JPMorgan Co-Heads Call for Treasurers to Challenge the Status Quo

Time is money — and an enterprise’s treasurer needs to keep a steady hand on both.

That’s why PYMNTS CEO Karen Webster sat down with Catherine Simpson and Krista Sharp, co-heads of Treasury Services for Middle Market Banking and Specialized Industries at JPMorgan Chase, to get their insights into how finance leaders can maximize their time and accelerate their impact through the use of data and technology.

Faced with inflation and rising interest rates, finance teams are being forced to reprioritize away from the previous era’s growth-at-all-costs mindset to a firmer focus on financial fundamentals and sustainable profitability.

That’s because today’s operating environment isn’t just fast paced, it’s also increasingly challenging.

“It’s about protecting the core [today], which means going back to basics,” Simpson said. “What is the liquidity management strategy? What is the approach to working capital management? Is it as efficient as it can be? And finally, are there effective cybersecurity and fraud prevention controls?”

But achieving, and enjoying, long-term stability requires that firms be equipped to adeptly navigate an increasingly complex landscape. Often that requires taking a collaborative and innovative approach.

Simpson emphasized that today’s firms, particularly those operating within the middle market and across industries, need to drive innovation through their ecosystems by focusing more on “the end-to-end experience.”

To drive innovation effectively, companies need to have access to up-to-date information and the ability to have third-party solution providers integrate with each other.

This means automating interfaces between systems and vendors, taking steps to limit manual data entry, leveraging technology to automate processes, and putting reporting in place to look at liquidity forecasting.

In order to successfully and seamlessly execute on vendor-system integrations, firms separately need to monitor and document their processes and resiliency plans so that they’re aware of the dependencies they have from other groups.

The Status Quo Is Risky Place to Operate From

All treasurers are constantly seeking ways to effectively leverage the growing use of data and technology, but smaller companies, nonprofits, and municipalities may not have the resources for automation, leaving them vulnerable to manual processes that can be time-consuming and error-prone.

“Treasury operations historically have been bogged down with manual processes, but often are the last to get investment dollars for new software automation,” Sharp explained.

But this situation is growing more dangerous for firms, she added, as the stakes for keeping treasury operations “status quo” are becoming higher than ever in today’s environment.

That’s in part because the sweeping digitization of the business landscape has brought with it new fraud schemes and cybersecurity threats. In a JPMorgan survey, nearly 2 out of every 3 respondents (65%) indicated their organizations were victims of either attempted or actual fraud last year.

“But there’s another big risk [to failing to modernize systems], and that’s the company’s future. Limiting your ability to easily gather and run analytics that can add value and insights [inherently] limits your ability to use real-time data to predict, forecast and plan strategically across your whole firm,” Sharp said.

In order to achieve organizational buy-in, treasurers need to “put on their sales hat” and find pockets of opportunity by understanding what is important to various internal firm stakeholders and showing them the cost benefits of modernizing legacy systems.

“What’s missing typically is [a cross-departmental understanding of] how payments information can be used strategically outside of just your treasury or accounting operations,” Sharp said.

Tying System Updates to Long-Term Goals

That’s because an actionable understanding of what data is being collected for, and how it will be used, is fundamental to accelerating growth.

It’s important for firms to remember — and identify — just what they need to leverage the data they’re collecting for.

While digital innovations are often viewed as silver bullets, there exist countless software solutions today which can solve for a myriad of things, making it critical for firms to establish a true business use case before they invest in any tool.

Simpson said many treasurers are focused on driving speed and simplicity through their organizations.

By uncovering gaps in operational processes and identifying their causes, companies can take steps to improve their efficiency and effectiveness.

“Oftentimes what we see is an ERP [enterprise resource planning] system is the single source of truth, and from there firms can build an ecosystem that generates real efficiencies and gives back time while accelerating business goals,” she said.

The Evolving Payments Landscape

Sharp explained that she sees three things evolving in the payments landscape. The first is that the volume of payments is actually increasing, which while great for companies, still presents a challenge for those firms that have to reconcile their payments using legacy or nonautomated methods.

The second, Sharp said, is the opportunity for firms to innovate away from paper checks and cash-driven processes; while the third is the rising importance of consumer data and privacy regulations that firms need to comply with as money movement grows increasingly digital.

But the firms at the forefront of trying to improve their productivity, remove friction, accelerate collections, strategically make payments to maximize their incentives and extend their days paid outstanding — are the ones focused on those three things, she added. And they will be the companies winning today, and that are still around tomorrow.