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Monday, 15th April 2024
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Cash management and the internet Back  
Brian Howley offers a banker's reflections on cash management and a bank's services in the light of internet developments.
When looking at any subject like cash management it is always wise to start off by defining the subject for clarity.

From the cash manager's point of view there are two main areas covered by this term:

•availability of data
•ability to make payments

The former should include comprehensive details on a range of account types to facilitate managing cash and accounting for receivables, bank charges and any other items passing through the accounts.

The latter should include a broad range of payment types like domestic simple intra branch account transfers third party inter branch or inter bank domestic payments Electronic Funds Transfer whether in the format of multiple credits to employees/creditors or multiple direct debits from debtors Cross border international transfers.

The customer expects this to be provided in the most secure manner and ideally with minimal intervention using straight through processing. Given all this the Cash Manager can then maximise value , minimise costs and have the earliest possible reporting of receivables with as much data as possible.

If a bank to customer PC link was the greatest influence on Cash Management in the last 5-10 years then undoubtedly the greatest influence currently is the internet.

Cash Managers'Aims

In the modern world of Cash Management that old evil villain, 'Paper' is Public Enemy Number One. This rogue selfishly 'steals' large amounts of cash from the control of the customer by either actual financial cost (most banks have higher transaction charges for paper than electronic) or by the more silent method of increased cost of administration in both processing and reconciling paper items.

If a bank to customer PC link was the greatest influence on Cash Management in the last 5-10 years then undoubtedly the greatest influence currently is the internet.

Numerous articles before this one have detailed the evolution of the internet and the fact of how the number of users has ballooned when compared to the slower increase in the number of television sets.

Some banks provide internet access for personal customers but the number who have provided a secure and flexible comprehensive service for commercial customers is quite low.

The astute Cash Manager will distinguish between Internet services which give 'access' to bank accounts and those which go further by providing real functionality such as making cross border payments or have the ability to integrate with the customer's own accounting package. And all this must be achieved within a secure and user-friendly framework.

Of course the advent of the Euro has also been a key driver of change as customers with a pan-European profile consider how best to apply a pan-European cash management solution.
This will continue to impact further as January 1st 2002 approaches.

The beauty of having real access over the internet revolves around two areas; real-time access to information and payments portability.

The Cash Manager travelling away from the office whether it is in Lisdoonvarna or Los Angeles can now view balances and transactions and make payments or the Head Office of a US Multinational can have view access over the working accounts of its European subsidiaries. Now that's progress!

When I look back over the changes in the banking environment over the last few years one other change is evident. Customers expect banks to have the expertise available when they require it and a good bank will actually have anticipated the requirement in advance. Banks have had to 'skill up' to be able to provide that expertise on a continuous basis and one thing is very clear---- if that ability to proactively adapt to customers needs is not present then customers will move.

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