PYMNTS Citi Playbook: CFOs Taming eCommerce Complexities Via ‘Smart Treasury’ Metamorphosis

Treasury is being radically retrenched in the wake of a global crisis that exposed vulnerabilities in financial systems, leading to a new generation of solutions designed for those challenges.

PYMNTS Powering Smart Treasury Playbook: Treasurers’ 2021 Roadmap To Innovation edition, a Citi collaboration, takes a comprehensive look at the transforming treasury space as finance chiefs assess next steps in creating a digital-first, future-proof treasury function. These are critical decisions, and the path taken to treasury transformation makes a huge difference.

“The dash for online growth has the potential to undermine years of hard work by treasury to establish robust practices and controls,” Rishi Patel, global product head at Spring by Citi, told PYMNTS. “Treasury needs to steer payments-related decisions from day one to avoid control weaknesses and ensure that eCommerce delivers on its promise for the entire organization.”

Processing heavy eCommerce volumes in an economic rebound sounds like a luxury problem, but new revenue streams and channels create serious complexity for CFOs. Managing these flows for optimal margin, minimal cost and zero compliance snags form the core of smart treasury, and the new Playbook is packed with examples of companies making it happen.

Opacity And Risk Redefined

Harking back to Rishi Patel’s comment, Powering Smart Treasury notes, “New revenue streams from cross-border and other digital eCommerce sales often require treasurers to transform their predictions for necessary working capital and their recommendations for settlement and reconciliation processes.” From FX risk to cross-border complications, treasurer’s revenue predictions can lose accuracy from payment delays caused by slow methods, floods of false declines and “problematic inconsistencies in eCommerce earnings.”

Such opacity and risk are the bane of treasurers, and that’s where digital smarts are coming into play more now, as global expansion becomes the new commercial promised land. That’s more of a journey than a destination, and certain routes get you there faster and more safely.

According to Powering Smart Treasury, “The first step for treasurers is to ensure that, as their organization and its business partners develop strategies for global eCommerce expansion, a pre-launch risk management policy is in place. The process should start with a conversation between treasury and business stakeholders before the planning stage is completed for any business model expansion. The reason for keeping treasury management front and center is clear: New eCommerce strategies may create a host of unique risk management requirements and financial vulnerabilities.”

Bringing Treasury Into The Innovation Process

Observing that “Businesses stand to improve their speed to market and raise their success rates when treasury management is made an inherent part of the innovation process and can ensure risks are mitigated and financial strategies are sound,” the Powering Smart Treasury Playbook: Treasurers’ 2021 Roadmap To Innovation edition lays out steps to solid eCommerce growth.

For the details on these steps, download the complete Playbook.

The short version can be summed up like this: “Creating a payments innovation model that accommodates marketplace uncertainty and the need for technological overhaul does not have to be a challenge, especially when treasurers are empowered with the right data and technology.” To that end, more CFOs are turning to agile cloud-based systems.

“An agile technology solution makes an organization’s existing infrastructure relevant and viable in a competitive market by automating compliance and risk management simultaneously,” per Powering Smart Treasury.

“Treasurers facing ISO 20022 might see it as a challenge, but standardized cross-border data sharing and user authentication standards will actually make it easier for companies expanding eCommerce operations abroad to comply. Open banking and API-based eCommerce strategies can speed innovation development processes by supplying treasurers with a single set of standards that must be followed. This ‘single strategy’ approach allows treasurers with an existing technology stack that integrates risk management and compliance to focus on payments optimization rather than try to work with a hodgepodge of compliance standards.”