The five most critical treasury practices for 2023
For treasury teams, 2022 will be remembered as a year of extremes. With rapid FX fluctuations, price inflation, rising interest rates, new cash forecasting challenges, global recession fears and more, treasurers heading into 2023 face a lot of uncertainty.
After conversations with its clients and reviewing developments from the past year, cloud treasury specialist Kyriba has compiled five key practices being implemented by many treasury departments to make their organisations more financially resilient.
Having full visibility of an organisation’s cash and liquidity can be a daunting task. Treasury departments often rely on a combination of disparate tools and data sources to determine a company’s cash position, which is a time-consuming process.
However, real-time views of cash and liquidity may soon be an industry standard, thanks to APIs like the new real-time treasury solution from Kyriba and JP Morgan. This API provides treasurers with real-time cash visibility, bank reporting and payments. With immediate access to data, treasury departments can make real-time decisions on investing cash balances.
David Miller, SVP and treasurer for Hunt Companies, said at KyribaLive 2022 that he sees APIs as the future of treasury and that treasury teams should have “real-time everything.” A mutual Kyriba and JP Morgan client, Hunt Companies, has already begun gaining efficiencies from using real-time treasury .
AI and machine learning (AI/ML) can provide treasury and finance with insights and capabilities that are nearly impossible using manual methods. Solutions like Kyriba’s new cash management AI can learn from an organisation’s cash flow history to make better inflow projections over time.
Machine learning is essential in modern payments fraud detection; it can screen transactions against historical payment data to identify anomalies. With the focus on forecasting and fraud showing no signs of abating, AI/ML will undoubtedly be very useful.
The Covid-19 pandemic has led to organisations changing how they approach cash forecasting. In the pre-pandemic era, treasury departments may have only produced a single forecast. Today, they produce multiple forecasts based on different potential scenarios. “The ‘what-if’ scenarios have become increasingly important,” noted Bob Stark, global head of marketing for Kyriba, in a recent webinar.
As interest rates continue to increase and with a possible recession looming, forecasting will need an upgrade. The tools of the pre-pandemic era are no longer sufficient. Many treasury management systems have trouble handling multiple data sets and scenarios. While ubiquitous, Excel is too prone to errors to be considered an adequate solution. Companies have more data at their disposal than ever before, and want to use it to make informed decisions. The only way to do that in real-time is with APIs which collate different data sets , such as the treasury management system (TMS), the enterprise resource planning (ERP), purchase orders and invoices and merge them into one composable system. The unification of data allows for better decision-making and forecasting.
For any digital transformation in 2023, treasury will need a strong business case. Value engineering programs can help treasury teams demonstrate the necessity of investment to senior leadership. This can be done by identifying key improvement opportunities, and then tracking achievements after implementation.
Kyriba’s value engineering process begins with value discovery, in which key challenges and improvement opportunities are identified. After the system is implemented, the value monitoring stage begins. Kyriba works with its clients to determine success criteria and whether all goals established in the previous stage are being met. At the final value realisation stage, Kyriba helps clients evaluate success, document best practices and benefits, and identify future opportunities.
Onward to 2023
Every year is unpredictable in some way, and 2023 will have its share of surprises and market shocks. But with more data and technology that enables access to that data in a timely manner, challenges can be addressed.
For more insights, watch the webinar Top 5 Treasury Practices That Will Change Your 2023 featuring Kyriba’s Bob Stark and Dory Malouf