Beyond the balance sheet

When a group of finance professionals meet with a banker and a treasurer, you’d be forgiven for assuming that the main topics of conversations would be FX and interest rates, plus the challenges of raising finance in the current climate.

If not, it would be tariffs, surely?

However, these topics were not front and centre at a recent meeting of finance professionals representing insurance, logistics, food import and export, media, and a technology platform. One reason for this was that they were not all treasurers. It’s easy to prioritise the day-to-day challenges of currency volatility and moving interest rate expectations, but the roundtable encouraged a broader and more strategic assessment of the current state of business in the UK and overseas.

So, what did we discuss?

Cash management and payments

These are familiar topics – and are covered at the annual ACT Cash Management Conference held each spring – but they never go out of fashion. Whether a treasurer or a CFO, and irrespective of industry sector, everyone agreed that they remain a high priority for them and their businesses. The drivers may vary, but the basic concepts remain the same. The ‘criticality’ of ensuring that sufficient funds are in the right place at the right time is something on which everyone can agree upon.

Getting the most out of the payments system seemed important to many of them. For some, it is a key part of creating a reliable and resilient settlement process with an engaging B2C user interface. Customers, especially in the retail space, are demanding and expecting businesses to provide the level of insight, transparency and customisation that banks are increasingly offering. One company is using QR codes with its smaller customers to make it easier for them to pay and to supply all of the relevant payment information in a standardised way – an arrangement that offers benefits to both the payer and the payee. In a world where delayed payments are very unwelcome, others noted that building contingency payment solutions (such as having an additional bank) is important to maintaining trust with suppliers and customers.

Cash forecasting is another area on which everyone had a point of view. While they all agreed on its importance, they found it hard to deliver an effective process. Part of the problem was technology-based; for some it was the challenge of collecting data from different ERP systems, while others were still relying on spreadsheets. One noted that the implementation of a cash-pooling structure had created the sense of a money tree and reduced the importance to subsidiaries of an accurate cash forecast. It was a good reminder of the importance of creating a cash culture and that advanced cash-management techniques can sometimes have unintended consequences.

Technology developments

AI, and generative AI in particular, is a popular topic, and it came up several times. One attendee shared their use of AI to help collection teams assess – using real-time data – which accounts to focus on, rather than sorting by size, age of debt or familiarity. Their solution is also able to propose what courses of action are available and which pieces of legislation or corporate policy need to be referenced. It is a good example of identifying a problem and then determining which tools can be used to solve it, and a reminder that new developments – such as generative AI, blockchain or digital currencies – need to have compelling business cases to become more widely used.

Talent

Creating and maintaining high-performing teams is an ever-increasing challenge for most business leaders, so it’s not surprising that this featured in our conversations. Building resilience in teams can include succession planning, and one of the attendees shared their approach. By undertaking a gap analysis of the skills of the individual with the requirements for a potential role, they were able to create a roadmap to help the individual identify what technical and soft skills they need to advance – even if there was no current vacancy.

The group also discussed the role of specialists (such as treasurers) versus generalists (such as FP&A teams). There was a sense that what companies need are specialists who understand their business. Access to specialists is not helpful if they do not understand how a solution could be applied and the benefits that would be derived.

There was some recognition, however, that specialists are capable of moving from one area to another and that an agile and flexible mindset may be most important, rather than applying a vague definition of specialist and generalist.

What was surprising?

Well, there were no discussions regarding ISO 20022 and a limited understanding of Open Banking and the opportunities it can offer businesses. Upon reflection, these developments in themselves are not important – it’s the business benefits that are of interest. Too much has been made of APIs and other acronyms, and it is important that more effort is directed to articulating the benefits, such as growing revenues, reducing fraud or improving sanctions screening.

Tariffs continue to dominate the news cycle, but, for many, they are only one of many geopolitical issues they face. Existing organisational structures may need to change and there was a sense that those with significant US activities may need to treat these operations as standalone companies, rather than be fully integrated from a tax, capital or regulatory perspective.

While the importance of sustainability waxes and wanes across different sectors and jurisdictions, most folk were generally supportive of the long-term business benefits of reducing their impact on the climate and having a more inclusive pool of employees. One area of interest was the growing role of business sectors working together to reduce the impact of some of the large-scale investment requirements. The other was how legacy standards (sometimes based only loosely on science) were leading to unnecessarily high levels of energy consumption.

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