Understand the evolution of the Treasury Management System in the age of AI and the true potential of AI-powered cash forecasting systems.
We are in a digital revolution that is fundamentally changing the way businesses are done across the globe. From growing transparency, consumer engagement, and new patterns for consumer behavior to research, development, and distribution using digital platforms has improved the quality and efficiency at which value is delivered.
Increased complexity and volatility of modern business have made cash flow forecasting and liquidity management more crucial than before. A survey on treasury systems and trends indicates that 60% of organizations have increased their investments in Treasury Management Systems (TMS). The result indicates the trend of organizations’ increased investment in Treasury Management Systems.
According to a survey, of over 200 treasurers, 75% of respondents identified concerns around inadequate treasury systems infrastructure. One of the key findings of the survey was that the extent to which technology can be used to achieve scalability, reduce cost, and gain a competitive advantage is not yet fully appreciated.
Treasury software systems combined with the use of Artificial Intelligence (AI) and Machine Learning (ML) are transforming treasury yet many organizations with TMS continue to use spreadsheet-based solutions for cash flow forecasting. So the organization’s treasury technology investment is under-utilized, resulting in inefficient and error-prone processes.
This ebook provides detailed information on the state of TMS and its evolution in the age of AI and helps you understand the true value it delivers in corporate treasury departments.
The treasury functions are seen as vital enablers in supporting an organization’s growth. Treasury has shifted its focus from transactional operations to assisting organizational strategies and increasing cash efficiency. The following are the prime responsibilities of a treasury function in an organization:
With the emergence of covid-19, companies realized that maintaining liquidity is essential to navigating through the crisis, Treasurers must provide the CFO with accurate and timely forecasts. According to a survey by Treasury Strategies 88% of treasury professionals consider cash flow forecasting as their top priority.
But also a recent survey with treasurers from Fortune 1000 companies revealed that nearly 90% of them rate their cash flow forecasting as ‘Unsatisfactory’ with almost all of them citing ‘Excel/spreadsheets’ as the major drawback followed by ‘Lack of Richer Data’ being the other.
Treasury management system (TMS) is a software that helps to automate, record, and control core treasury functions to improve process efficiency and gain relevant cash insights. It allows companies to streamline processes like communication with banking partners or pulling cash flow data in real time while ensuring that finance data is secure.
TMS have evolved significantly leading the treasures to achieve more accuracy in cash flow forecasting.
Saas/cloud technologies have been dominating the landscape for more than decade now. As a result, there is a 57% increase in Saas/cloud technology deployment and 41% decrease in installed solutions.
Dominance of cloud and software-as-a-service (SaaS) solution continues in adoption and are seen to increase in value as SaaS deployments offer many other number of benefits:
According to a survey by Deloitte, 20% of crucial treasurer’s tasks such as cash flow forecasting and cash flow management are still managed by spreadsheets despite having a cloud base TMS resulting in errors and inaccurate forecasts. This is where the Gen4 AI-enabled solutions would help treasurers to become strategic partners and advisors to the business.
Adopting AI-enabled treasury technology empowers teams to evolve from a purely operational role to a strategic role, spending less time on extracting data and more time on providing insightful, trusted foresight that enables the CFO to plan for what’s next.
AI and ML integration can shift cash flow forecasting from a historical data additive model to a future oriented predictive model which means the forecast process will involve advanced statistical modeling that can predict, rather than calculate, future cash flows.
This will help the treasury teams to leverage cash flow forecasting insights to make timely and confident decisions. AI automation streamlines the different steps of cash flow forecasting in the following ways:
These Gen 4 AI-enabled solutions also impact the key factors of cash flow forecasting by providing prominent benefits.
AI-powered cash flow forecasting is becoming increasingly crucial as today’s TMS should provide a holistic view of not just current day cash positions, but also deliver tools and insights to provide reliable forecasts. CFOs with the necessary information and intelligence will not only identify and predict market shifts but proactively manage this volatility through timely execution of an organization’s risk management.
In current economic conditions, it is paramount for Treasurers and Cash Managers to have a clear view of their organizations’ liquidity position and cash flow forecasts. Technologies like AI, machine learning, and APIs help to make the treasury management process more seamless. With just one click, treasurers can now focus on strategic tasks rather than manual and redundant tasks.
Implementing new digital technologies will give them more insight into the business, and push them towards a more strategic role. Such an outcome can only be achieved in the context of an explicit technology strategy and this will evolve their role from managers and treasurers to strategic advisors of the CFO.
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.