Treasury plays a critical role in the financial health of any business. Processes such as identifying and investing in new revenue streams, risk management, optimizing cash flows, setting up financial plans and policies come under the mandate of the treasury and help CFOs plan for the future.
On the periphery of the treasury, new and disruptive treasury technologies are revolutionizing treasury functions today and leading the path towards a future where it becomes an integral part of the treasury. For instance, Robotic Process Automation takes up the low value and repetitive work through enhanced automation, and Artificial Intelligence enables machines to perform cognitive tasks based on historical data and learning.
The adoption of treasury management technology is increasing rapidly:
PwC, 2019 Global Benchmarking Survey stated that cash forecasting continues to be a top priority for treasurers. But it can be equally challenging. According to HighRadius’ survey, Accounts Receivable is one of the most difficult cash flow categories to forecast for head office finance and treasury teams (57%), followed by Accounts Payable (20%).
Accounts Receivable forecasting is particularly challenging as it is entirely in the client company’s hands. While payment terms are agreed upon, customers might not always adhere to them, adding an element of unpredictability to the process.
Challenges in forecasting A/R difficult are:
In the case of A/P, the forecast is accurate in the short-term, up to the next 2 to 4 weeks. However, in the long run, the accuracy takes a hit because of uncertainties revolving around payments.
Challenges in forecasting A/P difficult are:
Spreadsheets have been the most widely used cash forecasting tool for a long time, but it isn’t foolproof. It holds certain limitations such as:
Due to the limitations, forecasts generated are inaccurate and unreliable. This leads to poor borrowing and investing decisions. Technologies such as AI can make a significant impact here by generating accurate forecasts for making confident decisions on borrowing and investments.
Treasurers now sit at the heart of a digital ecosystem that is already enabling some corporate treasuries to make smarter, more data-driven approaches to core processes and better support the commercial side of the business.
As the digital ecosystem becomes more automated, connected, and integrated, treasury has better visibility of data and can make better business decisions.
Emerging treasury technologies include:
These are the opportunities for treasury unlocked by AI:
Treasurers need to understand what functions they need to apply technology to and then easily evaluate the type of solution they should implement to improve their daily operations.
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.