B2B Payments

What Keeps Corporate Treasurers Up At Night

Experts cannot stress it enough: cash flow management is key to the success of a business, especially SMEs. Business owners are well aware of its importance, too. According to a new Capital One survey, cash flow management and liquidity were chosen as corporate treasury managers’ biggest concern.

According to Capital One’s Treasury Management Group, 60 percent of those surveyed cited cash flow as the aspect of their job that keeps them up at night – far more than regulatory concerns or antiquated technology and infrastructure.

Capital One conducted its research during the TEXPO 2015 event held in April. Treasury officials, the survey revealed, already have insight into how they could ease these worries. According to researchers, 37 percent of survey respondents said they would invest more into Big Data analytics and aggregation to strengthen management of corporate funds. More treasury officials, in fact, would invest funding into data than they would into a new commercial card program, receivables solutions, or even risk management and fraud protection services.

According to Capital One Bank’s Head of Treasury Management and Enterprise Payments Colleen Taylor, while these findings are poignant, they are not unexpected.

“It’s not surprising that treasury management professionals would spend extra money to address that primary concern of cash flow,” she said in a statement. “In this persistent, low-interest rate environment, companies are increasingly demanding capabilities to help them better understand and manage payments and liquidity. Navigating data analytics is an ongoing challenge for today’s businesses.”

Unfortunately, treasury officials do not always get to dictate where their businesses place their investments. Small businesses in particular are often reluctant to allocate dollars to high-technology services, including Big Data.

But according to Taylor, investing in Big Data services is especially important for SMEs. “Small- and medium-sized enterprises have a tremendous demand for cash with limited and costly sources of capital, making efficient cash management critically important,” she said in a recent interview with PYMNTS. “Data aggregation and analytics can allow SMEs to manage their cash positions more efficiently, enabling them to identify balances that can help free up working capital, which can be deployed elsewhere.”

She added that while SMEs run on a tight budget, spending money on Data Analytics can help business owners make money in the long-run, and provide other benefits that may not have been considered. “The benefits of efficient cash management can be enough to justify significant investment in data analytics but additional benefits, including risk/fraud monitoring and customer behavior insights, should not be overlooked,” said Taylor.

For all companies, large and small, part of the demand for Big Data to manage finances is a direct response to the diminishing barriers that national borders play. International operations mean businesses need faster, more agile ways to oversee their expenses, which can become increasingly difficult when international deals give rise to needs like foreign exchange services and electronic payments.

“Managing a global supply chain introduces a significant level of complexity to organizations,” Taylor agreed. “It requires careful analysis of a significant amount of diverse information, including supplier information, currency fluctuations and country risk.”

Industry experts agree that Big Data can play a massive role in managing all of this information. “Making informed decisions about currencies to hold, what balance levels are needed, and what balances are available for use for other purposes depends on their ability to accurately analyze and report on the information available to them,” added Taylor. Data analytics is one of the most efficient ways to gain the information necessary to make these decisions today.

While treasury managers are seeking more financial support from their businesses to integrate Big Data analytics into spend management, these officials are doing what they can to most efficiently do their jobs. Capital One’s survey offered additional insight into the cash flow management practices of corporate treasurers that revealed patterns in the way they operate.

For example, according to survey respondents, 66 percent said that between 1 and 10 percent of their business purchases are made with a commercial credit card, with the majority of those purchases being made for corporate travel and office supplies.

More than three-quarters of treasury officials said that their company deploys the use of a hard token as a security feature to access their online banking systems, and an additional 8 percent use a soft token. The research suggests that these managers are satisfied with the strategy, considering nearly all (97 percent) of the survey’s respondents said they feel confident their treasury departments would be able to at least somewhat handle a cyberattack or data breach.

From virtual cards to data protection, Capital One’s research makes it clear that businesses are embracing digital methods of managing and protecting their finances. But the survey also found that a significant portion of companies lags in this digital adoption.

While just 3 percent of companies said they do not use a virtual card solution, 16 percent of respondents said that their company does not use a multifactor authentication method, like a hard token, to access their corporate banking systems. Meanwhile, just 20 percent of treasury officials said that antiquated IT and technology is their top priority.

These shortcomings could reflect in the fact that many businesses, especially smaller ones reluctant to invest the time and funding into digital methods, still rely on less efficient treasury methods, like paper checks. According to Taylor, while the use of paper checks is often a response to corporations adhering to the payment preferences of their suppliers, these outliers may also be attributed to a lack in awareness of the benefits of more modern tools.

“Our experience reveals that many companies aren’t fully aware of the benefits of electronic payments, like Commercial Card,” Taylor said.

However, she added, this won’t be for long.

“The continued development by banks and financial software providers of easy-to-use digital, online tools and self-service options to businesses will help drive more B2B payments away from paper,” she said. “Additionally, as suppliers request electronic payment methods more and more, we will see B2B payments migrate to those methods.”



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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