Over the last few decades, corporate treasury has transformed, leading treasurers to take data-driven approaches and focus on driving value in business. Treasurers need to embody a wide range of skills to succeed in today’s environment, such as:
Initially, the treasury department could do with basing their decisions on intuitions and past experiences. But, as businesses grow in complexity, the role of the treasury department needs to constantly evolve to support rapid growth. Market fluctuations such as inflation and the pandemic have led to a surge in changes in Libor rates, customer payment behaviors, supply chain, and stocks. Sticking to age-old methodologies and systems for corporate treasury management can be unrewarding during such uncertain times. Though digitalization of treasury’s landscape is helping treasurers draw real-time insights, they also need to revamp their skillsets to reap the benefits from technology.
Treasury teams should upskill their roles and responsibilities from clerical work to informed decision-making at the CFO’s office. The treasury department is responsible for the following tasks:
Despite being responsible for a myriad of tasks, the corporate treasury team usually runs lean. Hence, treasurers need to explore technologies that can help in overcoming daily challenges. The treasury team needs to upskill their roles in the following ways:
Humans+machines are the key to bringing success to an organization. Here’s the 4E framework that treasury should adopt to be future-ready:
1. Embrace: Be technically sound and embrace change.
2. Evaluate: Evaluate skills regularly and critically analyze if they are fit for the present and the future.
3. Empower: Develop a new set of skills and work with the latest technologies.
4. Educate: From webinars to online training, educate yourself to learn about upcoming technologies.
A survey of treasurers by the European Association of Corporate Treasurers in 2021 cited cash flow forecasting as their topmost priority (63%), followed by the digital transformation of treasury (43%) and managing risks for FX, interest rates, and Libor (33%). Since the treasury department needs to stay vigilant and handle risks proactively, they need to focus on technologies that can safeguard their business and fuel business growth. Manual data gathering from disparate systems is time-intensive and error-prone. Furthermore, the use of spreadsheets to create cash forecasts hinders cash visibility and cash forecast accuracy. Thus, treasurers need to rely on a technology that supports:
AI-enabled cash forecasting software meets the above criteria, frees up the manual workload, and enables treasury to focus on high-value tasks.
HighRadius’ cash forecasting automation software provides the following benefits to fuel treasury’s success:
1. Increased forecast accuracy: Since data is gathered straight from the data sources and consolidated automatically, the scope of human errors reduces. Customer-specific variables and external factors such as raw material price fluctuations are captured to increase the accuracy of the sales forecast. Additionally, the AI-based software uses a closed feedback loop model that compares the historical and current results and makes adjustments to the forecasts to increase cash forecast accuracy up to 95%.
2. Improved variance analysis: The dashboard and drill-down capabilities increase granular visibility into cash flows. Thus, treasurers can analyze the variance between the forecasts and actuals for different currencies, cash flow categories, regions, and durations. Variance analysis enables treasurers to improve the efficacy of cash forecasts and reduce variance over time.
3. Accurate scenario analysis: Since seasonality, trends, and fluctuations are captured in the solution when making adjustments in the forecast, treasurers can analyze various scenarios and understand their impact on the business’ cash flows. This helps implement decisions proactively. Moreover, the solution supports performing cash forecasting frequently to manage short-term and long-term liquidity.
4. Informed decision-making: With automated reporting, easy and continuous data access, treasurers can implement data-driven decisions on time for managing capital, risks and improving corporate treasury management.
Automated cash forecasting software is easy to implement and does not require a large learning curve. However, the software needs to be fed with accurate and real-time input data to get the desired results (GIGO).
Schedule a demo today to learn more about HighRadius’ cash forecasting solution and its features.
The HighRadius™ Treasury Management Applications consist of AI-powered Cash Forecasting Cloud and Cash Management Cloud designed to support treasury teams from companies of all sizes and industries. Delivered as SaaS, our solutions seamlessly integrate with multiple systems including ERPs, TMS, accounting systems, and banks using sFTP or API. They help treasuries around the world achieve end-to-end automation in their forecasting and cash management processes to deliver accurate and insightful results with lesser manual effort.