Automation, Digitization, Prediction And Open Banking, Some Keys To The New Treasury

Automation, predictive analytics, or digitization of communications will make it possible to streamline and optimize the operations of this department to the maximum.

The financial crises have made it possible to recall the importance of proper treasury management. The latest pandemic is further reinforcing this priority due to the complexity and unpredictability of the scenarios that society faces.

The concepts of automation, predictive analysis, or digitization of communications can be applied to the Treasury area, to streamline and optimize the operations and management of this department to the maximum.

Transform The Treasury Function Through Automation

A classic on this list, which is still an ongoing task in many companies, but which is essential to perform an adequate treasurer function. To do this, there are a large number of processes that must be automated: generation and communication of orders, obtaining treasury forecasts, obtaining account statements, bank reconciliation, accounting, etc. In addition to the savings associated with productivity increases, freeing up manual tasks and speeding up their performance, it allows treasury professionals to take on more analytical and strategic tasks.

Move From Analyzing The Past To Predicting The Future

Anticipating the financial needs and risks of a company is essential for proper management. Having predictive analysis (AI) solutions or being able to simulate different cash flow scenarios in the medium and long term is key to making decisions that do not put the survival of the company at risk. However, to predict the future, it is necessary to have correctly classified historical information; Unfortunately, many companies still find it difficult to obtain this information with the quality and at the right time, which limits their forecasting and forecasting capabilities.

Also Read: In 2021 Companies Will Make The Final Leap Towards Digitization

Optimization Of Liquidity

The variety of businesses a business group engages in, its geographic expansion, the segregation of its processes, its shareholding, etc., generate complex organizational structures that pose significant challenges to the treasury function. It is necessary to implement models (organization + processes + technology) that simplify and optimize this management: centralization of processes, contracting of Zero Balance Sweepings, implementation of an Internal Bank (multilateral Netting), Payment Factory, etc.

Digitize Banking Communications

Teleworking has pushed the replacement of order communication through physical means (paper, handwritten signature, fax, etc.) by the use of digital means. This has three advantages:

Greater productivity in generating orders and sending them to banks, through banking communication platforms.
Greater agility or speed of the process through the approval of proxies from mobile devices.
Greater security through the use of digital signature in the approval of orders by proxies, encryption of communications, elimination of risk of file manipulation, etc.

Cash Management

In addition to the classic initiatives to optimize working capital (commercial credit control, proactive collection, stock reduction, etc.), Working capital also offers very interesting options for:

Obtain financing promptly (Confirming prompt payment or with financing, different types of Factoring, etc.) that complements and optimizes other forms of financing.
Invest excess liquidity by offering discounts for prompt payment to our suppliers (Dynamic discounting) In these moments when companies have to pay for liquidity (commissions for average credit balance), this option can reduce banking costs while opening new sources of income or savings to companies.
All these initiatives require technology due to the high volume of associated operations, the control of applied conditions, the control of the various limits they may have, the necessary automation in the issuance, accounting, reconciliation processes, etc.

Control Of Banking Conditions

The loss of business suffered by banks, associated with the evolution of interest rates, pushes them to increase the variety and amount of commissions that they apply to their services. Its control has increasing potential for cost savings for companies, both in terms of financing contracts or risk coverage as well as other banking services. It is necessary to have solutions that allow:

• facilitate negotiation with the banking entities with the best conditions (Bank-Company Balance),
• manage and compare, in a central repository, the conditions negotiated with the different entities,
• manage the distribution of operations to the banks that allow obtaining the best conditions, respecting the agreements made,
• verify the application of the negotiated conditions,
• claim the banking errors,
• monitor banking relationships and continually identify new opportunities for improvement.

Open Banking and APIs

Banks are offering their information services on account movements, issuance of payment and collection orders, etc. using APIs (Application Programming Interface). This is a great step forward because it allows real-time banking processes, which opens up a world of possibilities for companies to reinvent their businesses with fully integrated applications with a bank, new user experiences, etc. It is a trend that is still maturing and banks are positioning themselves to be the benchmarks in this way of offering their services, which will allow them to attract and retain business with their clients in this new digital era.

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