill that can dramatically improve how treasury teams interact with and extract insights from AI-driven systems. The author, Bojan Belejkovski, spent months studying prompt engineering, testing approaches, and seeing firsthand how it increased the quality and accuracy of treasury-related work. This practical knowledge is distilled throughout the book to give readers a clear advantage as they adopt new technologies. Who Treasury 2.0 Is For? Treasury 2.0: Future-Proofing Finance with AI is written for treasury and finance professionals who understand that the old ways of working are no longer enough. It’s for practitioners who are ready to move beyond spreadsheets, static reports, and manual processes and who want to build treasury functions that are faster, smarter, and more resilient. Whether you’re a senior leader setting strategy or a practitioner managing day-to-day liquidity and risk, the book offers a framework for thriving in a world where AI and digital transformation are rewriting the rules of finance. Treasury 2.0: Future-Proofing Finance with AI is available on Amazon. To learn more and get your copy, visit https://a.co/d/a6lMujY today. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Bojan
Treasury Contrarian View: Should Treasury Really Own Working Capital Optimisation?
Working capital optimization is increasingly seen as a core treasury KPI. But let’s challenge that assumption: Is treasury really the right function to own working capital initiatives—or should that responsibility remain with procurement, operations, and finance? In many organizations, treasury is now being pulled into working capital programs. But is that a strategic fit or a forced expansion of the role? The Case for Treasury Ownership The Case Against Treasury Ownership A Collaborative Approach Rather than assigning working capital ownership to a single function, a more effective model might be: Let’s Discuss We’ll share insights from treasurers, CFOs, and procurement leaders on how to strike the right balance—join the conversation! COMMENTS Wayne Mills, Chief Product Officer at ETR Digital, comments: The question of whether the responsibility for working capital optimisation should fall under the treasury department depends on organisational complexity and structure as well as how accountability is assigned. Working capital optimisation can be said to fit naturally into the treasury function in view of its adjacency to the strategic management of liquidity, funding, cash flow forecasting, financial risk, and bank relationships – indeed, optimising all forms of capital is a key role of treasury. There is, however a more practical view that many elements of working capital are operational and controlled by functions outside the treasury department, including sales, procurement, operations and IT. Treasury insight into these areas may be more limited, leading to sub-optimal outcomes, noting that internal sources of working capital optimisation may be easier to access, cheaper and deliver long-term sustainable solutions. Accountability v Responsibility In my view, Treasury should be accountable for working capital optimisation with other functions being responsible. Embedding a culture of optimisation through aligned cross-functional KPIs will deliver the required outcome – ultimately creating shareholder value. The most important aspect, in my view, is an inherent shared culture of continual improvement – working capital optimisation is not a one-off project; it’s an opportunity to become best in class. It is, after all, a team sport! Eleanor Hill, Freelance Content Creator, Treasury Storyteller, comments: Working capital optimisation (not just management) is ultimately a behavioural and structural challenge. You’re trying to change how different parts of the business make decisions, often without direct authority over those decisions. Treasury can definitely play a valuable role here – not because they ‘own’ the process – but because they’re often the only team with visibility across the full cycle and the motivation to optimise for the whole, not just the parts. But working capital optimisation inevitably means trade-offs. Do we extend terms with suppliers or invest in long-term relationships? Or can we do both? Do we push sales to invoice faster or rework the entire quote-to-cash process? These aren’t decisions treasury can make alone. That said, treasury can frame the choices more clearly (in terms of liquidity, risk, opportunity cost) and help the business approach them more intentionally. Tools like supply chain finance can support this if they’re used thoughtfully. Not just to improve DPO, but to offer flexibility to suppliers and even assist towards ESG goals – like offering better rates to businesses with strong sustainability credentials or inclusive ownership. But again, these tools only work when the underlying strategy is solid and agreed across departments. From every case study I’ve written on this topic (a lot!), I’d say the best working capital optimisation projects have been run by high-performing cross-functional teams. It’s all about collaboration. Nicholas Franck, Treasury Masterminds founder and board member, comments: As it says in the article, several different units work on and are responsible for different parts of working capital. It probably doesn’t stress enough the interrelationship between the areas though. Making life better for procurement and the treasurer can make life harder for sales. Choose any functions – If they’re not working on working capital together, the result is likely to be biased and suboptimal. Match responsibility to authority. The owner should be the owner of whoever controls all the processes, so, usually, the CEO. How? The best way I’ve seen is by having a company wide KPI: Net Working Capital as % of Sales. It encourages all the functions to work together, not fight against each other. Note that it’s net working capital, not gross. Treasury is still in charge of cash and short term debt. It collaborates with everyone else on the rest. It’s clear some companies will benefit better off with Net Working Capital as % of Gross or Net Profit. The principle’s the same: Align authority with responsibility. No one function can own working capital. All functions must want to work together on it. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Operationalising AI in Treasury: From Experiment to Execution
This article is written by ETR Digital Businesses are moving from AI curiosity to real-world application. And with growing C-suite support, treasury teams are no longer sitting on the sidelines of this digital transformation. According to Operationalising AI – The View from the Top, a recent report by Womble Bond Dickinson, 97% of CTOs say they’re already using AI. Over half (54%) cite data-driven decision-making as a core reason. These aren’t experiments anymore, they’re embedded deployments reshaping processes and financial systems in real time. For Dominic Broom, CEO, ETR Digital – and contributor to the report – this shift is long overdue. “There’s a lot of talk about AI in the abstract, but what matters is how it’s being applied in the real world. Like other digital tools, operationalising AI means turning ‘potential’ into tangible, practical outcomes.” He highlights three areas where this is already happening in treasury: 1. Making financing smarter and fairer Legacy credit models often fail to reflect real business performance. With AI, financing decisions can become more dynamic and tailored – using live operational data rather than outdated financial statements. “We now have the capability to be more bespoke and considered,” says Broom. “AI-driven real-time analytics will allow lenders to adjust risk models and costs accordingly, ensuring fairer financing and ultimately faster economic growth.” This could open up more affordable credit for treasury teams, especially in sectors or regions where capital access has historically been uneven. In turn, more dynamic access to credit could enhance working capital planning, in particular for companies juggling uneven cash inflows or seasonal cycles. AI can also help treasurers model real-time borrowing needs more accurately, reducing reliance on high-cost buffers and unlocking more flexible financing to support the business. As James Kelly, Co-Founder, Your Treasury, notes: “For decades, treasury teams have been stuck managing funding with tools that belong in a museum. AI gives us the chance to break out of backward-looking models and actually align to the real pulse of the business. If collections are accelerating or customer behaviour is shifting, funding decisions should reflect that.” Dan Kindler, Co-Founder and CTO, Bound, adds: “There’s a huge opportunity here for treasury teams to benefit from decisions that actually reflect how their business is operating today – not just how it performed last quarter, or last year. But the key, as always, is having the right data in the right place, at the right time. Without clean, connected financial data, AI will be running on fumes.” 2. Removing friction from cross-border operations Despite progress, cross-border transactions are still plagued by delays, documentation burdens, and red tape. AI offers new ways to automate, predict, and streamline these processes. “AI will play a huge role in international trade by reducing complexity,” says Broom. “And businesses that trade internationally grow faster and are more profitable.” From a treasury perspective, cross-border inefficiencies have a knock-on effect on working capital – whether that’s delayed collections, poor visibility over receivables, or mistimed settlements. With AI, treasurers can anticipate these issues earlier and reduce strain on the cash conversion cycle caused by avoidable delays. Kindler elaborates: “One of the biggest hidden costs in international treasury is the time spent on ‘what-if’ scenarios. What if that payment is delayed? What if the FX rate shifts? What if the invoice is held up? With AI, you can stress-test those possibilities in seconds, not hours, and plan accordingly.” And the cumulative benefit is huge, says Kelly. “Every friction point you remove adds up. A few minutes saved on reconciliation, a reduction in payment queries, fewer compliance chases – it all frees up time and headspace for better, deeper, more valuable work.” 3. Turning data overload into confident decisions Many treasury teams are data-rich but insight-poor. AI changes that, helping to surface what matters, when it matters. As Broom notes: “We don’t have to rely solely on historical data anymore. Real-time data can now be analysed almost instantly to support faster, better decisions.” After all, AI can turn huge volumes of data into valuable information, says Kelly. “But it’s not about building the smartest model. It’s about helping someone make a better decision on a weekday afternoon,” he explains. “Eliminate the noise and automate low value tasks, then highlight the strategic activities and free people up to focus on those areas. That’s how you move from firefighting to forward-thinking.” Kindler also believes better decision-making is the real promise of AI in this space. “We’re using APIs and AI to integrate directly with our customers’ financial data – everything from ERP systems to payment platforms. This helps us automatically identify and quantify their FX risk in real time, so they can be more confident in their hedging strategies.” He adds: “We don’t try to predict the future. That’s not the goal. What we do is give our customers a clear picture of what’s happening now – where the exposures sit, how sensitive their plans are to movements, and what they can do about it. That’s how AI unlocks confident decision-making for treasurers.” Where do we go from here? AI is no longer theoretical. It is increasingly embedded in how businesses and treasury departments operate. But its impact depends on how well it aligns with real problems – and how willing treasury teams are to rethink entrenched processes. Kelly summarises it perfectly: “AI is being operationalised to make financial systems work better. That’s not a side project for treasurers, that’s the job! Now it’s up to them to decide where to apply AI first – and what outdated process they’re finally ready to retire.” See how ETR Digital supports smarter, more efficient financial flows If one process you’re ready to review is how your cash conversion cycle is managed, check out our CCC calculator and chat with us about how Digital Negotiable Instruments can make a real difference. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to…
Doing nothing isn’t safe (or free): why FX inertia costs more than you think
This article is a contribution from our content partner, Bracket As a busy treasurer, it’s easy to assume your FX execution is under control – the rates look fine, and no one’s raising flags. But without proper benchmarking, you could be paying far more than you think. Treasury teams are generally meticulous about managing financial risk. But when it comes to FX – where millions can move in seconds – the same discipline often falls down the list. It’s understandable. Teams are overstretched. Other priorities need tackling. And many treasurers assume that rates from banks, brokers, or multi-dealer platforms are ‘fair enough.’ Competition keeps things honest, right? So, no need to benchmark? Not quite. A recent LinkedIn poll by Treasury Masterminds, Bracket, and Treasury Storyteller revealed the reality: A costly blind spot These gaps in FX transparency aren’t just theoretical; they’re real and expensive. As one senior treasury practitioner comments, “In my prior experience as a consultant, I saw far too many companies execute FX transactions at spot with their primary operating banking partner, with no thought of exploring other options.” “Even if treasurers and CFOs are only executing a few large spot trades each quarter, proper benchmarking can generate significant cost savings,” he adds. Platforms that appear competitive aren’t necessarily immune, either. Alexander Ilkun, Treasury Masterminds Board Member, notes: “Even in highly competitive trading environments like FXall or 360T, banks learn through trial and error, adjusting their spreads based on competitive insights and client behaviour. Costs then follow a collective upward trajectory.” It’s something Alex Charles, Co-Founder of Bracket, has seen throughout his 17 years in FX. “Most people don’t realise how much they’re leaving on the table by not benchmarking their FX transactions. It’s shocking. We’ve analysed over £30 billion of FX trades in just nine months and revealed average margin savings of 32%.” “These aren’t outliers,” he adds. “They reflect deep, structural behaviours in the market that often go unchallenged. The opportunity for savings isn’t occasional – it’s systemic.Treasurers often aren’t aware of the scale of the issue. Or don’t feel they have the time or the tools to benchmark in a meaningful way.” Benchmarking is about more than cost It’s not just about catching poor pricing, though; benchmarking can also help teams execute with visibility and confidence. “Benchmarking can assist in identifying the best – and worst – times to trade, even on a daily basis,” says Patrick Kunz, Founder of Treasury Masterminds. “Certain FX pairs or bank combinations perform better at specific times, and only detailed benchmarking can reveal these trends.” With the right data, treasurers can: Inaction isn’t a neutral move Where transparency was once optional, it’s now a clear expectation. Initiatives like the FX Global Code and scrutiny from auditors and investors are pushing corporates to demonstrate best execution in practice, not just on paper. “It’s tempting to view inertia as a neutral choice – a passive decision not to intervene unless something looks obviously wrong,” says Charles. “But the data suggests otherwise. Every un-benchmarked FX trade is a missed opportunity. And every month without transparency means hidden costs are still accumulating.” The real question isn’t why benchmark. It’s how do you justify not doing it, given the evidence? See how your FX trades stack up – for free The good news? Benchmarking doesn’t have to be manual or expensive. Bracket’s Benchmarker tool lets you upload any spot or forward trade – past or present – and instantly see if the pricing was fair. No integrations, no onboarding, and no cost for a trial run. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information.
Data is the new liquidity: Why Treasurers must champion technology for better data management
Our current financial environment is tech-driven, so data is no longer just a support function but a core driver of value. For treasurers, the ability to manage liquidity effectively is dependent on the quality and accessibility of data. However, without the right technology infrastructure, data remains fragmented, outdated, or inconsistent. Implementing the right technology is not just about automation but about transforming treasury through accurate forecasting, improved risk visibility, and faster, smarter decision-making. The consequences of poor data quality in technology rollouts Case example: A global manufacturing firm rolled out a high-end treasury management system (TMS), but due to a lack of integration with regional ERP systems, data inconsistencies resulted in forecast deviations exceeding 15% for 3 consecutive quarters. Case example: A European FMCG implemented a real-time FX exposure module, but mismatches in master data across systems led to unreported exposures, causing avoidable FX losses. Statistic: According to a 2024 AFP survey, 67% of treasurers said “data quality issues” were the main reason technology implementations failed to deliver real-time cash visibility. What the right technology stack enables Note: The impact of technology maturity on forecast accuracy is significant because the more advanced and integrated your technology systems are, the more reliable, timely, and actionable your financial forecasts become. The blueprint for building a data-ready treasury tech stack If your treasury function is ready to modernize, start with this 5-step roadmap: Statistic: Organizations with fully integrated treasury tech stacks report 50% fewer manual interventions and 30% faster strategic decision-making cycles (Deloitte, 2023). Conclusion: The digital Treasurer’s new mandate We are in a time where liquidity depends on data, and data depends on technology, so the treasurer’s role is now part technologist, part strategist. With the right systems, processes, and partnerships, treasury can deliver the insights and agility executives need to lead through uncertainty. But this transformation doesn’t happen overnight. It starts with a mindset shift from seeing tech as a cost center to recognizing it as a strategic enabler. Are your systems enabling the data intelligence your treasury needs? Now is the time to lead technology adoption that turns data into a strategic asset. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Jessica
Strategies for Setting Up a Cash Pooling Structure Across Multiple Countries and Regions
This article is written by Palm In an increasingly globalized business environment, effective cash management has become a cornerstone of financial efficiency for multinational corporations. Cash pooling, a financial mechanism that consolidates the balances of multiple accounts into a single master account, has emerged as a vital tool for optimizing liquidity, reducing costs, and enhancing operational flexibility. However, implementing a cash pooling structure across multiple countries and regions presents unique challenges, including regulatory compliance, tax implications, and operational complexities. We’ll share the top strategies for establishing an efficient and compliant cash pooling structure, tailored to the needs of companies operating in diverse international markets. By leveraging advanced methodologies and understanding the nuances of different jurisdictions, businesses can unlock the full potential of cash pooling to streamline treasury operations and drive financial performance. The Importance of Cash Pooling in International Operations Cash pooling offers significant benefits for multinational companies by centralizing cash management. It enables businesses to reduce reliance on external financing, optimize interest income, and ensure better allocation of surplus funds. For example, hybrid cash pooling—a combination of physical and notional pooling—has gained traction as a flexible solution for companies with varying financial needs across subsidiaries. This model not only unlocks cash efficiency across multiple currencies and entities, but operationally allows companies to manage funding on dozens to hundreds of account while mostly managing one funding account. Challenges in Cross-Border Cash Pooling Despite its advantages, implementing cash pooling across multiple countries is far from straightforward. Each jurisdiction has distinct regulations governing fund transfers, exchange controls, and taxation. For instance, some countries impose restrictions on cross-border transfers or require specific approvals, which can complicate the pooling process. In China, recent enhancements to cross-border cash pooling policies by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have streamlined processes and reduced costs, making it a more attractive option for MNCs (UDF Space). Moreover, legal and tax considerations, such as withholding taxes and thin-capitalization rules, must be carefully analyzed to ensure compliance. The choice of banking partners and technological platforms also plays a critical role in overcoming these challenges and achieving seamless integration of cash pooling systems (Euroaccounts). The Need for Strategic Planning To successfully implement a cash pooling structure, companies must adopt a strategic approach that aligns with their financial objectives and operational realities. This involves conducting a thorough analysis of liquidity needs, selecting the appropriate pooling model (physical, notional, or hybrid), and ensuring compliance with local regulations. Regular reviews and adjustments to the pooling strategy are essential to adapt to changing market conditions and regulatory landscapes This blog aims to provide actionable insights and best practices for setting up and optimizing cash pooling structures across diverse regions. By addressing the complexities of cross-border operations and leveraging innovative solutions, businesses can enhance their financial resilience and maintain a competitive edge in the global marketplace. Understanding Regulatory and Legal Considerations for Cash Pooling Across Regions 1. Navigating Country-Specific Cash Pooling Permissions Cash pooling is not a one-size-fits-all solution. Each country has its own set of rules, and understanding these is akin to solving a Rubik’s cube blindfolded—challenging but doable with the right strategy. In some regions, cash pooling is fully permitted, while in others, it’s partially allowed or outright restricted. Anecdotally, Europe is a relatively relaxed environment for cash pooling and cross border sweeps with most major banking hubs offering products to corporates. In contrast, pooling in LatAm in Asia can prove to be more challenging. Although things are evolving.For instance, countries like Thailand have recently relaxed regulations, enabling onshore FX conversion, which allows USD balances to be pooled offshore (Standard Chartered). This move unlocked significant liquidity that would have otherwise been trapped locally. In contrast, Vietnam is still deliberating the feasibility of intercompany loans, which are currently not permitted. Meanwhile, China continues to evolve its stance through pilot programs aimed at optimizing cross-border cash pooling for multinational corporations (Global Times). These pilot programs, rolled out in cities like Shanghai and Beijing, aim to streamline the pooling of both foreign and domestic currencies. The choice of banking partner also plays a pivotal role in navigating these permissions. Some banks may have the required special permits, while others may not. For instance, Singapore and Malaysia have embraced innovative banking networks, such as direct debit systems, to simplify cash pooling (Standard Chartered). 2. Tax Implications: The Elephant in the Room In cash pooling, tax authorities often view intercompany cash transfers as loans, which can trigger tax consequences. For instance, transfer pricing regulations may require that intercompany cash transfers be conducted at arm’s length, meaning you can’t just shuffle money around without proper documentation (Euroaccounts). In Europe, tax implications are particularly pronounced due to the EU’s Anti-Tax Avoidance Directive (ATAD), which scrutinizes intercompany financial arrangements. Non-compliance can lead to penalties and increased tax liabilities. Similarly, in Asia, countries like India and China impose strict documentation requirements to ensure that cash pooling does not lead to tax base erosion. Moreover, withholding taxes can complicate cross-border cash pooling. For example, if a subsidiary in Germany transfers funds to a parent company in the United States, withholding tax may apply unless a tax treaty provides relief. This makes it essential to consult tax advisors who specialize in international taxation (Tolley). 3. Legal Structures: The Foundation of Compliance The legal structure of your organization can make or break your cash pooling strategy. Imagine building a skyscraper on a shaky foundation—it’s bound to collapse. Similarly, a poorly designed legal structure can lead to compliance nightmares. For instance, undercapitalization of subsidiaries can raise red flags for regulators, as it may indicate that cash pooling is being used to siphon funds rather than optimize liquidity (Stahr Advisory). In China, the People’s Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE) have specific requirements for cross-border cash pooling, including minimum capital thresholds and detailed reporting obligations (Global Times). Similarly, in the United States, the Dodd-Frank Act imposes stringent requirements on intercompany financial arrangements to prevent systemic risks. Choosing the right type of cash pool—physical or notional—also impacts legal compliance. Physical pools involve actual fund transfers, which are subject to…