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Overcome the bottlenecks of treasury process with AI treasury solution

What you’ll learn


  • How is AI-enabled treasury solution reshaping treasury?
  • Why use AI for the effective management of treasury processes?

Common challenges in treasury processes

More than 80% of financial decision-makers feel increased corporate complexity for making it more challenging to manage cash efficiently and effectively. And in a fast-changing environment, the situation is only going to worsen.

Treasury professionals are today’s best forecasters. Accurate forecasting is critical for:

  • Understanding working capital requirements
  • Ensuring enough liquidity
  • Maintaining an active state of flexibility to handle emergent cash requirements

Treasurers need to assist organizations in keeping assets liquid. They can monitor liquidity by forecasting accurately in the short and long run. However, age-old processes hinder the effective management of cash.

What are the difficulties of age-old treasury process?

Treasury’s primary purpose is to protect a company’s assets and manage cash resources (i.e., liquidity) to support the company’s primary business activities.

As a result, treasury has been and continues to be one of the most challenging, dynamic, and vital departments today. And the daily responsibilities of the treasury team are:

  • Cash and liquidity management
  • Risk management, forecasting, fee analysis
  • Support capital preservation
  • Maximization of cash on hand/cash flows/returns

When developing forecasts, treasury professionals face four significant challenges:

  • Understanding how cash flows fluctuate over time

    The larger the organization, the more complex the financial flows. Consider a corporation that has acquired multiple companies or grown worldwide into new areas. Payment periods change across businesses, complicating the data.

    A greater volume of transactions and higher-value transactions done within the company can also impact forecast accuracy. There may also be instances where cash flows are rapidly shifting or reaching a significant limit.

    To ensure that forecasting results appropriately represent the anticipated cash flow, greater attention should be devoted to evolving cash flows. With all of these complexities and variables in mind, it is evident that a treasury solution can be a helpful tool in assisting treasurers in understanding and tracking data.

  • Obtaining the relevant data for the forecast

    How to incorporate the data into the forecasting model after comprehending it? Transactions with a high volume but with a low individual impact on the business’s financial situation can be acquired from well-established data systems.

    Bank feeds, A/R, ERP, and other systems that automatically transfer information to the treasury cashflow forecasting software or are extracted and manually controlled inside the treasury department are data sources.

    If not handled well, other less frequent, high-value activities like tax payments, investment maturity dates, and capital costs might impact forecast accuracy. Large tax payments, for example, may simply be reported by the responsible individual. Treasury professionals must be aware of payment dates and data that must be reported.

  • Managing the workflow for forecast data

    Obtaining accurate data on time may be difficult depending on the complexity of the firm’s activities. Typically, the best data workflow method will necessitate:

    • Knowing when data is entered or modified into systems
    • Manually modeling some of the data (e.g., spreadsheets) and obtaining additional insight over time
    • Determine the source of any significant abnormal numbers
    • Configuring data feeds
  • Improving the forecasting model over time (variance analysis)

    Analyzing forecast accuracy by manually manipulating data on spreadsheets takes time that most treasury departments do not have. That is why treasury cashflow forecasting software is helpful for confident decision-making. Cloud treasury management enables treasurers to quickly identify differences between forecasted and actual results over a specified time through variance analysis. Any discrepancies can be evaluated and understood, resulting in a feedback loop for forecast model improvement.

The right treasury solution can manage multiple forecast models simultaneously for real-time comparison. The treasury solution enables:

  • Identifying the model’s strengths and weaknesses
  • Adapting to the results
  • Retesting the data (historically and in real-time)
  • Adopting the newly vetted program easily for even more accurate forecasting results

Is an AI-enabled cash flow tool or treasury solution a threat to treasurers?

Rather than being viewed as a threat, AI should be considered a tool for maximizing human potential and accelerating organizational success. By utilizing AI to its full potential in treasury solutions, businesses gain a competitive advantage by reducing operational costs, increasing productivity, and investing in growth/expansion.

Why use AI for the effective management of treasury processes?

Despite its growing user base, the Treasury Management System (TMS) has some drawbacks. TMS is unable to collect data from a variety of systems to improve forecast accuracy. Furthermore, an on-premise TMS necessitates ongoing corporate upgrades, lacks flexibility and scalability, and is more challenging to implement.

On the other hand, AI-powered cloud-based solutions seamlessly integrate with a wide range of data sources, including TMS, saving time and money. AI treasury solution assists treasury in meeting its objectives by:

  • Identifying patterns or anomalies in transactions and customer behavior by processing large amounts of data and producing accurate forecasts.
  • Using customer data to understand payment habits better and keeping track of due dates.
  • Prioritizing recent trends over old ones for accurate cash forecasting and understanding changes in stock prices, bank deposits, and withdrawals.
  • Detecting and monitoring differences between forecasts and actuals.
  • Viewing cash positions across multiple banks, entities, regions, currencies, and categories.
  • Reconciling bank transactions from the previous day with precision.

How does AI work under the hood?

  • Input data: Cash forecasting automation software must include adequate, relevant, and high-quality data for training and testing the models.
  • Processing: Processing is dependent on the type of data fed into the system. The algorithms and models chosen are determined by:
    • Data types
    • Desired output format
    • Examining previous outcomes
  • Output data: The output quality is determined by the input data quality used in the models. Past performance should be estimated and evaluated in some way. The predictions and recommendations must be consistent and easily usable for making confident decisions, and the insights must be available and actionable.

When done correctly, data-driven forecasting yields accurate results and insights. Because inaccurate output leads to poor decision-making, ensuring that the input data is accurate is critical.

How are AI-enabled treasury solutions transforming treasury?

Artificial Intelligence (AI) has revolutionized our daily lives with navigation, virtual assistants, intelligent cars, music streaming, etc. It has also transformed treasury with automatic reconciliations and data consolidation, foolproof modeling, and improved scenario analysis. CFOs, treasurers, and cash managers are interested in learning more about AI’s application in finance, such as how it might improve functional operations and how to use it to fulfill future company objectives.

AI is transforming treasury in three ways:

How is AI changing the financial industry?

  • Data-based decisions: Massive databases of data exist in business, but few companies know how to use them to their advantage. Treasurers benefit from predictive analytics, which incorporates AI subfields such as pattern recognition, data mining, and sophisticated statistical modeling. Real-time data enables confident borrowing, investing, quarter-ending cash, M&A, and working capital decisions. CFOs make data-driven and long-term decisions with ease.
  • Efficient cash management: Payables, receivables, and reporting require a lot of effort from employees, who must deal with expected and normal tasks and exceptions and disagreements. Change is being brought about by the AI cash flow tool, which automates manual duties and enhances forecasts and projections. As a result, workers can now devote more time to strategic responsibilities, allowing them to bring more value to the company.
  • Dependable controls: Risk management and control implementation may be challenging and time-consuming. Automated processes, such as advanced process automation (APA), may be linked to present operations using AI technology. It’s possible to have software follow along with the actions of an employee and then learn how to do the activity itself. A treasurer’s exposure may be reduced or improved by automating, multiplying, and accelerating control procedures.

AI’s future trajectory is expected to grow as it helps with working capital management, financing, cash forecasting, foreign currency, risk management, and other activities.

Benefits of using AI in corporate treasury

Some of the benefits that AI provides in corporate treasury include:

What are the benefits of AI in business?

  • A wider range of data
    Granular visibility is improved through drill-down capabilities into entity-level data. Furthermore, without having to hunt through different spreadsheets and portals, teams may readily access data at any moment.
  • Increased accuracy
    A feedback loop model and frequent variance analysis increase cash forecasting accuracy. Accurate data, among other things, enhance confidence in borrowing, investing, and M&A choices.
  • Cost and time savings
    In the long run, AI technology helps save money and time, streamline routine operations, and free up employees to focus on higher-value work that improves the company’s overall performance.
  • Reduced turnaround time
    Less turnaround time refers to automation and reduction in manual tasks, which leads to faster processes and reporting.
  • Greater ROI
    AI increases ROI in both the short and long term by lowering interest costs, increasing investment revenue, and freeing up resource bandwidth. AI saves time by eliminating the need to manually update spreadsheets and apply FX rates. The time saved can make more informed decisions in day-to-day treasury operations and increase ROI simultaneously.

Customer success story

A $625 million construction engineering company faced these challenges:

  • Guesswork forecast model with low accuracy
  • Data gathering from multiple sources was slow and tedious
  • No variance analysis and control over data from A/R and A/P
  • Seasonality affected operations and created unpredictability
  • Low visibility into future cash positions with no daily, weekly, or monthly forecasts

With HighRadius’ AI-Powered Forecasting, they achieved:

  • Increase in A/R and A/P (>47%)  forecast accuracy for a month
  • Better accuracy in A/R and A/P forecasts (>94%)

Schedule a demo with our experts to learn how to make the best use of AI to forecast cash flows.

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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.