How to maximize profit from corporate treasury software?

There’s no denying that cash forecasting is a critical activity for treasury operations. No organization can afford to lose sight of its cash and liquidity positions regardless of size or industry. Yet, this can be easier said than done in a volatile economic environment. An SAP-sponsored report supports this viewpoint. The study of 371 finance professionals revealed a clear and compelling need for the office of finance and treasury to improve its cash management, control management, and general finance activities:

• 80% of the respondents believe that the growing complexity and unpredictability have enhanced the importance of cash management, reporting, and forecasting.
• 62% stated that their office would need to improve its ability to contribute to high-value activities within their firm.
• 83% stated that their organization would need more effective forecasting and understanding of its cash positions to prosper in the future.
• 76% believe cash management will grow more challenging over the next five years.

Respondents also identified these top objectives for making immediate improvements:

• 33% responded that improving the accuracy, quality, and consistency was critical.
• 34% indicated enhancing the accuracy of financial estimates was their top priority for the future.
• 33% said having real-time access to cash information and treasury analytics was their top priority.

Nonetheless, most corporates cannot make immediate improvements using legacy treasury systems.

Bottlenecks in legacy corporate treasury solutions

Legacy treasury solutions limit treasury’s capacity for expansion because:

• Discovering new opportunities and insights into the cash flow takes too much time since specialized reporting and forecasting needs heavy lifting from IT to generate and implement.
• Consolidating and normalizing bank data still necessitates manually downloading bank statements and uploading them to corporate treasury software. That results in outdated information.
• Implementing involves up to 6+ months of training across many departments. And the system can be used only in a limited capacity throughout the organization.

What influences treasury technology?

The bottlenecks stated above emphasize the need for treasury technology. The additional factors that influence treasury
technology are:

• Growth and development
• Regulation, tax, and accounting changes
• Treasury operations improvement and the need for efficiency and centralization
• Technology changes
• Emergency requirements, including cyber-attack protection and business continuity assistance

Unsurprisingly, businesses are looking to invest in corporate treasury software to automate, record, and control many fundamental treasury functions.

How to choose the best software for corporate treasury?

Corporate treasury software solutions automate critical financial operations in their most basic form, such as bank treasury operations or real-time cash flow data collection while maintaining financial data security.

Yet, corporate treasury software now provides more capability owing to the increasing complexity of treasury demands. Modern treasury solutions have grown to encompass treasury requirements in a superior, secure, and compliant architecture. But due to the abundance of technologies and software available, choosing the most suitable solution is difficult. Hence, the treasury must consider the questions below.

Typical questions to ask while selecting a treasury solution:

• Does the chosen treasury solution do what the treasury team needs it to do? Does it have the relevant features?
• Is it automated or hybrid?
• Are the proper security and controls included?
• Does it encompass dynamic, variable, and rich reporting capabilities?
• Is it cost-effective?
• Is it future-proof?
• Is proper maintenance support there?

What functions should a treasurer look for in corporate treasury software?

A proper cash management software for corporate treasury assists treasurers with the following functions:

• A comprehensive view of global cash balances for central and regional treasury centers
• Complete security and data confidentiality
• Cash pooling, transaction management, and in-house banking
• Straight Through Processing (STP) with intermediate checking points
• Increased control over audit tracking, workflow management, and user access definitions
• Easy administration and maintenance

The benefits of an effective cash flow management system are:

1. Minimized interfaces between systems and streamlined visibility and agility

A corporate treasury software establishes and implements various communications interfaces for bringing in complete data required to manage treasury functions. Hence, the treasury team can benefit from a single source of truth for all data sources feeding into the centralized treasury systems.

Instead of wasting time reformatting, gathering, verifying, and cleansing data, the team can see and act on the data for faster and more accurate decision-making. As a result, treasury professionals can be more productive and save time by viewing critical issues such as cash, bank accounts, working capital, risks, and liquidity throughout the organization. They can better undertake roll-up analysis for the entire firm or do a thorough ad-hoc study of specific concerns by using corporate treasury software solutions offering a “drill-down and drill-through” approach.

2. Reduced overall costs

The treasury team can immediately view any charges related to payments and transactions using corporate treasury software. This is because it has complete and up-to date information about a company’s finances.

Furthermore, the treasury team can handle several bank accounts from a single location. This makes financial transfers, such as those used to pay invoices faster, easier, and, in certain situations, cheaper.

3. Reduced mistakes and errors

Errors and mistakes can be costly, especially concerning the company’s finances. Corporations traditionally rely on spreadsheets and manual processes that reduce cash visibility. Reducing manual processes and eliminating reporting and documentation errors allow the treasurer to focus on cash and risk management rather than overcoming operational difficulties.

An automated treasury procedure eliminates any guesswork, thus minimizing human error. Moreover, some corporate treasury solutions provide complete straight-through processing (STP), i.e., total automation of all regular (day-to-day) treasury processes.

4. Faster and easy implementation

According to a poll by Strategic Treasurer and TreasuryXpress, 72% of organizations expected their corporate treasury management system deployment to take no more than nine months, yet only 41% of implementations were completed within that time frame.

Previously, when implementing treasury solutions, a firm would have to include in the initial set-up and ongoing maintenance costs of onsite servers and hardware, necessitating extensive internal IT assistance. But, setting up corporate treasury software is straightforward and less expensive nowadays. Implementation starts upon contract signing when a dedicated project manager is assigned. Their role is to prepare and execute a full implementation and training plan. It is a web-based out-of-the-box application specialized in streamlining main processes in the corporate treasury. Therefore, each implementation is quickly delivered and turnkey.

5. Maximized asset usage and improved business results with flexible solutions

The enhanced visibility and flexibility of transferable funds have functioned as a spur for adopting treasury solutions. The capacity to evaluate a company’s real-time financial situation and transfer surplus assets to meet financial obligations can considerably improve business capabilities. Knowing exactly where funds are being spent allows surpluses to be found and put to better use. Instead of cash sitting idle, corporate treasurers can now free up credit within an organization for more productive usage, allowing for improved corporate liquidity planning and management.

Solutions are also becoming more scalable and can be deployed globally. The capacity to effectively utilize cash and other assets to generate growth and profitability while avoiding risk and maintaining regulatory compliance is perhaps the most critical benefit of an integrated treasury management system.

Corporate treasury software solutions provide numerous advantages:

• Automating the treasury process gives businesses more free time as business operators to focus on more important areas and encourage long-term growth and development.
• An innovative treasury solution eliminates manual work, increases efficiency, saves time and money, and improves the financial situation.
• Using data granularity, corporate treasury software assists CFOs to determine which businesses in the company’s portfolio are most positioned to exploit growth opportunities. As a result, CFOs are not only better able to set organic growth targets, but they are also better at managing and monitoring performance. Moreover, they can also use the facts to build a precise acquisition and divestiture strategy.

Overall, software for corporate treasury plays a vital role in keeping corporate finances on track by enhancing agility and control to maximize the efficiency and accuracy of all cash reporting. That’s a positive benefit as globalization accelerates and the CFO’s work gets more complex.