Say ‘so long’ to the typical treasury department.
It’s time to stop making trips to the filing cabinets and scrambling through Excel spreadsheets. Treasury departments are starting fresh with new budgets and goals for growth in 2018. As technology evolves, business goals and treasury solutions are rising to a new level. The treasury department wears a lot of hats in the finance industry. There’s a fine line between focusing on risk versus reward for growth and success. They spend hours analyzing investments, cash flow, foreign exchanges, risk aversion, and growth investments to keep the company thriving.
Daily tasks are met with industry challenges that every treasurer is battling. According to a recent Deloitte survey, top treasury departments are continuously challenged with foreign exchange rate changes, financial visibility, and cash repatriation – all vital keys for future financial success. Of all the challenges, technology takes the cake.
Most treasury solutions are solving problems with technology. Finance departments are figuring out big data, reporting, and cash flows manually, which is really time-consuming, instead of trusting tech to deliver results in seconds. Even with all of the perks and benefits, there’s still not enough trust to implement tech.
“A key concern around technology is the speed with which the market is moving and being able to identify ‘which train to jump on.’”
Every treasury function now comes with the learning curve and headache of new trends and tech, which makes it difficult to determine exactly which treasury solutions solve what problems for your finance department. Have no fear! We’ve compiled a list of top solutions to make 2018 the best year yet for the treasury team.
RegTech is the new treasury police for fraud
The list of potential fraud attacks is endless. As soon as finance departments believe that they have figured out the method to the madness, a new attack is on the rise. With technology expanding at the speed of light, the one and only treasury solution cannot be trusting internal, manual processes to minimize every financial risk.
In AFP’s 2017 Payments Fraud and Control survey, FBI is warning companies about the most recent fraud attack on the rise – Business Email Compromise (BEC) scams. Finance departments that work with foreign suppliers and buyers are often targeted with BEC scams via email for payments – primarily wire transfers. The statistics of the B2B payment methods is alarming. Nearly 75% of companies were targeted in 2016. 60% of companies that detected fraud via BEC scams were through wire transfers. ACH debits, ACH credits, and corporate credit cards combined accounted for less than 40% of the payment methods impacted.
The current treasury solutions for payment fraud are manual and quite rigorous. To prevent ACH fraud, 60% of all businesses make it a daily habit to reconcile accounts to return all unauthorized ACH debits. Most companies take some form of action to check any outside payment for suspicious account information or payment method. Other procedures include stopping all ACH debits except a single account with filters. Some companies also create a separate account for third-party debit payments that are sent electronically. Internal processes may give leadership the peace of mind by reducing their biggest risks, but there’s much more that manual processes cannot account for.
To prevent fraud from every angle, the number one treasury solution for healthy growth is to trust Regulatory Technology (RegTech). According to EY’s Innovating with RegTech study, investing in preventative technology has its benefits.
““RegTech will help drive positive customer experiences. For example, a robust fraud detection platform could shorten the transaction lifespan and improve consumer experience by reducing the number of false negatives.”
Other perks include consistent data reports, patterns of identifying risks, automated compliance regulation, and regular monitoring of changes to reduce the amount lost. Treasury departments reap the benefits of real-time visibility and earlier identification of trends, fraud, or risks with minimal manual labor. Regular compliance monitoring can be completed by robots.
So, how is RegTech the ultimate treasury solution for 2018? RegTech does all of the intense work of Inspector Gadget to identify risks with advanced technology and data. According to EY, technology is used to detect and determine the pattern in breaches. The data is then used to analyze potential problems and risks for companies.
““Companies include a terabyte analytical capability with billions of different data points in a single transaction to identify potential threats to financial security.”
RegTech has a promising future in the finance department. Technology and data join forces to analyze transactions from every angle to catch any suspicious activity without the manual analysis and headache that still may cost your company thousands.
Treasury Management Systems are not one size fits all
The 2017 Deloitte Global Corporate Survey focuses the importance of a strong Treasury Management System (TMS). According to the survey, even though the TMS is advancing, over 20% of each part of the funnel is still being managed manually – including cash management and investments. Treasury departments are still in need of a well-oiled management machine to easily manage and monitor all tasks.
Why jump on board this year? According to the survey, companies that are trusting the cloud with their TMS is increasing year-over-year by 50%. Studies are predicting that TMS cloud usage will steadily increase over the years as more buyers and suppliers focus on cloud migration. Cloud TMS implementation eases managing funds, gathering big data, and global communication in one spot. It’s sad but true – in 2018, some treasury departments are still stuck in the Roaring Twenties by trying to protect proprietary information in closets and cabinets. Holding onto the information internally comes with the risk of unauthorized access to information, less collaboration, and potential tampering of third-party data.
Any company’s TMS must do more than just manage the cash flow. According to a recent Association of Financial Professionals (AFP) and Bloomberg study, it’s all about “customization and configuration” for both colleagues and clients. Your company’s TMS cannot be a “one size fits all” system to measure your risks and rewards. Each system must be implemented based on the company’s processes to ensure efficiency.
Because most systems require a great deal of research to find the perfect one, most businesses are sticking to their tried and trust internal processes – spending hours manually managing and monitoring daily processes.
CGMA agrees that treasury departments need a more robust system. It’s necessary to reduce risks and manual errors when dealing with large quantities of transactions and even bigger transactions. The advancement of treasury systems will also ease the auditing process with reports, data, and easy tracking of all accounts.
In 2018, the TMS is the one stop shop treasury solution for your company to monitor and manage the financial future better than before. Companies are relying on the system to manage cash flow, monitor transactions, reporting, and data because spreadsheets and calculators are things of the past.
Buyers and businesses are making payments quick, fast, and in a hurry
The 2017 AFP Payments and Fraud Control Survey highlights an alarming statistic about the fear of embracing one of FinTech’s biggest bets.
“Over 70 percent of corporate treasury and finance professionals are hesitant about adopting mobile payments at their organizations, as they question the security of this payment method.”
As the roles and responsibilities of treasury and financial professionals expand, they enjoy the convenience of handling business on the go. According to the survey, entering the mobile world raises security and account concerns due to unsecured connections, the potential loss of the mobile device, or sensitive data.
What’s there to look forward to with mobile payments this year? With technology advancing at the speed of light, mobile and real-time payments will be on the uptick. The ACH (Automated Clearing House) recently launched same-day payments to keep up with the times. Payments are processed in no more than 24 hours. According to the ACH, same day payments are expected to jump from 43% to 75% by the end of 2018.
Real-time payments are generally deposited immediately. In a recent SWIFT survey, 42% of treasurers want real-time payments. Treasury management must keep up with the rapid increase in transactions incoming and outgoing on a regular basis. If they do, they’ll be rewarded with faster reporting and data to make smart budgeting and investment decisions.
There’s also the added bonus of real-time reporting that the finance department will receive from making real-time payments on their end.
There are a few ways treasurers can leverage faster payments without caving into security risks. Many businesses are trusting accounts payable automation for faster payment processing, compliance, and control. Simply by using SaaS (Software-as-a-Service) to manage transactions and automatically pay businesses. Real-time or instant payments vary based on the accepted payment methods. But, businesses will have the security and on-the-go needs to access payment information with a connection.
Treasury departments can leverage data and information from payment automation services, as well. While payments are being automatically processed, robust reports are automatically built to show treasurers the financial data needed to make informed decisions about cash flow, investments, and financial security with payments all in one hub.
Tech is the treasury solution of 2018
It’s clear that treasury departments must be willing to invest in technology in 2018 to stay in the financial game with competitors. Implementing treasury solutions at the start of a new year gives your team the entire year to learn, grow, and adapt with a fresh start. Trusting technology has a sweet ROI of increased visibility and efficiency to make well-informed decisions on cash flow, investments, and growth opportunities.