Optimizing treasury management: Empowering organizations in the digital age

Leverage innovation and automation in treasury management to streamline operations and capture new opportunities in the digital age. Build a digital bridge to provide efficiency, control, visibility, risk mitigation and stakeholder satisfaction while optimizing working capital.

In a rapidly evolving landscape and the ongoing rush to pursue digital transformation, treasury management solutions are not just tools but critical enablers. They empower organizations to navigate complexities, unlock operational efficiencies, enhance financial visibility, and ultimately, boost stakeholder satisfaction.

Given the ability of treasury management solutions to support digital transformation, how can businesses effectively leverage these tools to streamline operations, mitigate risks, and capture new opportunities in the digital age?

Identifying and overcoming challenges

According to Adam Kruis, senior vice president of working capital consulting and treasury management with U.S. Bank, one of the main challenges companies face when trying to achieve real-time visibility into their financial position is how they use technology.

Kruis emphasizes the importance of a tailored approach, stating, “There’s no one-size-fits-all approach. It requires a cross-collaborative effort.” From his perspective, adopting technology requires a well-thought-out strategy. Kruis points out that when some companies implement technology, they often end up with systems that don’t communicate effectively, making it harder to achieve efficiencies and gain visibility into their cash position.

Consequently, Kruis sees a critical role for treasury management solutions in digitization. “When we talk about the drivers of process digitization, treasury management solutions support those by providing efficiency, control, visibility, risk mitigation, stakeholder satisfaction, and optimize working capital.” He also notes that leading solutions can adapt the technology to fit a company’s unique circumstances and goals.

Building a digital bridge

While treasury solutions can help companies embrace and accelerate digital transformation efforts, how should they embed the technology?

Kruis identified stages that help businesses build a “digital bridge” from their current state to the digital state they wish to adopt. The first step is simply to remove paper from the process. The second is to optimize associated steps within the process. The third is to focus on doing so across the enterprise.

The final step is aspirational for many organizations. It involves leading the industry by operating a boundaryless organization that discovers new methods and business practices through digitization.

One technology: multiple types of benefits

While there’s a path for companies to follow to leverage treasury solutions, what’s driving the need for more sophisticated technology?

Changes in consumer expectations are also driving the need for the latest technology to underpin processes. Digitized treasury management solutions make it easier to respond to market pressures by centralizing and automating various functions, including cash management, payments, and risk management.

For example, those involved in business-to-business (B2B), business-to-consumer (B2C), and consumer-to-business (C2B) transactions increasingly expect payment experiences to be seamlessly integrated into the systems they are using today. By embedding these payment types, companies improve the customer experience, increase efficiency, enhance control over payments, and potentially create competitive advantages.

Kruis highlights the shift in consumer expectations, noting, “Ten years ago, it would be commonplace to be on a website, click a pay button, and be taken to a different website to enter payment information. Now it’s a bit of an annoyance when I can’t simply choose the way I want to pay from my own digital wallet.”

Fraud mitigation is also a top concern in many treasury departments, and for good reason. Fraudsters constantly evolve their tools and techniques, so digitizing treasury management delivers many advantages when it comes to fighting fraud. This includes centralizing transactions in a single platform, which provides a single view of all financial transactions, making it easier to monitor activity and flag questionable transactions.

Automated workflows enhance the control environment and ensure that a single employee cannot initiate, approve, and record a transaction. Real-time monitoring and integrated fraud prevention tools allow treasury teams to review transactions as they occur and uncover fraudulent transactions quickly.

Along those lines, Kruis recommends a multi-faceted approach to fraud prevention that includes:

1. Utilizing available fraud prevention tools provided by banks, FinTech providers, ERP, and TMS systems.
2. Standard controls, including segregation of duties, second-level approvals, and bank confirmation calls.
3. Increasing employee awareness and training on how to recognize and prevent fraud.

With an understanding of the many benefits technology platforms provide, how do companies evaluate their needs with the view of deploying a new solution?

Assessing treasury management needs

Businesses must first look inward to navigate the complex landscape of treasury management solutions. Kruis recommends a three-step approach for effectively evaluating treasury management needs.

1. Self-assessment: Companies should assess their current processes, document pain points, and determine where they want to improve.
2. Stakeholder engagement: By gathering the right stakeholders, including finance, accounting, IT, procurement, sales, and operations, companies can ensure that all perspectives are considered and that the solution eventually chosen aligns with the needs of the entire organization.
3. Defining objectives: By defining primary objectives for implementing a new treasury management solution, organizations ensure that each department's goals, which could include efficiency, enhancing visibility and control, optimizing working capital, increasing revenue, or mitigating fraud, are prioritized. This will make it easier to evaluate potential solutions and make the process transparent to those involved.

Innovative treasury management

Treasury management is a critical driver of success in the digital age. As Kruis emphasizes, companies must embrace digitization, build collaboration, and align their technology to unlock efficiencies, enhance visibility, and mitigate risks.

Optimal treasury management requires continuous improvement and innovation. Businesses can navigate today's complex landscape by conducting self-assessments, engaging stakeholders, and defining clear objectives for the technology they adopt. Ultimately, operational success belongs to those willing to eradicate siloes, foster collaboration, and embrace innovative solutions.