In today's digital age, treasury management has become more complex but, at the same time, more efficient. Companies no longer rely solely on cash and cheques for their routine financial transactions. There are now multiple payment options and digital tools available within this critical business process.
For this reason, it’s crucial to manage cash properly to avoid future financial issues, and companies must pay special attention to their treasury. In this article, we’ll explore key strategies and insights for optimising corporate treasury operations in the digital era, helping to improve efficiency and ensure financial stability.
Without a doubt, cash is the most important asset of any company. It enables the financing of daily operations, investment in fixed assets, payment to suppliers, settlement of taxes, and maintenance of liquidity reserves for emergencies and unexpected events. Therefore, treasury management is increasingly vital, and new methods are continually being sought to optimise this important process.
Treasury and digital transformation make for a winning combination, as it essentially allows the modernisation of business systems. However, for this process to be truly effective, it is important that treasury management is integrated with the rest of the company’s systems, such as asset management systems, accounting systems, or payment systems, among many others.
The goal is not only to centralise all operations in one place but also to enable a banking connectivity channel between the company and the bank, allowing daily communication to flow much more smoothly. In this way, a real-time treasury is achieved, available from any location and device, and adaptable to the needs of each business.
There are several advantages and benefits to using digital applications in treasury management. The following are some of the key highlights:
Modern technologies, such as artificial intelligence and robotic process automation (RPA), can help automate many of the manual and repetitive tasks carried out in treasury. In fact, almost all activities in this department are susceptible to being automated through technology and digitalisation.
These tasks include bank reconciliation, cash flow reporting, or fund transfers to clients and suppliers, among many others. Such actions reduce human errors, increase process efficiency, and enhance overall performance.
Digital transformation, when applied to a company, drives significant cost reductions by minimising human errors. In the context of financial management, such errors can result in substantial losses, making the accuracy and efficiency brought by digital tools crucial for safeguarding the company’s finances.
Moreover, digital treasury also enables the consolidation of bank accounts, reducing fees and improving the negotiation of rates with banks. Finally, by having real-time visibility of accounts in banks, companies can optimise balances and cash flows, which decreases financing costs and, consequently, improves the company's profitability.
Digital treasury systems provide the right tools for financial risk management. This helps companies make informed decisions about financial risk management and reduces the risk of financial loss in real-time and without any friction.
Furthermore, digital treasury ensures regulatory compliance, such as verifying the applicant’s identity, monitoring transactions, and generating reports. Digital treasury systems can help companies comply with financial regulations and avoid penalties and fines for non-compliance, as they are quickly updated based on current legal requirements.
Digital systems allow centralised cash flow management in one place, in real-time, with the possibility of being updated and reviewed by anyone, on any device, and from anywhere.
Additionally, they provide useful tools for cash flow forecasting, helping companies plan their short- and long-term cash needs. Treasury teams can use these systems to create cash flow forecasting models and simulate different financial scenarios. This allows them to identify potential risks and financing opportunities, helping them make more informed decisions about cash management.
There are various tools for managing treasury in the digital era. Below are some of the most common and popular ones:
This type of software can include features such as risk management, cash flow forecasting, and bank reconciliation, specifically designed for corporate treasury management. It may operate as a standalone solution or be integrated into a broader ERP (Enterprise Resource Planning) system. Embat is integrated with the main ERPs on the market, such as SAP, Oracle NetSuite, Microsoft Business Central, and Sage.
Treasury management software can be customised to suit a company’s specific needs and can be used to manage multiple bank accounts and currencies.
Electronic payment systems enable the receipt and sending of electronic payments, which can be particularly useful for companies conducting online transactions. These systems use secure networks and communication protocols to facilitate money transfers and online payments.
Such payment systems offer businesses numerous advantages, including greater convenience and security for users, the elimination of cash and cheques, and improved efficiency in processing payments. Additionally, they provide enhanced security and can be integrated into accounting and finance systems to facilitate the management and tracking of a company’s financial transactions.
Most banks offer online banking tools that allow for the management of accounts and transactions, which can be especially useful for managing multiple bank accounts.
Furthermore, some companies offer peer-to-peer (P2P) bank connectivity protocols to create a direct communication channel between the company and the bank. These tools enable access to bank account information on demand through bank statements, as well as automating payment management (with transfers, confirming, etc.) or the receipt of collections (with direct debits, for example).
Cash flow forecasting tools allow for the prediction of future cash flows and the identification of potential liquidity problems. Some of their main features and characteristics include:
In reality, it would be fantastic to have all these features available in one place, wouldn’t it? Well, such comprehensive solutions do exist, offering an automated, efficient, and secure treasury for finance teams. Among these solutions are the treasury management solutions offered by Embat.
With our comprehensive cloud-based treasury solution you can visualise all your cash and debt positions in one place, make short-, medium-, and long-term liquidity projections connected to your ERP and accounting systems, automate your accounting and reconciliation processes, and connect with the banks you work with.
In conclusion, treasury management is crucial to the financial success of any company. In the digital age, tools and payment options have been created that facilitate treasury management, but new risks have also been introduced that must be considered. It is important to stay up-to-date and understand the best practices for properly managing treasury in the digital era. By following these tips, companies can ensure solid and efficient financial management for their long-term success.
