Smart treasury – Top tips for future-proofing your department

'Smart treasury' is no longer just a future consideration for companies: corporates of all sizes are already embarking on their digital journeys and reaping the benefits.

Victor Penna

Global Head of Structured Solutions, Standard Chartered

Olle Malmgren

Executive Director Structured Solutions Development, Europe, Standard Chartered

'Smart treasury' is no longer just a future consideration for companies: corporates of all sizes are already embarking on their digital journeys and reaping the benefits. Victor Penna, Global Head of Structured Solutions, Standard Chartered, and Olle Malmgren, Executive Director Structured Solutions Development, Europe, Standard Chartered, explain how treasurers can make the most of smart treasury programs – and avoid potential pitfalls.

Smart treasury will mean different things to different corporates – particularly when you consider their size, sector and the ecosystem in which they operate. Yet ultimately, a smart treasury should automate day-to-day operational processes, freeing up team members to focus on more strategic tasks. Technology is usually at the heart of a  smart treasury – especially in gaining deeper insights from data and supporting the wider business in its digital transformation and growth journey. But how can treasurers use smart technologies to maximum effect?

Seven steps towards a smart treasury:

1.    Create – and update – your own smart treasury blueprint. “One of the most common misconceptions is that every smart treasury is going to look the same,” said Penna. “In reality, different treasuries are supporting different types of businesses – ranging from large multinationals operating in a hundred markets to smaller businesses in perhaps just one market. Automation and digitisation are applicable to every size of treasury, in every industry, but creating your own smart treasury blueprint is vital. This doesn’t mean that you can’t adopt best practices from peers and banking partners, but it is prudent to build your smart strategy around the specific needs of your business.”

2.    Start with automation. “Phase one in building a smart treasury is automating manual tasks using technologies such as robotic process automation [RPA],” said Penna. “Automating tasks should involve reviewing the underlying processes and optimising them for the digital environment,” he added.

3.    Use data for strategic insights. “Once fundamental tasks are automated, more complex technologies can be added into the mix – such as artificial intelligence and machine learning – to help the treasurer leverage big data,” said Malmgren. One area where this could be useful, Penna noted, is improving cash flow forecasting. “By analysing historical data, treasury can progress from day-to-day liquidity planning to projecting more long-term working capital financing needs. This adds another string to the treasurer’s strategic bow.”

4.    Collaborate with other departments. “When looking to improve processes as part of a smart treasury journey, it’s important to look beyond the traditional boundaries of the function,” suggested Malmgren. “There may be fruitful synergies with other departments to explore,” he noted. Penna gave the following example: “Bank account signatory details are often out of date, as treasury teams are so busy. By teaming up with HR, RPA could be used to produce an alert every time a bank account signatory leaves the company. This alert could go to treasury or even direct to the bank, so records are updated in near real time.”

5.    Add value to the wider business. “It’s one thing for treasury to embark on a journey to become ‘smarter’, but to reap the full benefits, this transformation should happen in co-operation with the business,” said Malmgren. “Treasury is not an island. Digitisation is a group-wide endeavour.” Penna added: “If treasury can enable new ways of doing business with customers, reach new geographies, and generate additional revenue, then the C-suite are likely to be more receptive to investing in smart tools.”

6.    Look beyond the technology. “People and culture play a pivotal role in making a success of a smart treasury transformation,” said Penna. Malmgren agreed: “Upskilling treasury teams in areas such as data analytics will be critical for the future. Ongoing training around cybersecurity will also be vital.” In addition, treasurers must remain curious and continually educate themselves about new business models. “Keeping up to speed with changing ways of connecting with customers – and speaking with banks and fintechs about the technologies that can support these changes – is becoming a key part of the strategic treasurer’s role,” Penna added.

7.    Also critical is regularly updating this strategy, said Malmgren. “This is not a one-off journey. Treasury will need to continually adapt to the environment they are operating in, and embrace new innovations too. Flexibility in the smart treasury blueprint is vital, as is an open mind.”

This article first appeared on Treasury management International (TMI). 

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