Unlocking Real-Time Treasury Through the Power of APIs

The buzz around APIs seems to intensify with every passing year. Should you be using them to optimize your treasury department?

Published October 9, 2023 | 3 min read

Key Points

  • APIs are a way to send and receive information in real time, powering mobile applications and websites that we use every day.
  • Integrated APIs enable banks to embed solutions directly into clients' ERP and TMS solutions, allowing treasurers to access real-time working capital information.
  • Enhanced working capital insights empowers treasurers to make more accurate investment decisions and cash flow forecasts.

API is an acronym that you have probably been hearing for a while. The buzz around them seems to intensify with every passing year. But what exactly are APIs? And what benefits can they offer treasurer?

An API, short for Application Programming Interface, is a piece of code that allows different applications to “talk to each other” within an organization or across multiple organizations. Put simply, APIs are a way to send and receive information in real time. They are based in individual messages that pass information back and forth, either in response to a request or on an event-driven basis. APIs enable constant access to data without storing that data within the ecosystem, meaning the data never gets stale because it always refreshed with the latest information.

Real time solutions in the real word

Let’s take a real-life example: planning your next vacation. Perhaps you’ve decided to spend a week in Italy, and you want to find the cheapest, quickest flight available. Thanks to the power of APIs, you can go to an aggregator site that will show you all the flight and fare options across a wide variety of airlines within seconds of entering your destination and date. The APIs are fetching the data from multiple sources and presenting them to you in a standardized form. As the end user, you see the consolidated flight options, without having to search every airline’s site individually.

This is just one example of how APIs work in everyday life. Even though you can’t see them, they are behind the scenes powering the mobile applications and websites that you use on a daily basis – everything from checking the weather, to ordering a rideshare, to buying something online, and so much more.

How APIs can revolutionize treasury solutions

Now let’s pivot to a treasury view. APIs enable banks to embed solutions directly into their clients’ Enterprise Resource Planning (ERP) and Treasury Management System (TMS) solutions, which in turn empowers treasurers at those companies to access real-time working capital information with the click of a mouse. With the use of APIs, banks send and receive information with you in real time, allowing the aggregation of data in your own systems from all of your banks.

You might be thinking: “I already have file integration, how is this different?” The answer lies in batch processing. File integration bulks information together and sends it at a low frequency. Because of the low frequency, file integration will not provide you with real-time information in your ERP or TMS system. In order to obtain real-time information, you must log into your bank’s online banking application. In contrast, APIs function as an ongoing, streaming connection between your company and the bank.

You might also be wondering: “Do APIs open my company up to security or privacy risks?” The answer is that security is a key component in the development of today’s APIs. Any reputable API creator is thoroughly educated on cyber security protocols and actively takes steps to ensure the security of their APIs. Such protocols include, but are not limited to, controlling access by requiring all users and devices to authenticate and authorize themselves, encrypting all responses and requests, and cleansing the data both at the source and destination. APIs offer file integration with the added benefit of real-time updates, all with security as a foundational element.

The future of treasury

The benefits of having real-time access to your data are substantial. For example, knowing your real-time balances in all your accounts enables you to make more precise investment decisions and cash flow forecasts. Another example is getting your statements in real time as transactions occur. This will be useful if you are waiting for credits to your account before releasing goods/services. There will be no more need to manually look or wait for a batch update.

And last, but certainly not least, for any business that has a consumer or vendor at the other end, you can reflect their payment status in near real-time on your client facing App or portal to reduce the demands on your service team. These are some of the ways that APIs can help make daily tasks more efficient and reduce the reliance on human intervention.

APIs are the future -– giving you a fully embedded solution with real time information. The best of all communication methods in one solution.

“APIs can help make daily tasks more efficient and reduce the reliance on human intervention.”

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