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Managing Cash–Visibility is Key

With Thanksgiving and Black Friday now behind us, the Holiday Season has officially kicked off in the States. For consumers, corporations and even for banks the next few weeks will focus not just on what you can buy but also on how much you have to spend, save and loan at the end of each day.

Now I have a fairly extensive gift list big family=big holiday budget.  But like most people, I am thinking before I buy and more often than not I’m paying with cash and not credit. Because come January, I want some money in my pocket. So all through the holiday season, probably every day because again I have a lot of gifts to buy, I will be checking my online banking statement to make sure that I haven’t spent more than I can see. And according to a recent survey of U.S. Treasurers, I’m not the only one thinking that seeing is definitely believing.

Despite all the noise about banks not lending, the fact is that more and more of the bank’s corporate clients are trying not to borrow. They are instead looking, both internally to their own processes and externally to their banks for help to increase visibility into the cash they already have.

The one size fits all cash forecasting methodology that may have been good enough last year, is insufficient today due to the sheer volatility of the marketplace. So just like me and my near obsessive checking of my account balances, corporate treasurers are looking at their cash statements, positions and forecasts more often and expecting to see a lot more.

So what does this trend toward increased visibility mean for banks? Well, it seems obvious but maybe not banks have to adapt. In a time where corporate clients are consolidating banking relationships, banks will have to offer solutions that can help their corporate clients to see and more importantly act on the information they see faster and more efficiently.

True real-time visibility, which is now more essential than ever to the cash management value proposition, is going to rely on automation which means it will rely on technology. And the facts show that while spending on technology that helps to improve visibility to cash has been on the upswing for several years, far too many banks still lag behind in automating the processes that support forecasting such as payables, receivables, cash management, and account reconciliation.

Which begs the question: what good is visibility if it is not accurate at the time an action is needed?  Or to use a real world example; what good does it do me to see that I can’t afford the Eiffel Tower Lego set if I already purchased it because my online statement said I had the cash available?

In the coming months, the importance of real-time or near real-time visibility will most likely increase. As bargain hunting corporate treasurers with cash look to acquire smaller less liquid players they will be counting on their banks to show them the money.

I think the four big questions that banks will get asked again and again in 2009 by their corporate clients will be: Where is the money, who has the money, how much money do they have and what are they using their money for?   Did I miss any big ones? What are the questions you expect to get in 2009?

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OpenText is the leader in Enterprise Information Management (EIM). Our EIM products enable businesses to grow faster, lower operational costs, and reduce information governance and security risks by improving business insight, impact and process speed.

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