What APIs can do for your company’s cash flow management

4 min reading
APIs , Treasury / 11 September 2020
What APIs can do for your company’s cash flow management
What APIs can do for your company’s cash flow management


Recent years have seen notable advances in the international payment system, and corporate cash flow is just one aspect of this new paradigm. Mobility and 24/7 access to real-time information, rather than being an added value, are now a requirement for most workers.

One of the areas where open banking is most important is in the management of companies, and particularly of their cash flows. APIs have become a great ally in the digitization of companies by allowing certain important processes in collection and payment systems to be automated and simplified, thereby reducing costs and avoiding human errors.

These new technologies offer a strategic opportunity to corporate accountants. And not only in the present, since these types of applications will become increasingly relevant, especially because of everything they can contribute to the business. These are some of the advantages of using APIs to manage your company’s cash flow.

Adapting processes to the company’s reality

Although most companies, especially the largest ones, already have enterprise resource planning (ERP) systems, this type of software usually requires an add-on in order to adapt correctly to the changing needs of businesses, especially from the point of view of a company’s finances and cash flow management.

APIs offer a much more dynamic and efficient alternative. Any vendor can create solutions that are tailored to the business reality, and applications are much more standardized than in the case of conventional systems, which are often much less flexible.

This allows banking services to be integrated with the company’s treasury

By opening APIs, banking services can be directly integrated into a company’s cash flow. These solutions automate certain important processes, such as the processing of collections and payments, payroll, opening new financing facilities, settling bills of exchange and many other processes.

In fact, APIs go a step beyond conventional systems. They can be used to eliminate or reduce information transmission protocols that rely on direct (P2P) connections, which can sometimes be complex to maintain, and to cut back on certain nighttime processes, some of which may take a long time.

Accountants can execute and monitor these cash flow processes on demand, making information requests much simpler, agile and, of course, flexible.

Management of the business’s cash flow in real time

Perhaps the greatest advantage of APIs compared to other data exchange mechanisms is that they can offer users a continuous flow of information in real time.

The most typical example involving cash flow is the receipt of bank statements and their subsequent reconciliation. In a conventional system, the accountant has to wait until the bank statement is received in the appropriate format before updating the company’s treasury position.

These processes are not executed in real time, since the files that update this information are received once or twice daily, usually at the start of the day. This means that the information is not always up to date when it is analyzed, and hectic business activity can make the current cash flow picture in the system differ greatly from the actual financial situation.

However, through open banking and APIs, any process can be executed in real time and banking information can be received instantaneously, from anywhere, anytime and on any device. This technology also allows, among other things, the accountants to receive notifications when there is a significant change in banking information, always based on their needs.

More and improved financing options

The greater the integration between the company and the bank, the greater the chances of obtaining more and better products that fit the customer’s profile, and perhaps in better conditions.

For accountants, this translates into better financing and management options for sales invoices, especially in the area of payment and collection processing.

If the company can access the information on all its customers and vendors and all their commercial information, it can make offers that are better suited to their profile, including services that said customers and vendors may not know about, such as factoring, reverse factoring, settlement of bills of exchange, etc.

Cost reduction

The opening of APIs has helped reduce business costs. Since third parties outside the banking industry can access banking implementations, there is growing competition, which helps to improve solutions and, of course, lower their price.

Furthermore, since all the information can be received instantly, APIs reduce the need to have large teams devoted solely to the company’s treasury. A small team is more than enough to track all the information, and the use of automated processes reduces certain business costs and the possibility of error.

All of this combined makes processes simpler, meaning companies can reduce their costs significantly.

Information is much more secure

Traditional cash management systems have always had to deal with very important security problems, especially in everything related to the transmission and management of information involving third parties outside the company.

Each service provider typically has its own development and design protocol, which makes applications complex to maintain.

The standardization of applications thanks to the use of the same APIs, coupled with the fact that communication channels are more stable, means that every developer has a homogeneous system that has its own security mechanisms. This makes applications much safer and prevents certain data vulnerabilities from occurring, which are sometimes difficult to resolve, especially due to the constant flow of information between the company and the bank. This method also does away with the social engineering problems or abuses of trust that are usually associated with manual processes.

Eliminating or reducing human (and non-human) errors

Cash flow is one of the most delicate parts of any company. Every process, in one way or another, is related to cash and liquidity, which is why errors must be minimized and, in some processes, eliminated. Because of this, the systems must be as automated as possible. And while any information system is sufficiently developed to prevent human intervention, this is not always feasible.

The complexity of current cash flow systems has caused many of them to lack the capacity to adequately address every request. This poses a large risk, especially if one or more people need to intervene to correct it.

With APIs, all this complexity is eliminated, which makes processes much simpler and more secure. This minimizes the need for human intervention, especially in those processes that can operate autonomously.

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