Insight & Analysis

Future-proofing treasury finance tools and processes

Rapid advances in technology present a massive challenge for existing treasury systems and teams.

Accounting, ERP and TMS systems, coupled with solutions provided by banks, make up the range of tools at the disposal of treasuries. All, however, are currently exposed to technological upheaval, presenting huge challenges for treasurers.

For Clayton Weir, co-founder of FI.SPAN, a financial services management platform, the fast-changing treasury systems and solutions landscape, demands that treasurers ask themselves whether their tools and their teams are ready to keep up with the times. “Automation and new integrations into systems stand to fundamentally reshape the work of corporate finance departments. Imagine a world where you don’t have skilled employees manually reconciling paper bank statements or depositing cheques,” he says.

In mulling over developments currently taking place Weir points to work by some banks on systems that enable transactions to be reconciled into ledgers in near real-time. “Those same banks can also leverage contextual data from your environment to increase the number of items that match automatically, thereby freeing up your team for more valuable tasks.”

In addition, technology is becoming available that can help treasurers get ahead of increasingly sophisticated fraudsters. For instance, real-time systems for flagging of anomalies in a payment are already beginning to help prevent fraud from taking place.

Better yet, he says, treasury departments can use new innovations to help improve their access to credit: “Banks are now starting to automatically offer additional credit as the financial position of a treasury department improves, or when a factorable asset such as inventory increases. The result? No more faxing loan applications to the bank,” says Weir.

More broadly, Weir senses that banks are really starting to become better operating partners: “Deeper integrations to treasury tools will enable a bank to look at, for example, forward purchase and sales orders and determine if a finance department is carrying too much euro exposure or not enough Australian dollars. Subsequently, a bank may automatically recommend making a trade to achieve greater balance. This type of advisory role opens the door for greater efficiency than ever before.”

What’s standing in the way?

But Weir warns that reaping the rewards of ERP and TMS advancements may prove difficult for many finance departments to realise. Limitations of software tools and internal IT capabilities can create headwinds. And given how many areas of a business they touch, accounting and ERP systems aren’t easily replaced. “Such systems must accommodate evolving business requirements over the course of ten or 20 years, making it difficult for treasurers to quickly adapt to current needs. In addition to being constrained by rigid tools and systems, treasury and finance professionals must also navigate the intricacies of multiple banking relationships.”

In assessing how fit for purpose their existing systems are and how they might best leverage reforms and new technologies such as open banking and APIs, treasurers should carry out a comprehensive review of their operations. Weir says key elements of such a review should include:

  • Reflection on business processes – Finance professionals are often surprised by how many of their business processes are actually forced upon them by the requirements of their software tools and banks. As they start to adopt modern automations and projects, they recognise the need to reevaluate the way they do something such as payroll approvals. An automated and integrated way of working will require new processes and attitudes.

  • Getting specific with banks – Given the fact that leading banks invest billions of dollars each year in new technologies, now is the time to reach out and let your banking partners know what kind of services you’re looking for. When equipped with the necessary tools, banks can help mitigate long-standing issues and offer products you might not have the budget or bandwidth to invest in on your own.

    For example, many banks now integrate with businesses to enable invoices to be paid directly into accounting and ERP systems rather than relying on manual processes. Many of those banks will have early access programmes for interested companies. Consider taking advantage of a potential pilot. After all, it doesn't cost anything to ask.

  • Earning buy-in from IT – As the technological gatekeeper of an organisation, IT is well positioned to simplify the integration process moving forward. Treasury and finance departments should confirm that their IT department understands the importance of capabilities you need built into current solutions, ensure they are not only aware of your needs, but also the challenges and opportunities coming down the pipeline for the finance industry. Having the right IT partners will make it easier to prepare for new developments such as APIs and open banking.

  • Prioritising tool flexibility – While no one can pinpoint the right TMS or ERP tools for your business, there are some characteristics that will help you narrow down the options. Start off by asking, “Does your vendor have a marketplace?” as well as “How active is that marketplace?” The best systems will have a half dozen vendors in their marketplace for anything you search – including AP automation, tax reporting and cash forecasting.

    It might also be helpful to determine whether a system features APIs, or tools that make it easy to develop integrations to banks and other systems. Generally, cloud-based tools will offer greater flexibility due to technological capabilities and the culture of the teams that build cloud platforms.

Weir says: “From greater efficiencies to reduced fraud, automation and emerging technologies have the potential to bring more than a few benefits to corporate finance departments. But in order to make the most of what’s on the horizon, treasury professionals must find a way around inflexible systems and complex integrations.

That’s where future-proofing finance tools can make all the difference. A number of strategies – including searching for systems that can easily integrate with third parties and communicating specific needs to banks – can help prepare finance tools for a new era of innovation.”

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