The treasury landscape is in flux with long-established processes evolving, technology delivering new possibilities, and the more strategic nature of the role requiring a more comprehensive range of skills from those charged with safeguarding corporate cash. These changes mean proactive treasurers are perfectly placed to seize control and build a function fit for the future.
With the corporate treasury function rapidly evolving, treasurers seeking to transform the department are driven by three key priorities: securing top talent, optimising existing processes, and embracing cutting-edge technology.
Dr Arif Esa, Gobal lead of Treasury and Working capital Solution Management, SAP, outlines: “Treasurers are no longer satisfied with the status quo – they are actively questioning it. They are looking to infuse technology into different processes to increase efficiency, which is why everyone is talking about Generative AI [GenAI].”
Treasurers are eager to explore how integrated systems and advanced simulations can enhance their operations. Younger treasurers, in particular, are at the forefront of this transformation. They are not just focused on traditional banking functions but are keen to leverage innovative tools that enable them to operate in a more instantaneous environment.
Bruno Mellado, Global Head of Payments and Receivables, BNP Paribas, notes: “Real-time liquidity management is a trend that is gaining traction, and it’s poised to alter the relationship between treasurers and banks fundamentally.”
The move toward real-time transactions presents both opportunities and challenges, forcing banks and corporations to change certain areas of their operations that have been working comfortably for many years. For banks to help their corporate clients navigate the new treasury landscape, they must foster close partnerships to co-design updated versions of legacy processes by viewing them more end-to-end.
“The partnership between banks and corporates will be the key to unlocking a future where treasury management is not just efficient, but also agile and innovative,” adds Mellado.
Put the best people in the right places
As corporate treasurers navigate the complexities of modern finance, the shift toward virtual accounts and centralised cash management has become increasingly prominent.
Esa notes: “Many corporates are moving away from physical accounts in favour of virtual ones. This transition is not just about streamlining operations – it’s a strategic response to certain in-country restrictions that prohibit cash concentration or pooling.”
Virtual accounts have become a standard request from corporates to their banks, primarily due to the benefits they offer for reconciliation and liquidity management.
Mellado posits: “By reducing the number of physical accounts, treasurers can simplify liquidity management and centralise collections. This centralisation enhances control over data collection for forecasting and streamlines treasury operations.”
Treasurers are looking for ways to manage physical and notional cash concentration with an integrated solution. This shift underscores the growing importance of the TMS as a cornerstone of the structure that helps treasurers manage these processes and support reconciliation efforts.
ESG considerations also shape treasurers’ strategies. “Clients are increasingly asking how to invest surplus cash in green or social funds to enhance their ESG ratings,” Esa explains. While centralisation can dilute the influence of local cash managers, it also opens opportunities for them to contribute to ESG-linked investments – a trend gaining traction across the industry.
Mellado points out that sophisticated treasuries have already mastered the basics of cash management, focusing now on putting balances to work and making informed investment decisions armed with the best visibility possible. “It’s now more a question of how this is replicated among peers who decide to reorganise their treasury to take more control centrally,” he says. “They optimise the balances, make well-informed investment decisions, and maximise the cut-off times to be in the currency where the investments will be made.”
Developments around the optionality of moving funds 24/7 and investing around the clock will be evolving over the next five years. Treasurers can only succeed in these areas if they have a firm grasp of their cash flow forecasting.
“Forecasting is a topic that is always at the top or near top of the main priority list in treasury surveys, and it has to be addressed,” Mellado points out. “When liquidity is expensive, poor forecasting becomes an even greater challenge. There are amazing tools on the market to help with forecasting, but the issue treasurers face is investing in people who know how to manage data.”
This reflects how the skills required in the treasury function change as the role evolves. A treasury fit for the future needs people who understand traditional treasury management, data, and technology.
“Treasurers must have the capacity to manage such a project, clean up the data, prepare the forecast and industrialise that forecast,” Mellado adds. “Most corporates ask us which software they should use, but I’m not sure it’s a software issue. It’s about the overall project, the intention, and the staffing. Facilitating the talent for a successful forecasting project can enable better decision-making for cash management.”
As corporate treasurers grapple with centralisation, the topic of wallet share and where they want to put the cash becomes more important. The greater visibility into cash enabled by this pooling of funds also provides a clearer picture of the bank fees being levied.
Esa elaborates: “The reduction of the number of bank accounts and the corresponding bank fees, for example, have become a KPI for many corporate treasurers. But that is possible only if they have a centralised way in which to optimise their cash and liquidity.”
But bank fees are only part of the equation. Once treasurers start centralising, they can consider the FX and the underlying risk. “If treasurers have a central view of their cash flow, they can reduce the number of foreign transactions because they will effectively be able to net their exposures,” Esa continues. “The increasing consolidation of cash goes hand-in-hand with the centralisation of payments and exposures.”
However, centralisation isn’t without its problems. “Trapped cash in certain countries can pose significant challenges,” Esa warns. The solution lies in empowering local cash managers, who are crucial to managing these funds and ensuring compliance with local regulations. Engaging these managers from the outset is essential for the success of any cash consolidation project. “Treasury must partner with local cash managers to optimise cash forecasting and deliver value,” Esa stresses.
As treasurers continue to refine their strategies, integrating virtual accounts, centralisation, and ESG considerations will be critical in navigating the ever-changing financial landscape.
Why tech alone is never enough
Just as the treasurer’s role has evolved, so has the technology they use to execute their daily tasks. However, as the tech picture becomes more complex, treasurers face pivotal decisions about which tools are best suited to support those processes.
“There are three critical aspects on which treasurers should focus,” Esa explains. “First, they must decide on the cloud infrastructure they want to adopt. With everything moving to the cloud, this decision is no longer optional but necessary. Treasurers have choices, whether it’s a private cloud, public cloud, or even a bespoke cloud solution.”
A second crucial factor is the right platform for a sophisticated data modelling. When embarking on a transformation project, treasurers must carefully consider the type of data they intend to model and the methodology behind it. The decisions made at this stage will influence the effectiveness of any new systems or processes being implemented.
Esa also emphasises the importance of goal clarity before adopting technology. “Treasurers must be clear as to what improvements they seek,” he advises. Whether optimising, reimagining, or completely revolutionising their processes, having the right platform and data model is essential. But none of this works without the right team – technology alone isn’t enough.”
Mellado echoes this sentiment, stressing that treasurers should focus on how they consume technology rather than the system itself. “It’s not about adopting a specific tech solution, but rather about how treasurers plan to use the technology available to them,” he notes. With new platforms enabling treasurers to engage with functions beyond traditional finance, such as supply chain management or e-commerce, the strategic question becomes whether to build these capabilities in-house or to source them externally.
This choice hinges on how critical a particular function is to the treasurer’s strategic goals. “The decision to build or buy depends on whether the function is central to the business or if it can be managed via an external platform,” adds Mellado.
Indeed, fintechs and PSPs already leverage cloud-based, API-driven platforms with embedded intelligence, making them attractive options for treasurers. However, with these advancements come new risks. The recent CrowdStrike-Microsoft outage in July 2024 is a stark reminder of the cyber-security and data-protection challenges accompanying reliance on external platforms. “If your data is hosted externally, you need to be prepared for the associated risks,” Mellado warns.
For those seeking stability, one option is to consider cloud platforms vetted and validated by major banks. Equally, communication with treasury peers can bring forth valuable wisdom.
Ultimately, the key for treasurers lies in mastering data management. “Ideally, treasurers should have the ability to manage data effectively, linking treasury data to broader business processes,” Mellado advises. “Investing in this capability – both in terms of talent and technology – is crucial. Every treasury needs its own data team to navigate the future, regardless of whether they use off-the-shelf technologies or more complex, bespoke solutions.”
Brainstorm, pilot – and test
The nature of the relationships between banks, software vendors, and corporate treasurers has also changed as technology has developed. The way that banks engage with corporate clients from a software perspective has seen many focus on elements of their offerings that go beyond traditional banking functions.
Esa outlines: “Banks are not just funders; they’re becoming integral parts of business networks like SAP Taulia for example, offering services such as supply chain finance and fraud prevention. For instance, a bank might provide instant account balances or account verification to prevent fraud, adding tangible value to the transaction process.”
The trend of banks participating in broader business networks is also seen in the payment hub space. “We’re witnessing more collaboration between software vendors and banks to create streamlined communication channels between corporates and banks,” Esa notes. This approach prioritises the added value for mutual clients, rather than simply focusing on who owns the platform.
In the rapidly evolving corporate treasury landscape, the collaboration between banks, software vendors, and treasurers has never been more critical. As treasurers become more technologically enabled, banks are stepping up to support this shift by co-creating solutions that meet the specific needs of the modern treasury function.
Mellado highlights one such innovative approach. “We’ve established a group of senior treasurers who meet regularly to discuss their most pressing challenges. Together, we brainstorm, pilot, and test proof of concepts aimed at solving these problems. We can roll out these initiatives to a broader audience if they prove successful.”
Take instant reporting as an example. While the technology to provide on-demand reporting has been available for years, the real challenge lies in determining how treasurers can best use this capability. The question isn’t just about how to retrieve real-time data from accounts via an API; rather, it’s related to understanding which internal processes benefit from this data.
Mellado expands: “Is receiving updates every hour, or even every 15 minutes, more effective than a single end-of-day report? These are the practical considerations we’re working through with treasurers.”
This collaborative spirit extends to international payments and account validation, areas where banks and treasurers collaborate to streamline processes and enhance certainty. Imagine pre-screening payments and beneficiaries through software such as SAP, for example. Treasurers can confirm account details and ensure all necessary information is complete before initiating a transaction. This reduces the need for follow-up calls and adds a layer of confidence crucial in today’s fast-paced environment.
The push for multi-bank API services also exemplifies the industry’s move towards standardisation. “We’re actively collaborating with Swift and other banks to develop multi-bank API services that connect seamlessly with ERP and procurement systems,” explains Mellado. This not only benefits treasurers, who often manage relationships with multiple banks, but also simplifies the technology landscape for software vendors that prefer dealing with uniform APIs.
Esa agrees, commenting that most corporates work with multiple banks. “Treasurers require a standard way to operate,” he says. “Without common standards, software vendors can’t provide comprehensive solutions. It’s encouraging to see treasurers and banks pushing for these standards together.”
The message is clear: the future of treasury management depends on close collaboration between corporates, banks, and software vendors. By aligning their efforts, they can drive the innovation needed to navigate the complexities of a global, multi-bank environment.
Leading the charge
Certain obstacles must be overcome by corporate treasurers embarking on transformation projects if they are to make the most of the tantalising opportunities on offer. It is vital to start this journey with the right focus.
“Don’t begin by searching and considering the latest technology in silos,” advises Esa. “Instead, identify ways to increase treasury efficiency, then determine which technology can support that goal. Each transformation requires a fundamental shift in mindset within the organisation.”
He underscores the need for treasurers to engage all stakeholders, including external partners such as banks. “Even if your treasury department is equipped with the most advanced technology, it won’t work effectively if your banking partners aren’t on the same page. Collaboration with banks is crucial,” Esa urges.
Treasurers can also leverage the more strategic position of their role to take a leadership position in transformation projects.
Mellado enthuses: “Treasurers can lead the charge in transforming their organisations by fully leveraging today’s technology. The potential for efficiency gains, cost savings, and improved liquidity management is significant if the right resources are invested.
“Treasurers should encourage their software vendors to participate actively in their innovation journey. It’s essential that these vendors are in sync with the treasury’s roadmap, both now and for future developments,” he concludes.
In this complex landscape, treasurers are not just managing money but driving strategic change. By focusing on efficiency, challenging traditional processes, and fostering strong partnerships, they can ensure their transformation projects provide sustainable business and deliver real value.
