You have completed the necessary legwork and are prepared to propose a treasury management system (TMS) to your CFO. But are you ready to explain the value a TMS will provide your CFO? In this blog, which is part of our Value Engineering series, we will explore why treasury should focus on risk management when building the business case for a TMS.

By Kyriba Value Engineering, Ron Stott


Alleviating Risks with Treasury Software

A CFO, along with the CEO, communicates with shareholders, security analysts, and, if the company is private, the investors/owners. This communication affects the confidence of all stakeholders in the company’s management. And nothing erodes investors’ and shareholders’ confidence more than surprises.

Unexpected losses, higher-than-expected borrowing and other KPIs have one thing in common—they can take shareholders and investors by surprise. Getting in front of any changes that will negatively affect investor expectations is top priority for your CFO, and addressing those risks should be the focus of your TMS proposal.

Keys Risks that CFOs Need to Address

There are three areas of risks that concern CFOs, and the right TMS can mitigate them.

Risk #1: The current volatile geopolitical and economic environment. Having certainty of your financial strength and in your analysis is critical to build and retain investors’ confidence. In addition, an organization needs to have agility to act quickly as conditions change. Focus your conversation on your CFO’s interests—forecast accuracy, fast revisions to the forecast data, and multi-scenario comparisons using the latest data. Is your current process accurate? Does it allow you to be agile enough to assess changes in assumptions and verify liquidity and credit needs under multiple scenarios? Improving the flexibility, accuracy, and assurance of your forecast is necessary to react quickly and to have the confidence in the figures reflected and provided to investors.

Risk #2: Financial losses from cybercrime. Accelerated by the COVID-19 shift to more remote work, the risk of access to critical corporate systems by criminals has exploded. Ransomware, phishing and breaches of critical personal data make the headlines nearly every day. The sudden emergence of AI tools such as ChatGPT into the marketplace has created a stir, proving the ease of mimicking the style of a CEO or CFO. This technique is commonly used in business email compromise (BEC) scams to manipulate employees into believing they are receiving instructions from an executive to initiate a transaction outside of normal protocol. This has amplified CFOs’ concerns that more frequent and successful fraud attempts are likely.

Furthermore, the cost of a successful attack is often far greater than any actual direct financial theft. Reputational loss affects future business growth and can amount to millions of dollars in lost sales. The investigation and remediation costs to identify and prevent repeat incidents can far outweigh the direct loss of funds. Explaining such an attack to investors, customers and the authorities is detrimental to the company and the career of the CFO.

If your existing TMS solution does not offer enhanced data encryption, multifactor identification and systematic controls to prevent unauthorized access to your data and accounts and minimize points of access, it is time to propose a TMS that enhances your control environment.

Risk #3: Business continuity. The ‘Great Resignation’ effect triggered from COVID-19 has increased early retirements, resignations to relocate to more desirable locations, and dissatisfaction with perceived career opportunities.

Another recent trend in the limelight is ‘quiet quitting,’ which refers to employees not resigning from their positions, but doing the bare minimum to not be terminated. In an environment where unemployment is well below the natural level, the tight job market makes employers more reluctant to terminate poor-performing workers.

These employment trends reflect worker dissatisfaction. A satisfied workforce and low turnover are critical to CFOs. High turnover leads to excessive costs for recruiting and training new workers, often at higher wages. And the turnover can result in omissions and errors in business processes, which can result in incidents leading to material impacts on a company, such as a missed bond payment that creates a default.

Increased turnover can also leave the company with fewer staff members performing the same level of work. A lack of automation can result in employee frustration from a perceived lack of tools needed to perform, which can lead to longer hours and a desire to search for employment where they have tools to simplify their jobs. A TMS that will improve the work-life balance is critical for CFOs today.

Putting the Spotlight on Risk

As you assess your existing treasury processes, focus on the risks and the potential consequences if they are not addressed. That way, when it comes time to discuss a potential treasury software implementation with your CFO, you’ll be able to show how a TMS can mitigate those risks and position the organization for greater success.