Treasurers Explore The Line That Separates Challenge From Opportunity

The line between challenge and opportunity can be a thin one, as many of today’s chief financial officers (CFOs) and corporate treasurers are quickly discovering.

The digitization and acceleration of back-office financial workflows have presented the opportunity for organizations of all sizes to become more agile, with more data available to treasurers for clearer, real-time visibility into cash positions.

At the same time, however, these innovations have also introduced unfamiliar disruptions to antiquated workflows, creating new challenges for treasurers to understand how to readjust their processes and cash flow management strategies as their role within the enterprise grows more complex and valuable.

Speaking with PYMNTS, Fides Treasury Services Head Client Relations Simon Kaufmann explored how some of the biggest opportunities to modernize the treasury function are adding new pressures to finance teams as they navigate the pandemic. By the same token, he noted, there are also emerging challenges that can add a world of opportunity for corporate treasurers.

Opportunity Turned Challenge

With barriers to globalization coming down and new opportunities for growth discovered, corporate treasurers and CFOs are stepping into unfamiliar territory with their cash management operations.

One of the biggest points of friction, according to Kaufmann, is the struggle in managing an array of banking relationships that results from this expansion.

“Building bank relationships across multiple countries and regions is difficult and time-consuming work,” he said, adding that complexity can even proliferate if a treasurer needs to add a new bank branch to the mix. “And even once those connections are in place, accessing data through multiple bank portals, or even through a TMS [treasury management system], often requires manual work.”

Though technology has emerged to help ease this pain point, “monster spreadsheets” continue to be the tool of choice for corporate treasurers struggling to embrace digitization, noted Kaufmann.

And their challenge is only going to grow.

Faster and real-time payments innovation, often discussed as a significant opportunity for treasurers to become more agile at moving corporate funds and to secure real-time visibility into transactions and current cash positions, can become a headache for treasurers struggling to adjust to the faster pace of business.

“It’s so critical to have the right infrastructure in place to be able to support not only a wide variety of transaction channels, locations [and] currencies, but also data centralization, data analysis and real-time reporting,” Kaufmann said. “But supporting these new business models is yet another challenge for treasury: figuring out what changes to existing systems and processes are needed, how to address cybersecurity and how to do all this while supporting current day-to-day operations.”

Challenge Turned Opportunity

It’s in this context that the pandemic hit, a global event that piled on the friction points for treasurers now scrambling to establish remote workflows. But working from home wasn’t the only disruptive force.

Kaufmann highlighted the implications of COVID-19 on everything from a squeeze on revenue that introduced a “domino effect down the supply chain,” to heightened fraud and cyberattack risks, which all combined into a dizzying ecosystem through which treasurers must navigate.

These hurdles are, indeed, massive challenges. Yet there is opportunity hidden within the friction, he said. The technologies these professionals were in the process of adopting played an instrumental role in their ability to keep operations going — and as finance professionals have expressed, the pandemic introduced an even greater incentive to accelerate a digital transformation.

That meant investing in technologies that can tackle multi-bank connections and automated integration of real-time transaction data — all while addressing the need to work remotely in a higher-risk ecosystem.

And there are other opportunities that treasurers are uncovering today in the midst of the volatility — with long-term implications, according to Kaufmann. Remote working is likely here to stay for treasury teams, at least in some form, while FinTech innovators have also taken this time to accelerate their own product innovation in support of treasurers’ elevated cash management needs.

Overall, despite major mountains to overcome, corporate treasurers can find the space to advance their role within the enterprise at a pace not seen before the pandemic.

“The role of today’s corporate treasurer goes well beyond cash management to include regulatory compliance, fraud prevention, technology specialists and higher-level support for the business. The pandemic has highlighted the need for all organizations to have much better cash visibility, security, and bank and systems connectivity,” said Kaufmann. “It’s not about incentives, it’s about necessity. Treasury needs to have the right systems in place to ensure that work isn’t critically disrupted in another crisis scenario.”