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Why is it critical for CFOs to realize the value of treasury cloud implementation?

What you’ll learn

  • How does poor cash flow affect treasury management?
  • Will cloud platforms lead the treasury tech landscape in the future?
  • How CFOs can benefit from the best treasury management solution

Why is it essential for CFOs to address treasury technology challenges?

Finding and deploying the appropriate treasury technology solution for their organizations’ needs is one of the most challenging tasks for CFOs. The potential to reconsider conventional techniques and bring about significant changes by implementing the best treasury management solution is on the horizon to overcome the following challenges:

Top challenges in treasury management by the CFOs

Top challenges to efficient treasury management

Impact of poor treasury management 

Poor cash flow is generally associated with inefficient cash management. Poor cash management makes it difficult for companies to determine their cash position. As a result, it’s more challenging to identify internal business trends and problems. Also, it makes making wise business decisions significantly more difficult. 

The impact of poor cash management on any business is listed below:

  • Lack of insight that leads to missed opportunities:

    Poor cash management is typically correlated with inefficiency and disorganization. This can cause a variety of issues, including erroneous reporting and misunderstandings. In other words, ineffective cash management entails overlooking cash assets. As a result, identifying company trends, issues, and opportunities could be more challenging. This makes it very difficult to make wise business decisions.

  • Poor relationships with suppliers:

    In most firms, the procurement team is responsible for recruiting new suppliers, developing and maintaining solid relationships, and ensuring that they fulfill their contract agreements. However, these relationships often suffer when there is a delay or problem with their invoice, and they are not paid on time.

  • Unexpected expenses:

    The company would be unable to set aside funds to pay for expenses. Some of the most unexpected expenditures are:

    • Staff turnover
    • Equipment breakdown
    • Demands to invest in new technology or equipment
    • Last-moment borrowing

    Legacy systems are incapable of capturing cash on hand and lines of credit. So, businesses are more likely to borrow money late and pay higher interest rates.

  • Risk of security loss:

    Security is a big issue when dealing with cash. The likelihood of data theft and fraudulent activities is very high and needs to be properly addressed. Poor cash management can lead to inefficient threat tracking and raise the possibility of financial loss.

  • Stunted growth: 

    The most detrimental result of poor cash flow is that the business can’t succeed. Businesses lacking funding resources cannot expand or address their problems. Also, poor cash flow may force companies to close their doors.

On the other hand, effective cash management increases insight. Companies can make even the most difficult judgments with more confidence if the proper cash management technologies and procedures are in place.

Why is treasury cloud going to lead the future in treasury?

According to the McKinsey Global Survey, more than 80% of respondents stated they are using or experimenting with cloud technology.

Without cloud solutions, many treasury professionals struggle because they either continue to utilize spreadsheets or have the unfortunate situation of dealing with outdated software located someplace on their company’s IT servers.

Hence, companies want to adopt Cloud because it has several benefits, including the following:
Benefits of Cloud for treasury

  • Cost-cutting:

    Lower license fees than the conventional models can result in significant cost savings. Customers’ one-time and continuing expenditures are greatly decreased by combining subscription-based pricing and the avoidance of upgrading fees because of the automatic upgrade procedure within cloud deployments.

  • Reduced FX risks and data thefts:

    The use of cloud treasury solutions allows for better hedging with a complete audit record and exposure limitation by tracking commodity price changes, currency fluctuations, and risk exposures. Moreover, cloud treasury solutions protect a company from file loss and data corruption since they need no interventions from third-party suppliers or agencies, automate processes, and centralize workflows.

  • Rapid deployment and low maintenance: 

    A cloud treasury management solution requires minimal IT involvement and goes live within 6-12 weeks. The updates and maintenance are done by the vendors and are not the responsibility of the users. This helps treasury teams save time and costs and execute tasks and decisions faster.

  • Easy and detailed data analysis:

    SaaS/cloud treasury management software makes it simple for treasury teams to access, collect, and exchange data with automation. Due to this, the treasury team can engage in more value-added tasks like data analysis and decision-making.

  • Better scalability: 

    SaaS treasury software provides high scalability since the process and system don’t break when a new system or bank is added. Moreover, the process can be replicated or halted if the company is acquired or divested. It also provides operational flexibility to handle unexpected changes without requiring the setup of physical servers and offers predictability to monitor when and how much scalability is required for growth or investments. 

Why implementing a treasury cloud is a win-win for the CFOs?

The following are the value addition that Cloud provides to the CFOs:

Top 5 benefits of using treasury cloud for CFOs

  1. It automates data aggregation and provides quick and easy data access. So, it helps CFOs understand the cash balances and cash position in real-time. 
  2. With granular data visibility and customizable and accurate reports, CFOs have all the information at their fingertips. Hence, they can make data-driven decisions for borrowing, investing, and risk mitigation on a timely basis.
  3. It helps CFOs understand areas of improvement and growth by providing them with granular cash flow visibility, which helps them focus on sales, expansion, and innovation.
  4. Due to its high scalability, it adapts well to a business’s changes by supporting the expansion and resource/data added to the solution as and when required, and also allows decreasing data or features as demand evens out. This allows the CFO and team to remain in sync with every business cycle.
  5. CFOs don’t need to spend more money on updates, upgrades, third-party vendors, or IT resources as everything in Cloud is automated and customizable at negligible costs. Hence, it helps CFOs save cost, resources, and time.

Benefits of using HighRadius cloud treasury solutions

  • Ability to track all mirrored and hypothetical bank accounts’ balances and record interest.
  • Quicker treasury solution software deployment and implementation.
  • Cash position and cash flow insight across all subsidiaries on a global scale.
  • API-based seamless connection between banking, ERP, and FP&A systems.
  • Automated bank reconciliation and bank statement parsing.
  • Being able to make data-driven judgments for growth activities like investments and M&A.
  • Automatic capturing of intercompany activities.

Schedule a demo to learn more about how treasury cloud can help the CFOs.

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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.