For our second installment of our 2024 Business Payment Trends we’ve turned to an executive with his finger on the pulse of corporate treasury says who believes that forecasting amid economic uncertainty will define 2024… and the AFPs members are up to the task. Tom Hunt is the director, Treasury Services and Payments, Association for Financial Professionals. As the subject matter expert on bank relationship management, cash management, and treasury technology, he oversees AFP's Treasury Advisory Group and AFP's member committee dedicated to meeting the needs of the profession and keeping members current on developing topics.
Managing uncertainty; forecasting liquidity: Economic uncertainty leads to what you could call Cash Forecasting 2.0. Treasurers need to balance several things. They have a potential recession, and interest rates remain high. They have forecasting for the short term and managing liquidity for the long term. It’s a complex formula that comes into play for a lot of companies. It raises a lot of questions that will be important next year. Do we have the dry powder to do this acquisition? Do we have enough capital? What will our interest income look like? We did a survey recently that shows 43% of our members consider macroeconomic risk to be one of the most challenging risks to manage.
Making the most out of treasury investments: Treasury professionals are continually asked to do more with less. A lot of times, when automated systems get implemented, budgets run short and sometimes they don't fully implement everything they intended. Companies are having huge cost focus and cutting back on discretionary spending, especially in the short term, waiting to see how this recession unfolds. I expect treasurers to focus on the nuts and bolts.
Real-time payments seek B2B use cases: I think the evolution of the business case will continue. Will there be more demand from corporates for real-time payments? The biggest factor in that answer is cooperation. There are almost 5,000 banks in the US. But whether a business uses their bank for real-time payments is less important than understanding who their customers and vendors bank with, because the entire payments ecosystem needs to be aligned to get all the benefits inherent in this platform. Real-time payments have the advantage of giving the customer the ability to determine how and when to get paid. But cost is another factor here. I see a lot of companies weighing the cost of real-time payments vs. batch ACH, Premium ACH and wires. They need to identify the use cases that work best for real-time payments and balance them with how they pay for high-value, time-sensitive, critical payments that can be received and processed by all banks in the equation.
Reckoning with AI: Our recent conference showed a ton of interest around AI and machine learning. At the enterprise level, I think you’ll see more use of AI after it’s properly vetted. The situation reminds me of when robotic process automation was new and when we could finally move from spreadsheets to mainframes. I heard someone say the other day that treasurers are a conservative bunch. I agree with that. Corporate treasury and payments professionals are very risk averse, and they’re paid to balance risk and return. In that context, there’s still a lot to learn. We need to figure out where the treasury professional is most comfortable.