Working capital is the lifeline of businesses, with a potential to release around € 1.4 trillion cash globally from their balance sheet by managing working capital more efficiently, as per PwC’s working capital report “Bridging the gap”. However, only 9% of companies around the globe manage to improve working capital consistently over multiple years.
Businesses especially in the informal or unorganized sectors like transportation, retail trade and agriculture are focused on managing and improving their working capital cycle. To aid such businesses and allow them to focus their efforts on their core functions, banks have been traditionally offering Cash Management Services.
Thanks to budding fintechs, Cash Management Services are being transformed to improve businesses’ profitability through improved collection rates, picking out apt investment vehicles and accordingly negotiating payables. And this is now being powered by Advanced Analytics, Business Intelligence and AI capabilities.
American financial institution Capital One has partnered with fintech firm Viewpost to offer invoicing and payments to track the status of transactions along with dynamic discounting to manage working capital on demand. Fintech start-ups like InterNex Capital are providing working capital financing services to SMEs through in-depth account analysis as well as real-time updates, which play a crucial role in working capital management.
Back home in India, fintech firm Numberz.in is offering cash flow management solutions to approximately 3,750 SMEs integrating invoice and expense management tools. Another fintech firm AccessPay provides next generation cloud-based solutions that transform payments, cash management and treasury systems.
With proven benefits of Cash Management Services available to the customers, incumbent transaction banking players must put an ‘innovative cap’ to realize the full potential of virtual cash management.
Credits : Akhil Handa