Strategies Transforming Treasury Management

FREMONT, CA: To stay competitive in the current fast-paced global economy, companies must have a robust and modernised treasury management system. Traditional treasury management processes are no longer sufficient to manage the complex financial challenges that companies face in the digital age. Although conventional payment systems are attempting to modernise, many companies lack the resources or time to wait for it to develop and update into a more level playing field. In addition to long-term relationships with correspondent banks, legacy payment rails tend to be used most often by financial players with abundant resources (both human and capital) to expand into new markets.

Fortunately, technological advancements have made it easier for businesses to modernise their treasury management systems. There are a variety of technology solutions that companies can use to modernise their treasury management systems.

Cloud-based treasury management systems (TMS) offer companies the flexibility and scalability needed to manage their financial operations in real time. These systems provide companies with a centralised platform for managing their treasury operations, including cash management, risk management, and payments.

Some leading fintech companies have developed blockchain-based platforms that offer modern and efficient global payment management methods. These platforms enable instant settlement and real-time tracking of cross-border payments, reducing the time and cost associated with traditional payment methods. In addition to streamlining cross-border payments, they also provide companies with advanced treasury management capabilities. They provide companies with access to real-time foreign exchange rates, which can be used to manage currency risks. The platforms’ real-time settlement and FX capabilities enable companies to optimise their treasury management processes and reduce their exposure to currency fluctuations.

Traditionally, companies have had to maintain large cash reserves to ensure they have enough liquidity to meet their financial obligations. However, currently, companies can leverage real-time settlement capabilities to access instant liquidity. This reduces the need for companies to hold excess cash reserves, freeing up capital that can be used for other purposes.

Owing to the built-in compliance checks and advanced fraud detection capabilities Fin tech companies offer advanced fraud prevention and risk management capabilities. Besides integrating treasury, accounts payable and accounts receivable systems provide a real-time view of all financial data. Full visibility into cash flow is critical to acquire an accurate view of the company's financial health. This knowledge aid in minimising risk exposure and strategic planning for long-term growth.

Investing in a treasury platform that is independent of every banking partner allows for realising efficiency gains and puts control in the areas required. Manual processes hinder agility and the ability to make quick decisions. Automating and auditing current processes from the top down can help identify weak points and eliminate potential hiccups.

The role of the treasurer is evolving, and companies are increasingly recognising the value of the treasury function in driving strategic decision-making. As senior management focuses more on liquidity and risk exposures, it's important for treasurers to continuously review and reassess the liquidity management processes. The responsibility will continue to fall on the treasury to protect businesses from volatility and also strategically manage liquidity to add financial value and contribute to growth.