8 Key Questions a Treasurer Should Ask When Creating a Cash Flow Forecast
This article is written by Palm When regurgitating the cash flow forecast week in and week out, it is easy to become stuck in a rut, producing the same information in the same format and with the same shortfalls. Although the importance of the forecast on the rest of the business doesn’t waiver, the focus from the treasurer to strive for improvements and iterations inevitably does. In this post, I pose some questions to you as a treasurer to prompt you to think about your forecast and whether it’s time for a refresh. Before you get into the details, take a step back and think about the big picture. What’s the purpose of this forecast? Are you focused on short-term liquidity, preparing for long-term investments, or supporting strategic decisions like mergers or acquisitions? Having a clear objective in mind will help you avoid gathering unnecessary data and focus on what truly matters. Defining your goals upfront also helps you ensure your forecast is aligned with the needs of key stakeholders, like the CFO or the board of directors. Your forecast is only as good as the data you’re working with. Ask yourself if you have access to the most up-to-date and accurate information, whether it’s from your internal systems or external sources. Real-time cash positions, accounts receivable and payable, and working capital data are all critical to producing an accurate forecast. If you’re working with outdated or incomplete data, it’s likely to throw off your forecast—and your ability to make informed decisions. Treasury doesn’t work in a silo. A strong cash flow forecast relies on input from across the business—sales, procurement, finance, and more. Are you getting timely and accurate data from those teams? It’s important to establish open lines of communication with other departments and verify the quality of the data they provide. After all, if their numbers are off, your forecast will be too. It might also be worth scheduling regular check-ins to provide feedback to those teams to keep things running smoothly and ensure everyone’s on the same page. Business conditions don’t stay the same, so neither should your forecast. Is your company launching new products, expanding into new markets, or undergoing major changes? All of these factors can have a big impact on cash flow, and your forecast needs to reflect that. Staying in the loop on key business developments will help you adjust your forecast as needed and keep it as accurate as possible. By keeping an ear to the ground on what’s happening in the company, you’ll be better equipped to anticipate cash needs and provide more meaningful insights to leadership. One of the key roles of a treasurer is making sure the company’s cash is being used efficiently. Could excess cash be put toward paying down debt, reducing interest expenses, or funding new investments? Or do you need to hold onto more cash to cover short-term obligations? A well-structured cash flow forecast can help you answer these questions, ensuring you’re making the most of the company’s financial resources and supporting strategic decisions around capital allocation. Let’s face it: cash forecasting can be time-consuming. But is the time your team is putting into it paying off? Are you getting the insights you need, or is the process bogged down by manual data entry and time-consuming tasks? If your team is spending more time building the forecast than analysing it, it may be time to consider tools that automate the process. Automation can not only save you time but also improve accuracy, allowing your team to focus on strategic decision-making rather than data collection. Once your forecast is complete, the big question is: can you rely on it? Is it accurate enough to inform key decisions like capital investments, liquidity planning, or risk management? Confidence in your forecast is essential—especially when presenting it to senior leadership or the board. Regularly comparing forecasted cash flows to actual results can help you identify any discrepancies and improve future forecasts. Variance analysis helps ensure that your forecast is not only accurate but also actionable. Finally, it’s important to make time for reflection. Building this into your monthly cycle after each forecast period, review the results and identify what worked well and what didn’t. Were there any recurring errors? Did external factors cause unexpected variances? Forecasting is an iterative process, and there’s always room for improvement. The key is to continuously fine-tune your strategy based on what you learn along the way. Wrap Up Asking the right questions is the foundation of an accurate and actionable cash flow forecast. By focusing on data quality, collaboration, and constant refinement, treasurers can improve forecast accuracy and provide real value to the business. Whether it’s securing liquidity, optimising cash usage, or supporting long-term planning, an effective forecast gives you the insights you need to make informed decisions. 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 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. Notice: JavaScript is required for this content.
Franklin
A call to action for banks in the AI age
This article is a contribution from our content partner, Kyriba Intelligent platforms and partnerships can help reduce treasury pain points across sectors In today’s volatile economy, corporate treasurers face increasing pressure to manage liquidity, optimize operations, and provide strategic value. Despite working with multiple banking partners, a significant 70% of treasurers say their cash-management needs aren’t fulfilled. This gap isn’t just a service failure – it’s a strategic opportunity. To stay relevant, banks must evolve from traditional service providers into smart, platform-based partners capable of handling the complex demands of modern treasury operations. The most successful firms will move beyond traditional setups to become more intelligent, secure, and user-centric. They will empower relationship managers and senior bankers with advanced tools and technologies to thrive in a competitive and evolving digital landscape. Evolving expectations and unmet needs The financial landscape has shifted significantly due to inflation, supply chain issues, and rising interest rates. As a result, corporate treasurers now expect more from their banking partners. They seek real-time insights for better cashflow management, automated processes to reduce manual work and errors, seamless Enterprise Resource Planning (ERP) integration for faster onboarding and improved efficiency, and strategic advice tailored to their sector’s specific challenges. However, according to Capgemini’s World Payments Report 2023, most banks are falling short, leaving treasurers disappointed and underserved. Manual processes create pervasive pain points Rooted in outdated, manual processes, pain points are widespread across treasury functions. In accounts payable (AP), 63% of payment executives still rely on paper-based invoices, which slow down processing and increase the risk of errors. In the automotive sector, 74% of AP workflows remain manual, while insurance firms face a 27% exception rate at $22 per invoice.1 Retailers aren’t immune either, reporting a 38% exception rate due to a lack of automation. On the accounts receivable (AR) side, the picture is equally concerning. Only 10% of AR processes in retail are automated, and 69% of retailers struggle with multichannel reconciliation due to the proliferation of payment options.2 System fragmentation and a lack of visibility Beyond AP and AR, a lack of interoperability between a bank’s technology and a corporation’s systems creates significant challenges, including analysis gaps in exposures, credit, and counterparty risks, as well as compliance and reporting. Reconciliation remains a largely manual task for many financial firms, with half still relying on outdated processes due to missing data and poor system integration. Non-standard payment formats and weak ERP connectivity further complicate the process. Cash forecasting is another critical area plagued by fragmentation and inaccuracy. 60% of payment executives cite real-time cash visibility as a major challenge with significant consequences, ranging from unnecessary borrowing to missed investment opportunities. 3 Most corporations manage over 27 banking relationships, making it difficult to gain a unified view of their cash positions. This lack of visibility has sector-specific consequences. For instance, insurance companies often maintain overfunded reserves, retailers struggle with inventory and working capital management, and automotive firms face poor oversight of dealer and supplier payments. The high cost of inaction Disconnected systems and manual processes disrupt the cash management chain, leading to inefficiencies and silent attrition, where clients gradually shift volumes away without formal notice. Over 70% of payment executives believe that partnerships with fintechs can help accelerate technology adoption, enable faster market entry, and improve IT cost management. Banks that don’t act risk losing relevance in a rapidly changing financial ecosystem. The AI-powered solution Artificial intelligence (AI) has emerged as a strategic imperative for corporate banking. According to the 2025 CFO Survey Report from cloud-based liquidity performance platform Kyriba, 53% of CFOs are enthusiastic about AI’s potential to transform finance by automating routine processes and enhancing investment analysis. An overwhelming 96% of CFOs now prioritize the integration of AI. 4 While enthusiasm for AI is high, a significant trust gap warrants attention, as 76% report major security and privacy concerns, according to Kyriba’s global insights from 1,000 CFOs and senior financial decision-makers. AI can directly tackle many treasury operations pain points. It enables anomaly detection in cashflow mismatches, predictive forecasting based on real-time and behavioral data, and the smart routing of payments, as well as exception handling. These features not only improve operational efficiency – they also give treasurers the insights they need to make informed decisions. Kyriba’s white-label platform lets banks deploy AI-driven services under their own brand quickly. Services include predictive liquidity forecasting, scenario modeling for risk and cash visibility, and AI-driven reconciliation. The platform’s pre-integrated modules make it easier for banks to offer advanced capabilities to corporations without starting from scratch. To fully capitalize on this opportunity, banks can adopt a three-layer strategy, as outlined in Capgemini’s World Payments Report 2023. Additionally, banks can enhance communication with corporate clients by upgrading senior bankers’ tools and workstations, focusing on the value of AI in a fast-changing environment. What’s more, the adoption of cloud computing and desktop virtualization lets banks access computing resources on demand, streamline operations, improve scalability, and facilitate remote work and collaboration. Corporate treasurers are ready for a change and actively seek partners that can help them navigate complexity, unlock value, and drive strategic outcomes. For banks, the message is clear: the future of corporate banking is about transformation, not just transactions. By embracing intelligent platforms, AI-driven insights, and collaborative partnerships, banks can redefine their role and secure their relevance for years to come. Read more from Kyriba 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.
The Power of Banking APIs with Treasury Management Software
This article is written by Treasury4 Banking APIs have revolutionized modern treasury management by enabling seamless integration and real-time data connectivity between banks and corporate treasury systems. These APIs serve as secure digital bridges, allowing treasurers to access account information, initiate transactions, and manage cash positions across multiple banks through a single location. In the past, treasurers relied on manual processes, which were time-consuming and prone to errors, or file-based data exchanges, which could only occur based on an agreed-upon schedule with the bank, rather than as needed. APIs have transformed this landscape by providing protocols for direct communication between banking systems and treasury management software. This integration allows for automated data retrieval, transaction processing, and reporting, significantly improving operational efficiency. Banking APIs enable treasurers and their modern treasury management solutions with: Challenges of Traditional Banking Connectivity Methods Traditional banking connectivity methods that don’t utilize APIs often hamper efficient treasury management, as they rely on manual or scheduled processes and disparate systems, leading to numerous inefficiencies and risks. Manual processes Manual data entry and file transfers are among the most time-consuming and error-prone aspects of traditional banking connectivity. Treasury staff must frequently log into multiple banking portals, download account statements, and manually input data into spreadsheets or treasury management systems (TMS). This tedious process introduces a high risk of human error, with typos, misplaced decimal points, or incorrect data entries that lead to significant financial discrepancies and poor decision-making. Moreover, the time spent on these manual tasks reduces the ability of treasury teams to focus on more strategic activities. Data accuracy The lack of reliable, up-to-date visibility into banking data and positions is another major drawback of traditional methods. Without API connectivity, treasurers often work with outdated information. Without access to current account balances, transaction details, and cash positions, treasury teams can end up with suboptimal cash management, missed investment opportunities, and potential liquidity risks. Data consolidation Consolidating data from multiple banking relationships presents a formidable challenge when using traditional connectivity methods. Companies often maintain accounts with several banks for various purposes, such as different geographical regions or specific financial products. Without APIs, aggregating this information into a unified view requires extensive manual effort and custom integration work. The Power of API Connectivity for Treasury Teams Connecting your treasury management solution to banks via API can significantly transform treasury operations, offering a range of powerful capabilities that streamline workflows and enhance decision-making. This integration brings numerous advantages to treasury teams, revolutionizing how they manage financial data and execute transactions. Accurate, reliable data One of the primary benefits of connecting your bank accounts to your treasury management system via APIs is access to accurate, up-to-date banking data. Through API connections, treasury teams can instantly retrieve up-to-date account balances, transaction details, and payment status across multiple banking relationships. This real-time visibility eliminates the need for manual data validation and provides treasurers with a comprehensive, current view of their financial position. Automated data ingestion Automated ingestion of data into the treasury system is another crucial advantage of API connectivity. Instead of manually downloading and importing bank statements, the system can automatically pull this information directly from bank servers, helping treasury teams save time and reduce the risk of data entry errors. Treasury teams can configure the system to update at regular intervals or on-demand, ensuring that they always have the latest financial information at their fingertips. Execute transactions within your TMS Perhaps one of the most transformative capabilities is the ability to execute transactions directly via API. This feature allows treasury teams to initiate payments, transfers, and other financial transactions from within their treasury management system with the same level of confidence as bank portals as a result of the immediate confirmation provided with APIs. By eliminating the need to log into separate banking portals or use file-based payment methods, API-driven transactions increase efficiency and reduce the potential for errors. Treasurers can even implement real-time payment capabilities where they are supported by their banks. Improved cash management With real-time data and transaction capabilities enabled by banking APIs, treasury teams can monitor their cash position, transfer excess funds into investment accounts, or to other accounts requiring funding in a timely manner with confidence. This level of automation and control allows for more effective liquidity management and optimized use of cash resources across the organization. Key Benefits of API Integration for Treasury Teams API integration offers numerous key benefits for treasury teams, transforming their operations and capabilities. These benefits collectively enable treasury teams to operate more efficiently, make better-informed decisions, and contribute more strategically to their organization’s financial success. Increased operational efficiency and productivity Improved cash visibility and forecasting capabilities Enhanced accuracy and control over treasury data Up-to-date insights for strategic decision-making Overcoming API Limitations and Challenges While banking APIs offer significant advantages, treasury teams may encounter certain limitations and challenges in their implementation and use. Understanding these potential issues and developing strategies to mitigate them is crucial for successful API integration. One common limitation is inconsistent data formats across different banks. Despite efforts to standardize APIs, variations in data structures, field names, and transaction codes can complicate data integration. This inconsistency may require additional mapping and transformation efforts to normalize the data within the treasury management system. API outages or performance issues present another challenge. Like any technology, APIs can experience downtime or slow response times, potentially disrupting treasury operations that rely on real-time data and transaction capabilities. To mitigate these risks, treasury teams can: The TMS plays a critical role in consolidating and normalizing API data. A well-designed TMS can act as a central hub, integrating data from multiple banking APIs and presenting it in a standardized format. This consolidation simplifies reporting, analysis, and decision-making processes. Leveraging a TMS that also provides an open data architecture, such as Cash4, can eliminate the data silos that typically form. Key functions of the TMS in API data management include: By leveraging the capabilities of their TMS and implementing robust risk mitigation strategies, treasury teams can…
Treasury Contrarian View: Should Treasury Own ESG Data and Reporting?
Environmental, Social, and Governance (ESG) reporting is becoming a critical expectation for companies worldwide. Regulators, investors, and stakeholders increasingly demand transparency. But here’s the contrarian question: Should treasury—not sustainability or finance—own ESG data and reporting? The Case for Treasury Ownership The Case Against Treasury Ownership A Collaborative Model Perhaps the best approach isn’t treasury owning ESG outright, but treasury playing a critical role: Let’s Discuss We’ll share perspectives from treasurers, CFOs, and sustainability leaders—join the conversation! COMMENTS Ricardo Schuh, Treasury Masterminds Board Member, comments: I believe that ESG should be led by a dedicated professional or function within the organization, given its scope goes far beyond financial reporting. While Treasury can add significant value in ensuring data integrity, governance, and technical alignment with financial markets, ESG encompasses a broader set of dimensions such as environmental metrics, supply chain ethics, and social responsibility. In my view, Treasury’s role should be to support and challenge the ESG function, ensuring that information is reliable, finance-grade, and presented in a way that meets the expectations of banks, investors, and rating agencies. This partnership creates a stronger framework where financial expertise complements, but does not replace, subject matter specialization. From my practical experience, banks increasingly place heavy demands on companies in terms of ESG-related disclosures, particularly when structuring loans, sustainability-linked instruments, or green financing. In these situations, Treasury often acts as the interface with financial partners, but our effectiveness relies heavily on the dedicated ESG team. Their expertise, agility, and ability to provide accurate content, supporting materials, and standardized forms have been critical in meeting external requirements on time and with credibility. This collaborative approach ensures that Treasury maintains its focus on financial strategy while ESG professionals drive the broader agenda, together reinforcing the company’s overall transparency and sustainability positioning. Eleanor Hill, Founder, Treasury Rebel, comments: From what I’ve seen in the market, this very much depends on the company and their organisational structure (including whether there is a standalone sustainability team). Interestingly, a couple of years ago, I did see one or two treasury teams being tasked with ESG oversight and reporting – admittedly quite rare cases. But I haven’t encountered any others since then. The current political climate and rhetoric around ESG certainly isn’t helping, either. If I had to come down on one side, I’d probably say treasury should support ESG reporting rather than own it outright. Treasury teams already have a tremendous amount on their plates and adding full ownership of ESG reporting could risk spreading precious resources far too thinly. It would also require some upskilling in most treasury functions as the ins and outs of a niche area like sustainability can be complex. That said, I do believe that (where they can and want to) treasury professionals have a valuable role to play, particularly in pushing banks and vendors for better reporting on the sustainable aspects of their products and services. Treasury leaders – especially in large organisations – are well positioned to make those demands, given their relationships and the commercial leverage they hold. I’d love to see more treasurers asking for greater ESG transparency and accountability from their counterparties going forward – and this should help increase the value that treasury can bring to ESG reporting. A virtuous circle! Royston Da Costa, Treasury Masterminds Board Member, comments: Treasury should not be the sole owner of all ESG reporting. But Treasury should be a co-owner and the lead steward for finance-linked parts of ESG reporting — especially anything that affects capital markets, debt instruments, financed emissions, financial disclosures, assurance-ready controls, and the numbers that feed investor/creditor decisions. The best practical model is a clear cross-functional (hub-and-spoke) model where Sustainability owns operational ESG strategy and data collection, Finance (CFO/Controllership) owns integrated reporting controls and accounting alignment, and Treasury owns the finance-market, funding and financed-emissions disclosures and assurance controls that relate to capital, liquidity and counterparty exposures 1) Why this question matters to Treasury 2) Key external standards and rules 3) Ownership models — what they look like and how they affect Treasury Recommendation: adopt the hub-and-spoke with explicit RACI for each reporting element (I = Information owner, R = Responsible lead, A = Approver, C = Contributor). 4) Dimension-by-dimension breakdown — who should lead, who should contribute, what Treasury must do I’ll go through the main dimensions and for each say: Lead, Treasury role, Why it matters. A. Strategy & targets (net-zero, ESG strategy) B. Governance disclosures (board oversight, committees) C. Metrics & targets (GHG, KPIs, financed emissions) D. Data collection & systems E. Accounting & financial statement alignment F. External reporting (ESG report, investor presentations, bond prospectuses) G. Regulatory compliance (CSRD, ISSB/IFRS S1 & S2, local rules) H. Assurance & controls (internal and external) I. Investor relations & credit markets J. Capital products (green bonds, SLBs, loans) K. Risk management & scenario analysis (transition & physical risk) L. Incentives & remuneration linkages M. M&A, due diligence & disclosures 5) Practical RACI (example) — core reporting components (Abbreviated; expand for your organisation) 6) Pros & cons for Treasury owning ESG reporting (straightforward) Pros Cons Net: Treasury should own finance-linked ESG reporting and be a core co-owner of consolidated reporting. Not the only owner. 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.
Hedging or Gambling: A 300-Year-Old Lesson for Modern FX Markets
This article is written by HedgeFlows “I’m not gambling, I’m hedging!” How many times have you heard this in the world of Foreign exchange? The confusion between hedging and speculation isn’t new—it nearly destroyed the insurance industry in the 1700s. The Modern Confusion Walk into any corporate treasury department today and you’ll likely hear heated debates about FX hedging strategies. Some CFOs swear by natural hedges and forward contracts. Others worry their treasury teams are essentially running a side business in currency speculation. The line between prudent risk management and gambling can seem frustratingly blurry. Sound familiar? This exact same confusion plagued London’s financial markets 300 years ago—and the solution developed then holds the key to understanding hedging today. Lloyd’s Coffee House: When Insurance Met Gambling In the 1750s, Edward Lloyd’s Coffee House had become London’s center for maritime insurance. Ship owners could protect their investments, merchants could secure their cargo, and underwriters could earn premiums for accepting these risks. It was the birth of modern insurance—and it was working beautifully. Until it wasn’t. By the 1760s, the coffee house was overrun with gamblers masquerading as insurers. When newspapers reported that prominent figures were seriously ill, bets were placed at Lloyd’s on the anticipated dates of their death. People with no connection to ships were taking out “insurance” policies on vessels, essentially gambling on whether they’d sink. The line between legitimate risk management and pure speculation had completely disappeared. The respectable underwriters were horrified. As one historian noted, Lloyd’s had become infiltrated by “persons of dubious character, particularly inveterate gamblers” who threatened to bring discredit upon legitimate business. Parliament’s Brilliant Solution: The Insurable Interest Doctrine In 1745, Parliament passed the Marine Insurance Act—the first major intervention in insurance law. The solution was elegant in its simplicity: you can only insure risks you already face. The Act established that insurance was only valid when the policyholder had a genuine “insurable interest”—a pre-existing financial stake that would result in actual loss. No more betting on random ships. No more death pools disguised as life insurance. If you didn’t already face the risk, you couldn’t insure against it. The Life Assurance Act of 1774 extended this principle, banning life insurance policies where the policyholder had no legitimate connection to the insured person. The message was clear: insurance protects existing risks; gambling creates new ones. The Modern Application: FX Hedging vs. Currency Speculation This 300-year-old principle perfectly explains the difference between FX hedging and currency speculation: True FX Hedging: Currency Speculation: Just like the 1745 Act required demonstrable insurable interest, legitimate FX hedging requires demonstrable currency exposure. No underlying business risk? Then it’s speculation, not hedging. The Ironic Twist: “Hedging Your Bets” Was Gambling Slang Here’s the historical irony that explains so much confusion: the phrase “hedging your bets” actually originated in 17th-century gambling houses, not agricultural fields or financial markets. The first recorded use appears in the 1670s, describing a betting strategy where gamblers would place offsetting wagers to limit losses—essentially the gambling equivalent of what we now call hedging. The agricultural metaphor of protective boundaries came later, as the financial meaning evolved. No wonder people are confused! The term literally started as gambling terminology before becoming a cornerstone of risk management. We’ve come full circle from gambling slang to legitimate risk management and back to gambling again when misapplied. The Practical Test: Ask These Questions Before any FX transaction, ask yourself the Lloyd’s Coffee House test questions: If you can’t answer these clearly, you’re probably speculating rather than hedging. Why This Matters More Than Ever The Lloyd’s Coffee House crisis teaches us that the distinction between hedging and gambling isn’t academic—it’s fundamental to market integrity. When speculation masquerades as hedging: The 79 respectable underwriters who broke away from Lloyd’s in 1769 understood something crucial: true professionalism requires clear boundaries between risk management and speculation. The Bottom Line The next time someone claims they’re “hedging” a currency position, remember Lloyd’s Coffee House. The distinction that saved the insurance industry 300 years ago remains the gold standard today: Insurance and hedging protect risks you already face. Gambling and speculation create risks you don’t need to take. The irony that “hedging your bets” started as gambling slang just proves how easily the lines can blur. But the principle established in 1745 remains crystal clear: link it to underlying risk, or call it what it is—speculation. The ghost of Edward Lloyd would be proud to see his coffee house principles still working in modern treasury departments. The question is: are you following them? 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 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.
Why Treasury Tech Projects Fail – and How to Turn Them Around
written by Lorena Pérez Sandroni, Treasury Masterminds board member Treasury technology projects often fail due to not starting with a structured approach from the beginning—one that prioritizes collaboration, thorough assessment, and most importantly, adaptability throughout the implementation process. Key Factors Behind Failure Real-World Examples of Failure A company invested in a best-in-class TMS to improve global cash visibility and automate payments. However, due to poor stakeholder engagement and a lack of training, the system failed to meet treasury’s needs for bank connectivity, forecasting, and liquidity management. Manual processes persisted, and ROI was never realized. A new payment processing platform was introduced without considering the complexity of integrating with outdated systems. Frequent customizations were needed, leading to delays and technical glitches that disrupted daily operations. A debt module was purchased without a proper assessment. It couldn’t handle all debt types, forcing teams to manually calculate and manage exceptions—defeating the purpose of automation. From a technical standpoint, the project was a success. But beneath the surface, daily operations lacked the controls and discipline needed to maintain data integrity: What Went Wrong After Go-Live: The Consequences: Key Takeaway: Even the best TMS can become a liability if data governance isn’t embedded into daily operations. Success isn’t just about implementation—it’s about sustaining accuracy, ownership, and trust. Turning It Around 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.
Gut feelings vs. FX tech: does your hedging strategy need an upgrade?
This article is a contribution from one of our content partners, Bound Cognitive biases are sneaky. They mess with your decision-making – without you even realising it. Whether it’s deciding what to have for lunch or how best to manage your FX risk, your brain is constantly taking shortcuts, often based on past experiences. Yes, we all love the easy route now and again. But these mental detours can lead you down the wrong path, especially when you’re under pressure. Are you thinking straight? Luckily for you (and us), neuroscientist and firefighter, Dr Sabrina Cohen-Hatton, gave some hot tips on how to spot and manage cognitive bias at TreasurySpring’s recent Tea & Treasury event. Two traps she taught us to watch out for are: Confirmation bias: seeking what you want to believe You’ve probably heard of this one. It’s when you subconsciously look for information that confirms what you already think. Take a CEO who strongly believes that acquiring a particular company will lead to significant future growth for the business. As a result, they focus heavily on positive forecasts and optimistic valuation reports, while downplaying or ignoring risks, as well as warnings from analysts. This is confirmation bias in action. So, next time you choose which FX forecasters to believe (don’t even get us started on that!), maybe think about whether you’re picking them based on your own idea of where the market is heading rather than objective factors. The mere exposure effect: playing it safe (maybe too safe?) Ever been tempted to buy the same tech brand again and again, just because it’s what you always do? That’s the mere exposure effect – a tendency for people to develop a preference for things simply because they are familiar with them. What you already know feels safe. But in FX, using the same hedging strategy on autopilot, or always choosing to have no hedging strategy at all, could mean you’re missing opportunities to manage your risk smarter. Beating the bias Can you really outthink yourself to make better decisions, though? Short answer: yes, you totally can – well, most of the time! Once you’re aware of the biases at play, you can hack your brain’s shortcuts and stop letting them hijack your common sense. Dr Cohen-Hatton shared a super simple but powerful framework that firefighters use called ‘decision controls.’ It’s a mental checklist that helps avoid snap, emotional choices. (And it could be handy for reducing bias in your FX strategy too). Restoring logic through FX tech Let’s take this thinking a step further, though. Why not take bias out of the equation by handing over the heavy lifting to tech? Sounds scary, but it’s actually pretty simple. So, instead of second-guessing yourself, you automate the process (well, get tech to automate it for you!). Forward contracts, for instance, can easily be automated based on specific business needs or market triggers, meaning you consistently lock in rates without reacting emotionally to short-term market shifts. Automated strategies can also be set up to execute regular currency conversions at set intervals, spreading risk over time. This removes the temptation to time the market, which can lead to decisions clouded by fear or optimism. Been there, done that… Bottom line: automated FX hedging strategies can help treasurers and CFOs make more consistent and objective decisions by avoiding the emotional trap of reacting to market swings. That means sticking to your long-term FX goals and getting more predictable foreign cash flows, with a lot less hassle. It doesn’t mean losing control over your hedging decisions. It’s just about making sure your strategy is driven by consistency and logic – not bias. Recommended Reading 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 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. Notice: JavaScript is required for this content.
Counterparty Management: Automating Payments and Collections
This article is written by Embat Automating payments and collections has become an essential requirement for any company aiming to optimise its financial management. Regardless of the structure of the finance team or the industry sector, automating these processes helps reduce operational risks, accelerate liquidity availability, and free up resources that can be redirected to higher–value activities. Counterparty Management: Technology as the Driver of Financial Automation Counterparty management – the use of technology to simplify, accelerate, and control financial processes related to payments to suppliers and the receipt of customer income– relies on connecting accounting and enterprise management systems with electronic banking to enable automatic synchronisation of financial data, minimising manual intervention. This technological integration not only enhances operational efficiency and reduces error rates but also provides real–time visibility into cash positions. This optimises cash flow management and mitigates risks associated with payment delays or collection issues.This technological advancement is supported by various solutions that, when integrated, enable faster, more accurate, and more controlled operations. The primary objective is to connect accounting systems with electronic banking, facilitating automated and synchronised financial information management, particularly through open banking APIs. Key Benefits of Automating Payments and Collections Automation delivers multiple tangible benefits that positively impact business growth. First, it lowers operational costs by reducing manual involvement, thereby minimising errors and issues related to manual invoice and transfer processing. It also allows treasury teams to dedicate more time to tasks with higher strategic value. Another crucial benefit is improved liquidity: by accelerating collection cycles and ensuring timely payments, companies can better manage their treasury and avoid cash flow tensions. Timely payments not only optimise internal management but also strengthen supplier relationships and enhance corporate reputation. Additionally, automation simplifies bank reconciliations and monitoring of accounts receivable and payable by providing real–time information that facilitates decision–making. Finally, it supports business scalability and flexibility, enabling the handling of increasing transaction volumes without the proportional increase in resources and adapting easily to new requirements. Steps to Implement an Automated Financial Transaction Management System Implementing a payment and collection automation system demands careful and thorough planning. The first step involves a detailed analysis of current processes to identify critical points, frequent issues, and duplicated tasks, defining the project’s scope with precision. Secondly, it is essential to select the most suitable technological solutions considering the company’s size and needs, prioritising scalability, integration, and user–friendliness.The treasury and accounting sectors have notably evolved over recent years, with the emergence of digital and real–time solutions that integrate directly with enterprise management systems. The third, and most critical, step involves securing the treasury team’s commitment since automation represents a cultural shift that should not be underestimated. Resistance to change, particularly in family–run businesses or traditional sectors, remains one of the main obstacles to the successful deployment of these tools.Training, transparent communication, and active participation of the team in defining new processes are key elements to transform the finance team into a primary ally of change. It is vital to understand that automation is not a final destination but an ongoing journey. Cultivating a culture of continuous improvement, with regular reviews and openness to new functionalities, is the best guarantee of long–term success. In short, combining the right technology, adequate resources, and effective change management maximises the potential of automating payments and collections, optimising financial management and strengthening the treasury function in any company. 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 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. Notice: JavaScript is required for this content.
Treasury Contrarian View: Forecasting Accuracy Is Overrated
Cash forecasting is often described as the holy grail of treasury. Countless hours are spent fine-tuning spreadsheets, implementing new tools, and chasing the elusive “perfect forecast.” But here’s the contrarian view: forecast accuracy is overrated. What matters more is flexibility, adaptability, and decision-making agility. Why Forecast Accuracy May Be Overrated What Matters More Than Accuracy A Smarter Forecasting Approach Let’s Discuss We’ll feature insights from treasurers, CFOs, and forecasting tech providers—share your perspective below! COMMENTS Patrick Kunz, Treasury Masterminds Founder/Board Member, comments: “Couldn’t agree more with this contrarian view. I’ve seen too many treasurers obsess over a forecast being 95.3% accurate while the business around them is changing by the hour. You know what? The CFO doesn’t care about the decimal places, they care if you can react when the unexpected happens. Forecasts are always wrong (yes, always). The trick isn’t perfection, it’s agility. Can you re-forecast quickly? Can you explain the why behind variances? Can you give your CFO the confidence that, no matter what happens, treasury is on top of it? Understand your numbers. A treasurer who doesn’t know the story behind the numbers is just a number cruncher, a computer can replace that 😉 Story telling and internal relationship that help you tell this story -> irreplaceable. I’d rather have a 75% accurate forecast with a plan B, C, and D which is explainable than a 95% accurate one that’s outdated the moment it leaves Excel and I cannot sell to the CFO” Johann Isturiz Acevedo, Treasury Masterminds Board Member, comments: Forecasting is still something considered as important but no sacred , two things that we have learned over the last year is about the way that we respond changes and responsiveness. When we build forecast is important to include sensitives in term of flexibility and strategic insight. It is not the same to forecast in Egypt as if we forecast in Spain forecast in Egypt. We as treasurers and finance functions need to measure how to mitigate changes in our forecast and how to respond in each situation to avoid issues in our supply chain process and fix cost payment. Anticpation and way of pilot remain as king. Tanya Kohen, Treasury Masterminds Board Member, comments: Cash forecasts are never static. Customer payments slip, supply chains shift, and conditions change. The real value is not in hitting 95% accuracy at a single point, but in constantly adjusting as new information comes in. The level of detail matters. Invoice patterns and customer or supplier behavior give real insight, while historical bank deposits may look steady but can point in the wrong direction. By layering adjustments like due dates, payment behavior, seasonality, late payment probabilities, risk scores, and macro signals, forecasts become more realistic and more useful for decisions. From this perspective, accuracy is less important than agility. Treasury teams that see forecasting as a living process, not a fixed deliverable, are better prepared to manage liquidity, allocate capital, and respond quickly when things shift. Matthias Varenkamp, Account Executive at Cobase, Comments: At Cobase we see treasurers working with different banks, multiple ERPs and local payment systems. In that environment, even the smartest forecast model struggles, because the inputs are incomplete or outdated. Accuracy becomes a mirage. The real challenge is: Our view: Forecasting adds value when it’s built on consolidated, real-time data and tied directly to execution. That’s what allows treasurers to adapt and make decisions with confidence even when the forecast itself is “wrong.” 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.