Bank of the West BrandVoice: COVID-19's Transformative Impact On Treasury

Pandemic pushes centralization and treasury on demand to the fore By Kevin Plumberg, Head of B2B Content Marketing at Bank of the West COVID-19 has intensified the need for treasury professionals to play a strategic leadership role in the enterprise. In today's business environment, two approaches are shaping the future: Treasury Centralization and Treasury on Demand. "Smart treasurers are convincing their boards these projects are not only self-funding, but essential to develop the resilience and intelligent control needed to help the company better survive a crisis," Damien McMahon, a Partner at PwC, said in the latest Journeys to Treasury report.

Bank of the West

Treasury Centralization Comes of Age

From 'nice to have" to 'need to have," the shift to treasury centralization is being fueled by five clear benefits provided to the enterprise: Optimized liquidity – By creating a central view of cash across the business, treasurers are better able to mobilize liquidity at the group level. They can also resolve working capital friction points that occur between sales and procurement teams. Working capital assets can also be leveraged as a source of liquidity. Improved risk management – Creating a central view of an organization's financial and operational risk can better align hedging strategies with the organization's risk appetite. Standardized controls and access can reduce an enterprise's risk of fraud and cybercrime. Reduced costs – Centralization enables the de-duplication of systems, processes, and roles. It also allows treasury to consolidate banking relationships, particularly when combined with payment and collection systems. Enhanced business intelligence – With centralized data, data analytics can be improved. Capacity for growth – Centralization supports scaling, entry into new markets, and development of innovative business models more quickly.

Especially for global corporations, the COVID 19 crisis fast-tracked centralization efforts. Amidst this rapid change, many treasurers have had to confront difficulties. Some of the most common challenges to centralization include: Multiple systems and fragmented data often due to M&A and or legacy systems; Regulatory differences and disparate local requirements across countries and regions; The iterative nature of centralization due to M&A, geographic reach, and changes in business structure and organization.

How are treasurers approaching centralization to overcome these challenges? We recently surveyed senior finance decision makers to find out. They recommended phasing projects with small steps to ensure evolving requirements continue to align with long-term objectives. Also, they recommend stress testing new models. If you'd like to learn more about some treasury centralization best practices, visit our interactive experience.

The Time is Yesterday for Treasury on Demand

The need for speed, as they say, is what's driving the treasury on demand trend, and it is only expected to accelerate. Data, transactions, and optimized liquidity must now be available in real-time to support better, faster, smarter decision making. Treasurers report the pandemic has solidified the business case for the following: Automated processes; Digitized payment and collection processes; Faster access to data for operational and strategic decision making; Digital signatures.

The natural next question is, 'What are the best strategies for delivering treasury on demand?" Three that stand out as providing significant opportunities for treasurers are leveraging APIs, prioritizing digital initiatives, and improving communications. To learn more about these, visit our interactive experience.

The COVID-19 crisis has truly elevated the role of treasury and at the same time the value of digitization and the need for real-time data and transactions. The demands on treasurers have never been higher. Treasurers who turn those demands into opportunities by embracing centralization and on-demand will better position their organizations to succeed in the future. What choice will you make?