The Journey To Intelligent Treasury

Ido Shamgar

As business and data analytics have become widely adopted and technology enables real-time information processing, the next wave of business automation is here: the intelligent enterprise.

While for many years finance departments have focused on reporting and analyzing past business performance, finance is increasingly becoming a forward-looking business function that needs to provide insights on choices companies face in a volatile market.

With the rise of the intelligent enterprise, treasury departments globally have a wide and often growing range of responsibilities. To fulfill this role effectively, treasurers need timely access to information to make essential risk and liquidity decisions and manage business-critical transaction and data flows. However, treasury resources are limited, while increasing scale and complexity mean that it becomes impossible to process information and transactions without the help of technology.

To help illuminate these issues, SAP, PwC, BNP Paribas, and the European Association of Corporate Treasurers (EACT) have partnered together once again to produce the Journeys to Treasury report. The report provides expert insights and practical experiences on key topics that are dominating the treasury agenda today and shaping the future of intelligent treasury.

“We are very proud to be one of the contributors to the Journeys to Treasury report. The third edition of the study has provided a lot of insights and useful content for the corporate treasurer that can help them to deal with the business challenges ahead of them,” said Christian Mnich, senior director of Solution Management for Treasury and Financial Risk Management, SAP.

Following are some of the technologies, insights, and best practices established in the report. To dive deeper into each of these topic areas, download a full copy of the report at www.journeystotreasury.com.

Taking stock

Opportunities for digitalization to transform treasury processes and decision-making have never been greater, but the focus needs to be on using new capabilities to deliver value to the enterprise. The Journeys to Treasury report helps treasurers shape priorities and business cases to leverage new and established technologies that ultimately deliver operational and strategic benefit.

Treasurers have a broad range of responsibilities, with a multitude of internal and external factors influencing their operational and strategic agenda, which include:

  • Enhancing the use of data for better analysis and insights as part of a broader view of the digital treasury, in which robotics, artificial intelligence, and the use of application programming interfaces (APIs) are starting to play a role.
  • Protecting the organization’s financial and data assets; cybersecurity has become treasurers’ No. 1 priority.
  • Navigating the impact of global tax reforms, such as base erosion and profit shifting (BEPS) and recent U.S. tax changes. Regulation and compliance continue to be priorities and may be a catalyst in the adoption of new treasury technology.
  • On top of these issues, liquidity management has emerged more prominently as treasurers deal with the implications of Basel III, particularly in a low or negative interest-rate environment, while coming to grips with new and emerging opportunities such as virtual accounts.

Digital treasury

The concept of digitalization in treasury has evolved in parallel with the tasks, challenges, and expectations of the department. At the same time, treasury’s expanding role has been enabled by new technology opportunities, such as automating processes, incorporating AI, or migrating to the cloud. While each step on the digital roadmap may focus on a particular element of the workflow, treasury functions that derive the greatest value from digitalization are those that take a complete, integrated view of their activities.

Treasury should aim to remove complexity, improve transparency and control, and free up resources to “do more with less” as part of the digital agenda. Today’s solutions can be configured to meet specific requirements of each treasury function, as opposed to requiring vendor customization that can be expensive to implement and maintain. Digital technologies should not represent a new cost, but demonstrate savings or additional value. In fact, Accenture analysis shows that by 2020 this additional value will take the form of increased staff productivity by two to three times, and costs will decline by 40%.

Cyber-risk and fraud

The risks posed by cyber attacks have never been higher and the damage inflicted never greater, but both the risk and potential cost will continue to grow. Many treasury functions may have relied on IT to combat cyber attacks in the past; however, treasury, IT, and the technology companies that support them need to work together closely and proactively. Combating cyber risk and fraud has emerged as treasurers’ top priority, cited by 82% of treasurers in the ACT’s Business of Treasury 2017 report.

Keeping employees informed and aware of the types of threat that they could experience, how it could affect the business, and what they can do to avoid or recognize threats such as malware is one of the biggest defenses against cyber risks. Treasurers and IT must come together to consider how best to deliver specific, regular, and mandatory training.

Tax reforms

As international tax issues become more complex and tax authorities become more assertive, treasury and tax departments must work together to understand the implications of new rules. In some cases, treasurers have expanded their role to cover tax, recognizing the synergies and similarities between the departments, facilitating a more integrated approach.

Whatever the organizational structure, alignment between the two functions is essential. Many corporate finance departments are turning to integrated solutions to break down silos and enable a common view of all financial and operational data. The tandem deployment of tax-specific tools helps ensure the accuracy of tax data flowing through massive volumes of transactions across numerous systems.

Liquidity management

While cash and liquidity management has been considered a “commoditized” activity in the past, innovative solutions are creating a set of new dynamics that could transform cash and treasury operations and liquidity and risk management strategies.

While countries are at different levels of maturity and progressing at varying speeds, capabilities such as virtual accounts and real-time instant payments will become a reality with the transition to intelligent treasury. Treasurers should already be considering the implications and opportunities for the finance function, as well as the wider business, and identify the operational, commercial, and/or strategic benefits that may be derived.

Looking ahead

It goes without saying that technology is a big enabler of this paradigm shift in treasury. Intelligent technology has created a new reality for companies. By embedding intelligence in treasury applications and processes, finance leaders can leverage improved levels of insight, prediction, and efficiency to drive growth and inform strategic initiatives throughout the business.

This article originally appeared in the SAP News Center and is republished by permission.

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Ido Shamgar

About Ido Shamgar

Ido Shamgar is SAP’s global lead of Product Marketing for SAP S/4HANA and SAP S/4HANA Cloud focusing on the Finance Line of Business. In his role, Ido develops compelling marketing programs, messaging, and content on the next-generation intelligent ERP. He is a seasoned business executive who works with companies around the world to market, sell, and deliver innovative technologies for pressing business needs.