Cash & Liquidity Management

Corporates set their sights on automated cash flow management

Published: Jul 2023

From insider fraud to cash management automation, Bottomline’s Kevin Grant discusses the firm’s 2023 Business Payments Barometer, and the five findings that corporate finance teams and treasurers should be aware of.

Kevin Grant

CRO Corporate Solutions

Change is a constant in the world of business payments and cash flow management. With COVID finally fading as a factor, corporates are using this change to focus squarely on payments technology with the intent of improving visibility into their cash positioning.

Those are just some of the findings from Bottomline’s recently released flagship research project, the 2023 Business Payments Barometer. The research covered 1,600 finance leaders from corporates in the US and Great Britain.

Kevin Grant, CRO Corporate Solutions at Bottomline, highlights the five findings from the report that he sees as most useful to treasury professionals:

1. Technology has become the top priority

Grant notes that in both the US and Great Britain, the top priority from the past two years (COVID) has been supplanted by various technologies. Both countries tagged payments technology as having a positive impact on productivity: 60% of all US respondents and 58% of British companies singled it out. The two countries likewise noted the positive impact of payments technology on other factors, from gaining a competitive edge to reducing costs and boosting reputation.

“This is an encouraging finding and reinforces what I’ve observed from my decades of experience in treasury,” says Grant. “When financial volatility presents itself, treasurers become acutely aware of their cash positioning and the risks associated with it.” As such, he says that automated and aggregated access to bank accounts – and to the functionality that makes good cash management solutions – is essential.

“The one thing you can control as a treasurer is the money you have and how you pay it out,” Grant adds. “Achieving a balance must be a managed process, and when money is tight and expensive to borrow, it’s time to prioritise enabling technologies.”

2. Insider fraud is growing

When US businesses were asked to rate their level of concern about different fraud types, 73% said they had “a great deal of concern” or “a fair amount of concern” about insider fraud. The GB figure was slightly lower at 59%.

“You might ask why this is a key finding for treasurers. But it should be a major concern,” says Grant. “There are a few technologies and best practices that can mitigate insider fraud, but from a treasurer’s point of view it’s critical in the current environment to validate the account owner for a payment. Cash flow management solutions will do that.”

In addition, Grant notes that there is a solution in the UK called Confirmation of Payee that automates name checking for payments. “With potential bad actors likely feeling economic pressure, combatting fraud should be right up there with technology as a priority,” he adds. Today, even more advanced technology is available to help protect against accidental or deliberate malicious actions made by insiders.

3. Cash flow management automation is surging

The Barometer found significant gains in the use of automated cash flow management software, which is now in place at 59% of companies in GB and 64% in the US. Those numbers also indicate that cash flow technology still has room to grow.

Grant comments: “In my opinion, some of the responsibility for that growth must come from companies like Bottomline and we’re happy to take that on. Our approach is to build cash management solutions on top of current capabilities, because we understand that in order to see all of your payments and receivables globally, you need to have secure, simple solutions that can be adopted and integrated quickly into your infrastructure.

“Rather than having a six-to-12-month, heavy lifting, complex, larger solution capability, we’re saying that businesses can still capture and manage high volumes of accurate data to inform their decision making, so that they do a better job for their business right now. That would include mitigating fraud, updating real-time payments, and having visibility into all your bank accounts and money movement.”

4. AI has appeared on the radar

The top four tech solutions mentioned this year in both countries were access to pay-as-you-go (or subscription-based) technology, AI and predictive analytics, mobile payments and easier access to the cloud.

In both countries, the biggest concerns around AI – coupled in the Barometer with predictive analytics – were the difficulty of keeping up with advances, and the resources needed to implement them. Both are legitimate concerns, especially as AI continues to evolve at a rapid pace.

“I think what corporates need to understand in the context of business payments is that AI is not limited to the Generative AI controversy dominating the headlines,” says Grant. “In a cash management solution, it can take higher volumes of data and draw insights from it. That adds great value.”

At the same time, he notes, “you need to have what are called circuit breaker entities here.” In other words, AI should be used as a tool to promote insight for a human to observe, analyse, consume, and then decide what action to take. “For me, AI is something that augments the data that’s flowing through the system and provides observations that wouldn’t be obvious to the human eye.”

5. Excel is still a factor

The use of cash flow management software in the US jumped to 64% of respondents, up from 53% in the 2022 Barometer. The use of treasury management systems likewise rose from 33% in 2022 to 44% in 2023.

In GB, meanwhile, cash flow automation is now in place at 59% of the companies surveyed, up from 46% last year, with automated treasury management increasing from 27% to 37%. The use of Excel to manage cash flow manually continues to hold steady at 32% in GB, and 38% in the US.

“While automation is certainly the preferred solution for cash flow management, I’m not among those who think Excel is an evil and completely inaccurate methodology,” Grant says. “It can be a valuable analytics tool for cash management, provided that companies are aware of the value of their data, the personnel that has access to it, and the restrictions for the data that will be inputted into Excel.”

If Excel is not used as the main authorisation tool for tracking money received and money being paid, he adds, “it can be a useful supplement to core financial processes.”

The Bottom Line

All in, the Barometer is a positive report. “I would encourage corporates of any size to understand that there’s no progress without taking risks,” comments Grant. “Just like any change in process or technology, I would say that you must balance your risk and reward.

“Quantify those, assess the business benefit to your revenues and your ability to engage with customers. If you can do that, technology decisions such as the ones detailed in the Barometer will be well-informed.”

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