How technology helps corporate treasury answer its major challenges


Globally, businesses are facing myriad challenges that threaten profitability and success. Within each business, the treasury department is responsible for the management of money (cash flow and cash management) and financial risks, helping the company meet its business objectives. Traditionally thin (in staff numbers), treasury teams, like those in so many other departments, are expected to do more with less. That can be extremely difficult with a small staff and a reliance on legacy manual processes. That’s why more treasury departments are relying heavily on new technology to streamline processes. Fortunately, the tools are available to help treasury realize its goals.

The Strategic Treasurer: Treasury Technology Analyst Report is an annual report that provides the latest information on technology trends and innovations that treasury professionals need to know. This Corcentric-sponsored report goes into detail in four main categories: Treasury Management Systems/Treasury Risk Management Systems (TMS/TRMS), Treasury Aggregators (TA), Supply Chain Finance (SCF), and Cash Conversion Cycle (CCC) Solutions. But before getting into these categories, it’s important to understand the current environment for treasury.

Stressors are everywhere

Although the worst effects of COVID-19 have somewhat abated, businesses still face ongoing challenges. As the report notes, there are aftershocks from the pandemic made worse by wars in Ukraine and Gaza, bringing “chain reactions of ongoing chaos. This has led to supply chain difficulties, elevated inflation, interest rate hikes, bank instability, recession risks, currency fluctuations, market volatility, fraud and more.”

At times like these, treasury must be able to ensure accuracy in forecasting as well as operational efficiency in ways that will increase control over liquidity. That requires greater focus on analytics and strategic thinking, including the ability to quickly respond to unexpected events. It’s clear that time management is as important as cost management, and a reliance on legacy, slow, and error-prone manual ─ rather than digitized ─ processes compromises a reduction in both time and money.

Treasury departments use treasury technology solutions to address four value-driven issues: data management, security (fraud), compliance, and staffing. The Strategic Treasurer report addresses each of these.

Data management – How much is too much?

The amount of data available can be overwhelming; that’s why data management has become so essential. Digital transformation is no longer a luxury for treasury operations ─ it’s a necessity. Business intelligence tools such as artificial intelligence, machine learning, and natural language processing make extracting the right data from the huge amount the organization has stored faster and easier. But without a strategy to effectively use that data in decision making, the tools alone won’t produce the desired goal. This is true for the entire company, not just treasury.

As a company expands, the amount and complexity of data will expand as well as visibility into that data. Having real-time visibility into every aspect of the company’s growth and finances ensures that treasury can perform its duties to optimum effects. As the report states, “Proper, intentional data management and architecture become necessary at a certain point of complexity in order to maintain the needed visibility.” Although nearly three-quarters (73%) of treasury respondents to the Strategic Treasurer report said they had 100% visibility – monthly ─ into their bank accounts, only a little more than half said the same about daily (54%) or weekly (55%) visibility.

Security – Finding fraud in a changing office landscape

One of the major impacts of COVID-19 that is still affecting organizations is the work-from-home issue. Having so many remote workers has created much greater risks to a company’s security. For treasury ─ the department responsible for protecting liquid assets and mitigating risk ─ defending against fraud is among the top challenges. This is especially relevant as fraudsters have become more sophisticated, learning how to circumvent existing security controls.

The report found that 50% of company respondents plan to spend more on treasury fraud prevention since senior management had major concerns about the threat level, while 25% were increasing spending due to a recent security incident. Fortunately, as cybercriminals get smarter, so does the technology that can thwart their attempts … or at least, mitigate them.

The best way to mitigate fraud is to reduce manual processes and the human error these legacy processes make possible. By eliminating the human factor, the number of touchpoints for payments are reduced significantly. With payments processes automated, vulnerabilities inherent in human intervention are also reduced. Digital processes have built-in controls preventing shortcuts that can open up a system to fraud. In addition, the real-time visibility into bank accounts, transactions, payments, and more provided by digitization means that fraudulent activity can be detected early enough in the process so that funds can be recovered or prevented from leaving.

Compliance – As regulations keep increasing, so does the need for technology

In the current technology age, the chance for fraud has increased exponentially. So too, it seems, have the regulations to combat that scourge. Treasury expects the regulatory burdens to keep growing. The report notes that 47% of respondents expect an increase in regulations while an additional 40% expect them to stay the same. Only 1% expect a decrease.

To ensure compliance, many companies have implemented secure data storage that is more difficult to breach, but it’s in the reporting that technology is of the greatest value. That burden falls directly at the feet of the treasury department. Manual processes don’t provide the type of visibility necessary for reporting details. The report states that “The increased visibility and efficiency achievable through digital adoption makes it appealing to the compliance-burdened treasury department.”

Staffing – Growing slowly, if at all

Compared to other finance-process departments (accounts payable, accounts receivable, and accounting), treasury has usually been the one stretched thinnest. In the report, more than 50% of respondents noted that they have only one to three employees, yet demands on the department continue to grow. Since employee count isn’t likely to increase, technology (digitization and automation) continues to play a significant role, especially as it replaces burdensome manual processes. As more processes are automated, limited staff can devote themselves to more strategic avenues to improve accuracy, reduce costs, and tighten security.

If staff is to grow, however, technology is necessary to attract younger employees. This age cohort has grown up alongside the technology and is accustomed to automation and a digital environment. So, if an organization is still tied to manual processes, it will be difficult to attract this group. Leveraging technology as a recruiting tool is becoming an effective HR practice.

Treasury needs to keep pace with technology

CFOs and other stakeholders must have confidence in the treasury department. As technology continues to advance, treasury needs to keep up with those advances in areas that will go beyond comprehensive visibility, regulatory compliance, and security. The disruptions and changes that continue to emerge are transforming treasury’s challenges and responsibilities. This transformation depends on deploying the right technology to meet the demands on the department. Fortunately, there are providers, such as Corcentric, that can help optimize treasury functions through their technology solutions.