15th Feb 2018

Digitisation of Treasury | Part 2

The impact of digitisation on major treasury pain points

Blog Series – Part 2 of 3:

Read Part 1

Read Part 3

It’s tough being a treasurer nowadays. So how is technology making it easier?

The role of Corporate Treasurer has evolved significantly over the last decade. In addition to traditional treasury activities, treasurers and treasury practitioners are taking greater responsibility for financial risk management, regulatory reporting, as well as playing a more strategic role in corporate activities.

With the treasury function increasingly seen as having a unique set of skills to improve the bottom line, treasury departments are now called upon to help add value above and beyond cash management. For the modern-day treasurer, technology has helped reduce the burden and relieve those niggling treasury pain points.

So, how is digitisation helping?

Industry adoption of TMS and the appetite for new treasury technology is just one of the reasons why digitisation has changed how corporate treasury functions operate. Here are some additional reasons:

Real time cash / liquidity reporting:

Multi-bank cash visibility – tired of creating numerous spreadsheets and spending hours reconciling to garner some level of sanity over cash visibility, industry professionals are now turning to technology to get a better picture of their company’s cash position.

By using an Automated Cash Analytics Tool, treasurers can gather cash positions and report on liquidity requirements in real-time. Which is particularly important for organisations dealing with multiple banking systems and subsidiaries across the globe.

Coordinate and configure data – Analysts spend hours every day trying to patch together data, so treasury and financial professionals can act on advice – only to then start all over again the following day.

Technology has turned this process on its head, with data now available in real-time and configured by bank provider, currency, country and even on an organisational legal entity basis.

Detection – with finance data overflowing and information coming in and out concurrently, detecting anomalies and missed opportunities is impossible when you’re using a spreadsheet treasury model.

Luckily for treasurers, technology is now available at their fingertips to help them make quick changes, which means they’re less likely to miss opportunities to save or make money.

Treasury risk management:

Minimise Loss – never has there been greater justification for a firm to minimise losses, than today. A volatile macroeconomic environment, unstable foreign exchange and negative interest rates all highlight a need for better reporting. Digitisation has made this process easy.

Today, treasurers can automate reports that allow them to minimise losses with minimum effort, enabling them to act on their findings in a proactive and positive way.

Sweeping – Treasurers looking to maximise interest, minimise cost of borrowing and improve liquidity, concentrating all their cash into one account where the interest is at its highest is a great way of managing cash. Without the latest in treasury technology, this process would require routine manual input of payments, which is both error-prone and difficult to maintain.

However, through an Automated Cash Analytics Tool, the process can be automated as it integrates directly with the payments engine and therefore removes the need for manual sweeping.

Executing profitable treasury tactics:

Analysis – to understand the structure of the finance and treasury function, treasury departments gather daily information  about the company’s cash positions by region, currency, bank and legal entity. The task can usually take a large proportion of their day – time which they would rather spend analysing the data. Digitisation has shifted the treasury role away from data gathering to data analysis and strategy execution, as all these routine tasks can now be automated.

On-demand – Treasurers have to jump over many hurdles to produce reports that contain accurate and up-to-date information on current cash positions or future liquidity forecasts. However, with real-time information available, these tasks become easy as bespoke organisational reporting requirements can be configured and delivered on demand.

Appetite for change:

Adoption of tech across business – more and more organisations are setting up subsidiaries across the globe. Globalisation, international trade and the internet have led to endless opportunities to expand the organisations footprint. Yet, treasurers are the ones left to deal with an increased numbers of foreign exchange transactions, financial risk management, compliance and regional and international regulations.

Consequently, treasurers are demanding greater functionality from their technology to meet these demands – tools which track cash positions, manage fund transfers and allow them to take appropriate action to measure and manage risk exposure.

Future proofing treasury – we’d all love to see the future today, so that we can build a better future for tomorrow. Treasurers are no different. Having lived through the good and the bad, one thing is for certain: all signs point to a corporate treasury department of the future with even more responsibilities.

Financial regulations, the banking environment, payment systems and international trade policies are all set to change the treasury and finance landscape. To keep up with the pace of change, treasurers are looking to future proof their systems to reduce future risks and improve the functionality of the treasury departments.