Five tips for mid-market CFOs to tackle the treasury technology challenges

Why do mid-market CFOs need to tackle treasury technology challenges?

One of the most difficult challenges for modern CFOs is determining and implementing the best treasury technology solution for their organizations’ needs. The range of technology available to mid-market CFOs has become increasingly sophisticated in recent years. As a result, determining the best treasury management options has become significantly more difficult. With new treasury technology trends and fintech offerings, the promise of rethinking traditional approaches, causing major shifts in the treasury function, is on the horizon.

Five tips for mid-market CFOs to overcome treasury technology challenges

1) Integrating liquidity and FX management globally

Whether it’s managing and aggregating funds spread across non-functional currencies, physically moving FX and cash, or gaining visibility into global cash positions, liquidity management is entering a new era of simplicity and efficiency.

Cross-currency sweeps, for example, use same-day rates when automatically converting non-functional currencies into functional currencies on an intra-day basis – a significant improvement over the traditional two-day spot process. This makes it easier to manage liquidity and cash funding deployment across a company’s global currency impact. Such intra-day capabilities, along with new treasury technology tools, are elevating liquidity management from a back-office activity to a front-and-center decision-making driver.

2) Opting for automated real-time reconciliation

One of the most significant benefits of using automated reconciliation is increased efficiency in liquidity management. Tracking intraday cash movements improves the visibility into cash positions.

Accelerating real-time reconciliation

Payment delays and a lack of information provided with payments are two of the most significant roadblocks to rapid and effective reconciliation. This becomes more challenging when cross-border/currency implications are addressed. Banks are now developing solutions based on new-age technology that significantly improve real-time reconciliation, even in cases where payment information is missing or segregated.

Using cash management software to match payments received with expected receipts reduces cumbersome manual matching processes by bringing together disparate pieces of payment data. Hence, it improves the reconciliation of payments.

3) Managing risks with treasury solution

A treasury software assists the organization in keeping track of current and future cash inflows and outflows for different time periods. It aids in risk mitigation in the treasury by detecting discrepancies or fraud in transactions or payments through automatic reconciliation and accurate cash forecasts. This helps to optimize cash usage and avoid debts. Furthermore, treasurers can recommend better investment portfolios and financial plans for their organization.

4) Incorporating several scenarios into the cash forecasts to visualize future cash flows effectively

When multiple scenarios are analyzed, the impact of specific future conditions can be better visualized. This enables businesses to revise their strategies for overcoming potential financial risks. As a result, treasurers should stress test what-if scenarios (both best and worst-case scenarios) and incorporate them into cash forecasts to see how their cash balances would change if those scenarios occurred. This helps them make proactive decisions leveraging cash forecasting solution.

5) Implementing Cloud that helps in tracking bank signatories

Cash and liquidity management, as well as banking management, are among the top five priorities for treasurers, according to the 2021 PwC Global Treasury Survey. As a result, both mid-market and enterprise treasury require a system to effectively and timely monitor cash and improve banking. An automated cash management system aids in the tracking and management of bank signatories, as well as the elimination of other banking management issues such as balance sheet management, regulatory compliance management, and security breaches. Bank signatories can benefit from automation in terms of security, compliance, and productivity.

CFOs are in the midst of the most challenging yet exciting period of their careers. Emerging treasury technologies like automation are disrupting the way treasury operates by providing them several benefits.

Three areas where treasury technology can help the mid-market CFOs

Some treasury trends have already emerged that treasurers should be aware of when choosing their preferred treasury software. These can be boiled down to three key areas where treasurers will need technology to help them simplify an increasingly complex task:

• Firstly, treasury technology should assist treasurers and CFOs in gaining visibility over cash and identifying risk exposures by aggregating data from various data sources and departments.
• Secondly, by easier access to the data, treasury technology should allow treasurers and CFOs to gain greater control over all treasury activities at different levels of granularity.
• Thirdly, by providing a tool for visualizing the data, treasury technology should help treasurers and CFOs prepare all of the various reports they must file such as accounting entries, management reports, and regulatory reports.

Today, treasurers must be more informed than ever about emerging innovations and real-time payment networks to stay ahead of the competition. Schedule a demo with one of our experts to learn how treasury technology tools are changing the way liquidity and foreign exchange (FX) are managed.