Many treasurers and CFOs believe that their current treasury strategies are at the ceiling of what’s possible for connectivity, automation, and visibility, as well as a host of other workflow capabilities. But a few developing technology trends point to untapped opportunities for more – and more powerful – connected treasury processes that drive insight, efficiency, and business growth.
A genuinely modern and connected treasury ensures that treasurers can more easily predict and manage cash, debt, investments, and exposures across global operations, all optimised to keep expenses low and productivity high. Treasurers with truly connected treasury technologies can provide their organisations with a decisive edge, measured both in time spent on tasks as well as in decision quality. Treasurers without a connected treasury are left playing an ever-widening game of catch-up.
These four trends are driving treasury practice forward, moving the department further towards a connected and open treasury ecosystem:
1. Greater FX rate visibility is enabling greater optimisation
Treasurers may believe their FX practices are optimised. However, in many cases this is only because they lack the requisite visibility and understanding to recognise faults in their workflows.
FX rates change as treasurers execute payments. Poor visibility means potentially missing the best rates. Treasurers can also be double charged in some instances and never know it. The complexities of multiple currencies and time zones can further slow legacy manual processes.
When treasurers have the data to show and compare their FX payments against those of industry peers, opportunities for significant cost improvement become immediately apparent. Internal discussions then often lead to streamlining FX workflows through activities such as intercompany netting, automation, and integrating end-to-end FX risk management into hedging tools.
In addition, intelligent insights support better decision quality, and enable setting – and achieving – the treasury function’s strategic goals. The strategic value of an optimised FX workflow inevitably rises to the attention of CFOs themselves, many of whom champion such initiatives.
2. Treasurers are forecasting more frequently to navigate volatile markets
The current volatility of the market requires that treasurers increase the pace of their cash forecasting to account for the broader range of scenarios caused by the volatility. Treasurers with the right technology connectivity can complete forecasts more quickly and more easily – and with more accurate results – than those still relying on spreadsheets.
Treasurers frequently overestimate their forecasting capabilities because they’re looking at only a subset of data they need for forecasting. In many cases, these treasurers aren’t even aware of the full dataset available with better connectivity.
The technology-driven ability to connect into any cloud or on-prem system and access data in any format goes a long way towards increasing treasurers’ depth of perspective when assembling forecasts. Whereas treasurers hampered by manual data ingestion processes and connectivity obstacles may overlook critical forecasting variables (or simply lack access to pertinent or even decisive data points), treasurers with broader visibility at their disposal can make far better decisions.
3. Bank fee analysis is providing direct savings opportunities to more organisations
Connected treasury capabilities are enabling treasurers to understand how much their companies pay in bank fees, and how those costs compare with competitors. For many treasurers, this analysis has been a low priority, or simply off their radar completely. Treasurers often assume they’re performing well, or well enough, without putting that opinion to the test.
However, bank fee analysis backed by connected treasury can save a company millions a year. Because these fees accrue so much total cost, they represent one of the clearest and most easily justifiable applications of connected treasury from an ROI standpoint. The most mature treasury functions regularly look at and adjust their banking relationships based on fee analysis.
4. Bank account strategies are becoming more data-driven and effective
Since the 2008 financial crisis, companies have diversified their assets across more banks and accounts. Connected treasury capabilities bring data-driven clarity to the portfolio of bank relationships. Examining the true impact of a company’s relationship with each global, regional, or domestic bank it has accounts with, its total number of accounts, and its comparison with peers yields opportunities for optimisation.
Connectivity is often the key driver in this optimisation process. For example, if a company has 50 bank accounts but only 30 of those can support connectivity via bank APIs, recognising the opportunity and consolidating to those API-ready accounts can provide key savings and streamlined efficiency. Treasurers and CFOs should examine existing practices to benefit from this trend.
Open minds
Treasurers can optimise and modernise treasury management and fast-track the competitive advantages that optimisation unlocks more easily than most think. Those who believe they’re at the forefront of treasury technology must still adopt an open mindset, and honestly appraise and improve their capabilities; those who do not risk falling behind.
