How to enable your treasury team to do more with less

Increased pressure to lower costs and maximize returns are prompting treasury teams to look for ways to improve operational efficiency without additional head count. High-value, low-touch strategies that enable treasurers to make fast, informed decisions and support other functions can help them stand out among the competition and gain a competitive edge.

In this article, we’re outlining ways that treasury teams can optimize operations without dramatically increasing spend and without necessitating a major overhaul of your existing infrastructure. From small tweaks that can optimize cash flows to implementing risk management strategies to encourage optimal resource allocation, here are four ways that your team can accomplish more with less.

4 ways treasury teams can do more with less

1. Optimize cash flows:

   • Standardize processes for payables and collections

     By standardizing processes and increasing automation, treasury teams can make more efficient use of their cash, maintain supplier relationships by processing invoices in a timely manner, and reduce errors associated with manual data input.

   • Leverage data to negotiate favorable payment terms with suppliers

     Analyzing data to highlight aggregate transactional volumes and a prompt payment history affords the opportunity to negotiate more favorable terms with vendors and develop standard payment terms across an organization.

   • Minimize idle cash and maximize returns through cash concentration

     With cash concentration, companies use separate operating accounts along with one master account. This allows companies to optimize the earnings credits that can be used to offset cash management fees, potentially earn higher interest income by reducing overdrafts, or internally fund business units/activities.

   • Consider Shared Service Centers

     Shared service centers (SSC) consolidate transactional activities, increase consistency, and promote efficiency. They eliminate redundancy across an organization by eliminating duplicative tasks within different business units. For example, instead of having a team of ten employees working on payables, an SSC may employ two or three, standardizing operations and reducing costs.

2. Employ technology to streamline processes

   • Automate workflows, payment processing, and reconciliation

     Harnessing the power of technology to automate workflows can help reduce errors and save employees from repetitive tasks. Instead of a multiple step process to get an invoice approved and manually creating a purchase order and payment, an automated workflow could be implemented within your Treasury Management System (TMS) to enhance controls, shrink approval time, and make the process less prone to errors.

   • Centralize operations, control, and reporting with TMS

     Bigger companies that work with a large number of banks encounter an administrative headache in having to work on a separate portal for each bank. But with a TMS, all entitlements, workflows, and approvals can be done directly through the TMS portal, allowing payments to easily be routed and approved to the bank with straight through processing.

   • Utilize APIs for better efficiency and experiences

     APIs improve operational efficiency by linking various systems and delivering updates in real time. Treasury teams can free up time that would otherwise be spent manually consolidating balance information from their numerous banking providers to get to their overall cash position. Additionally, APIs can help reduce payment fraud by helping to validate payee details for recurring payments.

3. Leverage data analytics for forecasting

   • Utilize historical financial data and advanced analytics tools to create accurate cash flow forecasting to ensure sufficient liquidity to fund daily operations

     Many cash forecasting programs are built around the payment due date and do not reflect the typical payment pattern. But with AI and machine learning, cash forecasting can become more exact. For example, it could discern that a specific customer doesn’t submit payment on the payables date but instead always pays three days later.

   • Regularly update forecasts based on real time data and insights received from other departments and Implement ML/AI to analyze patterns and identify trends

     ML/AI can enable regular forecast updates. As your customer’s payment patterns or geo-political/ economic factors are changing, your model is constantly updating to ensure that forecasting is as accurate as possible.

4. Implement risk management strategies to ensure optimal resource allocation

   • Minimize manual data entry and RPA for routine tasks

     Robotic Process Automation (RPA) allows for the minimization of manual, rules-based tasks via automation that can help teams save time on repetitive tasks, like data entry, and instead allow them to focus on more strategic work initiatives.

   • Implement logical segregation of duties and automate notifications that alert when there are changes to vendor records or unusual transactions

     Logical segregation of duties can reduce risk and cost. Automating notifications can alert you to when there are changes to vendors or unusual transactions. Users can set up alerts any time a payment is initiated that doesn’t follow normal patterns. For example, if you’re making a payment to a vendor and someone has changed the banking details, an automatic alert can double check whether the correct due diligence was done to confirm that change in details.

By incorporating the above strategies into your workflows, your team will have the necessary tools to automate lower-level tasks with greater compliance and accuracy, while saving money and without having to complete a total overhaul of your existing infrastructure.