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Corporate cash management trends in 2022

The factors that will shape corporate treasury strategies and the impact transaction banks can have

Alexandra Larsen / January 24, 2022

One thing is for sure; the pandemic is not over, but maybe this is the year when we must learn to live with it. In this blog, we'll look at six areas that we believe will influence treasury thinking and the demand for cash management services.

The implications from the pandemic for business in general and treasury specifically have already been enormous. Remote working created many challenges - not just in the mechanics of how a treasury team can successfully work remotely; it also forced a rethink of treasury strategy and an examination of how things should be done in this new world.

Digitalization, which pre COVID-19 was sometimes seen as a “nice to have”, is now most definitely a “need to have”.

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Cash visibility, which was also high on the “to-do” list before COVID-19, has become a necessity. So, what does all this mean for corporates and their banking partners?

1. Digitalization

Much has been written about Robotic Process Automation (RPA), Application Programming Interfaces (APIs), Artificial Intelligence (AI), and the like. We expect to see some usable end products emerging such as the ability to extract and compile data from different sources, not just limited to bank data and corporate ERP and TMS systems. We should also see progress around improving the interoperability of different systems using APIs that support cash management decision-making.

Looking at everyday routines, corporates will push for document-based processes to be digitized to save valuable time in, for instance, account set-up and amendment. The use of digital signatures has come of age and treasurers have welcomed their banking partners embracing the use of DocuSign, Adobe Sign, and other secure e-signing technologies.

Corporates expect banks to engage and lead in the development of products that support digitalization on different levels of the treasury.

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2. Visibility and quality of data

Collecting data is one thing but the expectation is that it should be as close to real-time as possible to reflect the way businesses now operate. In addition, data needs to be accessible providing treasurers with the ability to use it within the treasury department, but also share it across the organization in a manner relevant to them. There are already a number of examples of how real-time treasury services can ensure competitive advantage, some captured in this market analysis by Capgemini.

The concept of immediate visibility of cash and the ability to move cash and manage liquidity in a real-time manner is not just a treasury wish but is quickly becoming a requirement.

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Further, the ability to forecast cash is now more crucial than ever. Accurate and reliable cash forecasting is driven primarily by full visibility of cash, which is currently available only to every second corporate according to a recent treasury survey.

3. Automation of manual processes

Another area that came under the spotlight during the pandemic was treasury processes. Automating manual tasks has become a priority for many treasuries and will continue to be so this year. The push to make treasury more efficient is being driven by several factors. These include the need to ensure treasury is ready for any future disruptive world event by automating repetitive/manual tasks so that staff can be freed up for other activities.

Banks can play an important role here by showcasing how innovative transactional banking services based on real-time payments and virtual account management can transform treasuries and prepare for any eventuality.

4. Bank Relationships

Experts have talked in the past about reducing the role of banks in the corporate treasury relationship. If anything, we think the opposite is true.

Banks are core to how treasuries function and grow. The relationship itself might be changing but its importance is not.

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2021 saw the start of some interesting discussions by banks on the transparency of bank fees. Some are seeing a competitive advantage in being more open about pricing of transactional banking as a way of improving the relationship they have with their corporate clients.

The pandemic has also highlighted the value of a good banking relationship. Having the backing of your bank during difficult times is something that corporates have recognized and valued.

5. ESG and treasury

Environmental, Social, and Governance (ESG) issues have been placed at the center of many organizations’ strategic direction. It is fair to say that treasury has so far, not taken a lead in this area. Uncertainty about translating ESG objectives into actions is certainly to blame for this. However, we predict that 2022 will see a change with many treasuries focusing on where they can make a difference. Already some are looking at their supply chains, investment, and debt portfolios with an ESG mindset.

Of course, treasury needs to partner with banks on ESG matters, and those banks that provide products that fit the “green thinking” label will be rewarded, as pointed out also in Accenture's report on "Banking Top 10 trends for 2022".

6. The wider role of treasury in an organization

The role and status of the Treasury within the organization is gaining importance, as demonstrated by a recent Treasury Technology Survey from “Treasury dragons”. Much of what treasury does affects other parts of the company - sales, purchasing, supply chain, accounting, audit, etc. It is not surprising that treasury needs to engage more with these different groups, providing input and helping to improve efficiencies for the greater good of the company. An example of this cooperation might be the control of payment fraud which is seen by many treasuries as a companywide issue. If treasury becomes a vehicle that provides improved data and analytics to the wider organization, it can further demonstrate its usefulness and then widen its influence.

Banks too, work with many parts of a corporate organization and it seems logical that sharing information through bank client meetings might be another way to cement or improve corporate/bank relationships.

Alexandra Larsen
Head of Cash Management Payments at Tietoevry Banking

Alexandra has an extensive banking and finance background, including operative Cash Management responsibility for local government. In her current position, Alexandra engages in strategic discussions with leading global and regional transaction banks on a regular basis, and keeps a close eye on the cash management market dynamics.

Author

Alexandra Larsen

Head of Cash Management Payments at Tietoevry Banking

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