Since the pandemic, the global economy has never been quite the same. Rising costs and supply chain issues led to inflation and a lack of consumer confidence. During this time, corporate treasurers have had to look beyond their typical approach and extend it beyond just a function of the back office.
Today, it’s a front-foot strategic vehicle for capitalizing on any growth opportunities that are presented. To innovate past the manual processes and fragmented financial visibility is to confront the inefficiencies head-on and lean into modern, advanced cash management practices.
The challenges in corporate treasury
Corporate treasurers have the worst of both worlds; globalization has meant even small companies now must manage currencies, regulators and sales of multiple markets around the world. Yet, the recent political movements towards isolationism have brought in red tape and tariffs with this. The number of banking partner relationships you have to manage hasn’t decreased, but the costs and frictions are rising.
The typical pain points are a lack of real-time cash visibility, which slows down decision making, as well as a reliance on manual processes when it comes to reconciliation, cash positioning and reporting. And, with constantly changing exchange rates and currency risk, cash flow forecasting is of high importance and in need of technologically-focused solutions.
Any modern advanced cash management solutions worth their salt will address these issues within a unified platform, particularly since the rise of cloud migration and a library of APIs to integrate with. Solutions like Prometeoapi allow businesses to consolidate financial information from all bank accounts in a centralized place, making it both agile and secure.
Getting to the bottom of advanced cash management solutions
Modern solutions outperform legacy systems by using technology to centralize and automate the majority of treasury duties. High-level overviews are important in finance, and these platforms provide real-time views of cash and liquidity.
When looking to upgrade to advanced cash management solutions, look for the following characteristics:
- Centralized visibility (e.g., consolidating data from disparate bank accounts on your dashboard)
- Up-to-the-minute financial data and dynamic reporting
- Automation of time-intensive tasks (e.g., bank statement retrieval and processing)
Tangible benefits of optimization through advanced solutions
Advanced reporting on a single dashboard isn’t just about convenience. With better visibility, there’s better insight, and these can drive business decisions. Liquidity management and mobilizing funds can be done faster and more accurately when idle cash is identified.
These systems are proven to improve the cash flow forecasting accuracy, in part due to their integration of data and predictive analytics, which may be driven by machine learning. Of course, better forecasts enable better anticipation of cash surpluses and deficits, and this helps investment and funding strategies.
The treasury also has the important duty of risk mitigation, and such solutions can be proactive in detecting liquidity, currency and interest rate risks, while better bank account detection can also combat fraud. One example of this is timely data on FX exposures, which can allow for more effective hedging strategies.
Beyond business intelligence implications for other departments, the treasury’s own operational efficiency is improved due to the automation of routine tasks and the liberation of treasury teams to focus on more value-added activities.
Selecting the right advanced cash management solution
Choosing an appropriate solution is going to require careful evaluation of one’s own integration capabilities, first and foremost, as the existing ERP system is heavyweight and much more difficult to transition away from. Current banking platforms and other financial tools are also important to consider, meaning that the broader stack should be weighed up. Integration is everything, and it’s not uncommon that such accounting solutions are a catalyst for a broader cloud migration towards a more modern ERP.
Security and compliance are of course non-negotiable, so the solution must have strong security protocols and data encryption and a clear relevance to your specific regulatory environment (also consider future bodies that you may enter new markets of).
Don’t become distracted by claims surrounding AI and machine learning. While these have a growing role within predictive analytics, much of corporate treasury management is about visible information and integrations rather than complex algorithms. Pattern spotting is useful, but what’s more important is the quality of your existing data.
Before committing to a new solution, a clear set of objectives for treasury optimization should be established to help keep the decision and implementation on track. Data accuracy and the training and culture surrounding the importance of data is a prerequisite for any solution to work, as you can only get out what you put in.
Transforming treasury into a strategic powerhouse
In the current turbulent environment, advanced cash management solutions are becoming a popular way to modernize the corporate treasury. Such solutions are helping provide organizations with better visibility, efficiency and control, all of which are needed as you enter more markets with a growing friction between them.
