Corporate TreasuryTreasury needs to evolve now to reap the rewards of digital

Treasury needs to evolve now to reap the rewards of digital

Financial organizations, and treasurers in particular, need to embrace digital treasury if they are to tackle the ever-competitive and uncertain environment

Digital transformation is a major talking point in boardrooms across the globe. Organizations of all sizes in all sectors are turning to digital-led change that will deliver multiple benefits and help them deal with the changing economic and social landscape they find themselves in.

When it comes to finance functions, including treasury, while many are slow to adopt new practices – those that are utilizing digital treasury solutions fully are really doing great things around cash forecasting and working capital, to name just two examples. Faced with a heightened level of urgency to become more digital and connected, driven by pressuring expectations from boards and shareholders alike to become more strategic, treasury is dramatically changing.

Writing for Digitalist, Ido Shamgar, SAP’s global lead of Product Marketing for SAP S/4HANA said: “While in the past, treasury organizations were unwillingly confined to specific tasks, they are now expected to provide strategic guidance to the board and be an integral part of their company’s running operations.

“Ultimately, the more finance organizations can centralize, simplify, and automate their operations, the more efficient they become. This virtuous circle can only be achieved with centralization and easy access to data and the adoption of tightly connected tools. It requires finance to work hand-in-hand with IT to consolidate, harmonize, and govern the data and may involve new skills for the finance teams to acquire.

“The companies going through this process, however tedious it can be, will surely reap the rewards and be more ready to tackle the ever-competitive and uncertain environment.”

Real time insights

Digital treasury with intelligent automation is enabling treasury organizations to drive cost out of a wide range of processes, without reinventing their business model or redesigning their IT infrastructure.

Highlighting a few trends with respect to the digital shift, Ido observed: “In many industries, companies are changing their business models to engage directly with their end customers. Their ability to process and manage digital payments is therefore becoming key. To support their growth in a tough market, companies need more cash available. Treasurers are now looking across the boundaries of their organization to ensure that sound working-capital management practices are in place.

“Treasury operations should be accelerated, simplified, and more efficient. New tools in bank connectivity and communication, along with intelligent automation technologies in the order-to-cash process, are going a long way towards achieving a nimbler operating model. The ability to get the right insights in real time has never been more important.”

Digital treasury: Embracing transformation

At the treasury led finance transformation debate at Kyriba Live 2019 in Las Vegas, Jim Kaitz, President & CEO, Association of Finance Professionals pointed out how treasurers, if they are to embrace the full potential of tech-led transformation – which is a given for those companies looking to prosper – need to commit themselves to lifelong learning and skills development.

“Treasurers need to ask themselves if their skills are on par with their mission?” said Kaitz. “This question needs to be asked on almost daily basis. This is what’s going to drive success as a treasurer. The fourth industrial revolution is going to be disruptive and we’ll all need to learn new skills if we’re to be successful.

“For example, every single business is swimming in data. So, treasurers need to ask: Can you think better with that data? Can you make better decisions as a treasury professional with that data? Are you equipped to leverage the power of data? After all, you can’t have a single version of the truth if you don’t have a good handle on data analytics.”

Treasury firmly on SAP’s radar

Drew Hofler, VP of Portfolio Marketing quoted in an interview with The Global Treasurer at the recent SAP Ariba Live event in Austin: “What we’re doing that’s related to Treasury are things like dynamic discounting, which can increase your return on cash. Pay a supplier early, you get a 1% discount, that act works out to like 16% APR, which is heck of a lot better than the half a percent you’re getting from a Libor fund or whatever.”

The Global Treasurer also spoke to Sean Thompson, senior vice president, SAP Ariba Business Network and Thompson said: “If we can break down the silo between procurement and treasury and create an overall efficiency, then there’s huge potential. That’s why we’re so excited by this announcement.”

Treasurers can learn more about the burning trends in treasury and risk topics, listen to other companies’ stories and how they have achieved their goals, or network with peers and treasury partners, make sure to join us at the SAP International Treasury Conference on July 3-5, 2019 in Amsterdam, the Netherlands.

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