The Role of AI Treasury Solutions in Paving the Way for Strategic Innovation

Treasury solutions: Way towards strategic innovation

Today’s and tomorrow’s treasuries both rely heavily on technology. Treasury requires high visibility over cash flows and quick access to data to get better insights for decision making as the market undergoes volatility. Treasury benefits strategically as a result of technology’s capability to make precise forecasts. The treasury department must extend its horizons to keep up with the change as technology gains traction and evolves.

KPIs of the treasury department

Treasury KPIs are measurements that are used to track and analyze treasury performance. To stay ahead of the curve in cases of a volatile economy and frequent market fluctuations, CFOs must establish the appropriate Treasury KPIs for liquidity, funding, financial risk management, and overall corporate governance. The most common KPIs of a treasury involve:

• Average monthly bank fees
• Counterparty exposure by counterparty
• Average monthly/quarterly forecast variance
• Average hours to forecast and reforecast

The need for AI in treasury solution to keep up with the KPIs

To evaluate KPIs regularly and ensure quality performance, appropriate treasury tools are required. Regularly evaluating KPIs ensures end-to-end cash flow visibility and promotes proactive financial planning.

Here are the following purposes for AI-based treasury technology to improve treasury KPIs:

• To assist in the tracking of daily work and the measurement of treasury department goals.
• To enable treasury managers in the management of important tasks and the enhancement of processes.
• To provide accurate and dependable treasury operations insight to CFOs, board of directors, and investors.

Use cases of AI in treasury management

Organizations get a competitive advantage by reducing operational costs, enhancing efficiency, and investing in growth/expansion when they use AI in treasury management. Predictive analysis using AI-based treasury technology aids in the identification of stress scenarios and the calculation of their impact, allowing treasurers to plan ahead of time.

Application of AI in treasury technology

Artificial intelligence (AI) should not be viewed as a threat, but rather as an enabler to help humans unleash their business acumen. Humans and machines will collaborate rather than compete in the future.

AI-powered treasury solutions assist in the following treasury process

• Automation of tasks: Data is automatically consolidated from a local to a global level by the system. Additionally, data is retrieved directly from sources and systems utilizing AI-based treasury technology and presented as a single source of truth.
• Cash forecasting: AI-based cash forecasting software deliver up to 95% accuracy for both long-term & short-term cash flow forecasts across all categories including complex categories such as A/R and A/P.
• Proactive decision-making for strategic investments: Real-time data enables confident borrowing, investing, quarter-ending cash, M&A, and working capital decisions. CFOs make data-driven and long-term decisions with easy and continuous data access and timely reports.
• Fraud detection: Businesses have improved internal security and simplified corporate operations by utilizing AI to detect fraud. Artificial Intelligence has emerged as a key instrument for preventing data thefts and fraud.
• Cash management: Leveraging AI cash management tool helps to track real-time cash positions across bank accounts, companies, and currencies in user-defined worksheet templates with transaction-level drill-down capability.

Looking forward to treasury: 2022 and beyond

By allowing treasury to focus on strategic and analytical operations that provide actual value to the business, AI treasury technology encourages and reinforces treasury as a strategic partner inside the organization.

Five ways of reshaping treasury utilizing AI-enabled treasury solution

1. Transactional efficiency: In payables, receivables, and reporting, employees used to spend a lot of time manually doing predictable and/or routine activities, resolving exceptions and disputes, and identifying risk. Companies gain more free time by automating the complete treasury management process. Additionally, business owners can concentrate on areas that are more essential to them and do more to foster long-term strategic growth and development.
2. Data-driven scenario analysis: For organizations aiming to manage and reduce liquidity risks during the pandemic, AI allows for better and more immediate detection, measurement, and understanding of critical risk factors using scenario analysis.
3. Improved efficacy of forecasts: AI tool uses the feedback loop model to compare past and recent results and make adjustments to improve the accuracy of forecasts. Moreover, the use of AI models for complex cash flows (A/R and A/P) can increase accuracy into A/R and A/P forecasts for making effective decisions.
4. Dashboard view: Drilling down to acquire deeper insights and high visibility by visualizing cash balances across multiple categories, subcategories, regions, banks, and currencies.
5. Better collaboration: One place for everything creates stronger collaboration within the organization which can be done by centralized treasury tools.