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Four cash management norms that will endure post-pandemic

Innovation and dedication have been hallmarks of the treasury community’s response to the pandemic. Here we look at four factors that have made a difference to treasurers’ lives during the crisis and that will carry a legacy into the future.

1. Prioritise cash forecasting

Lessons: When we look at the impact of the pandemic – the business reaction to lockdown and the work treasurers have done in response – the leadership and sustained effort that went into cash forecasting stand out.

Throughout the crisis, treasurers became instrumental in ensuring the supply of real-time information to their boards and senior management teams, providing not just daily but intra-day reports. They were an authoritative source on the business intelligence that would prove essential to understanding COVID-19 impacts.

In early lockdowns, we heard about treasury teams setting up back-to-back zoom calls to ensure subsidiaries didn’t run out of cash and remodelling cash flow forecasting systems and protocols to deliver precise and realistic outputs.

Future actions: With a renewed appreciation of just how pivotal liquidity is, treasurers have cemented direct lines of communication with executive teams. Cash forecasting must remain agile to reflect the realities of business on the ground.

2. Cybercriminals haven’t stopped, so neither should you

Lessons: Cybersecurity remains decidedly a business risk, with cybercriminals ramping up their own response to the crisis.

Shifting operations from office to home vastly increases the surface area and points of entry from the point of view of hackers. Networks and devices in the home simply do not benefit from the same level of security as office-based technology and may lack routine protections such as network monitoring, security protocols and patching. Homeworking also introduces many more devices that might be vulnerable to hackers via the internet of things. Factor in stressed-out employees and the vulnerabilities increase.

Future actions: Staying one step ahead of the cybercriminals will be crucial as lockdowns ease and more normal routines resume. Treasurers and security experts will respond accordingly, especially as hybrid modes of working start to emerge. It will be incumbent on treasurers to keep abreast of both threats and the protocols and defences that emerge.

3. Optimise your technology capabilities

Lessons: Some organisations have taken the opportunity to ramp up their technology adoption, a development that brings huge upside in terms of visibility and cash forecasting capacity. Well implemented treasury management systems have proved invaluable to treasurers during COVID-19; however, not all treasury technology infrastructures are well-optimised. There are examples where only top-line bank connectivity has been reached or only partial TMS functionality is being used.

Future actions: Keeping a close focus on treasury technology and its possibilities is more important than ever. New technologies and connectivity models beckon, and the potential is hugely in the treasurer’s favour. Advances such as machine learning and application programming interfaces will drive increased functionality and connectivity: 100% visibility is becoming a viable prospect.

4. Prepare for payments innovation

Lessons: this dynamic area has seen huge amounts of activity and investment and is one that treasurers track very closely.

From infrastructure projects like the Bank of England’s real time gross settlement system to advances in international transfers, from cryptocurrencies to bank-supported fintech developments, the payments ecosystem is enormously diverse.

Data enrichment and transparency remain key themes in the international transfer space. Migration from proprietary data tags to international standards, for instance, is an effort that will bring benefits to treasurers.

The prospect of enriched data moving around payment infrastructures such as the global correspondent banking network will greatly enhance traceability. It comes with a need for treasury technology infrastructures to keep pace with developments, however.

Future actions: Keeping abreast with ways of establishing connectivity with multiple banks or tracking payments as they transit around the globe is imperative. More and better data is coming onstream. Treasurers should ensure their infrastructures are positioned to match.

Final thoughts

Treasurers have performed exceptionally during the crisis, tailoring cash flow forecasting and other working practices to new realities on the ground; pushing ahead with treasury technology upgrades and automation, protecting against evolving risks and looking ahead to the payments innovations that will evolve treasury and finance functions in the future.

Those initiatives now must be pressed home, if treasury functions are to capitalise on the strides they have made.

ACT Cash Management

The 2021 ACT Cash Management Conference, powered by Barclays, was a chance to celebrate what treasurers have achieved over the past year – and to look at future trends in cash management. You can watch all the session replays from the event, plus additional content here.

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