Seven Key Findings from the 2023-2024 Treasury Technology Survey

27-09-2023 | Introducing Our 5th Year of Comprehensive Treasury Technology Research

Exploring the World of Treasury & Finance: Introducing the Debut Issue of the TIS Magazine

29-08-2023 | TIS has just launched the first issue of the TIS Magazine, a quarterly publication dedicated to providing extended analysis and expert viewpoints on a broad range of topics within the world of treasury and finance.

APIs as a Game Changer for the Office of the CFO: Expectations vs Reality

20-07-2023 | APIs (Application Programming Interfaces) are regarded by many as the future of connectivity within the fields of finance and treasury.

Reviewing Best Practices for Treasury’s Cash Flow Forecasts

03-07-2023 | Why is Cash Forecasting so Important for Treasury? For as long as corporate treasury has existed, cash and liquidity management have been two of the primary responsibilities entrusted to practitioners.

TIS Clients Unilever, Siemens Gamesa, and TeamViewer Win Five Treasury Technology Awards in H1 2023

28-06-2023 | During the first half of 2023, TIS was thrilled to recognize three of our pinnacle clients for receiving prominent treasury and technology industry awards

Recent Banking Failures Highlight the Importance of a Strategically Diversified Financial Ecosystem for Treasury Groups

27-03-2023 | TIS | treasuryXL | LinkedIn | At-a-Glance: So far in 2023, there have already been several high-profile institutional banking failures including Silicon Valley Bank (SVB) and Signature Bank, as well as the sudden acquisition of Credit Suisse by UBS.

AP, AR & Treasury- Creating Harmony to Control Your Cash Conversion Cycle

21-02-2023 | treasuryXL | TIS | LinkedIn |

Technology is now offering companies of all sizes unprecedented visibility into all accounts payable and accounts receivable and bank account activity to better predict and understand all cash flows. This visibility offers companies the ability to manage accounts payable, accounts receivable and treasury in harmony, not in silos, to optimize their cash conversion cycles.

Source

We will share specific opportunities to leverage AP & AR related business intelligence at your company to impact your company’s bottom line, identify specific opportunities to take more ownership of how and when you make payments, and how and when you get paid, and understand the current and emerging role of automation and APIs in helping companies to take more control of their cash conversion cycles.
Join us to discover insights and specific advice to:
  • Create 360-degree visibility relative to AP and AR related activities and processes
  • Identify and understand drivers of all cash movements
  • Remove silos in AP, AR, and Treasury
  • Improve supplier and customer interactions to empower more control of payments & receipts * Leverage technology to facilitate collaboration between AP, AR and Treasury

2023 Treasury Priorities & Opportunities Survey Results

17-01-2023 | treasuryXL | TIS | LinkedIn |

Now in its 2nd consecutive year, TIS is excited to release the findings from our 2023 Treasury Priorities & Opportunities Survey. Having run throughout the course of Q3-Q4 2022, our research again captured responses from hundreds of U.S. finance and treasury practitioners operating at companies of all sizes and industries. The goal was to capture their perspectives on a range of items including the ongoing adoption and use of finance and treasury technology, as well as upcoming staffing plans, strategic and operational expectations, and overall trends occurring in the space.

Source

This blog serves as a summary overview of the key results and findings from TIS’ 2023 Treasury Priorities & Opportunities Survey. To access the full results and analysis, you can download the extended whitepaper here.

  • Overall Composition of Treasury Operations
  • Treasury Staffing & Professional Development Plans
  • Treasury Technology Investment & Focus
  • Cash Forecasting Preferences & Workflows

This image provides the demographics related to TIS' recent 2023 treasury industry survey.

In total, over 250 practitioners responded to this year’s survey, which consisted of roughly 30 questions. All respondents held roles in either treasury or finance. In addition, all respondents were operating at companies with headquarters in the U.S., but most maintained an active international presence.

In terms of company size, 34% of represented companies had annual revenues of $100M – $1B, and another 34% had $1B – $10B annual revenue. 14% had revenues of over $10 billion, while 18% were under $100mm.

Regarding industry representation, construction and manufacturing firms accounted for over 27% of all respondents. Companies from the software, education, insurance, retail, and automotive sectors collectively accounted for another 40%.

In aggregate, our 2023 research initiatives are representative of an appropriately diverse spread of treasury and finance practitioners from a variety of company sizes and industries.

 

Treasury Responsibilities Increase as Staffing & Technology Investments Remain High 

The findings from our 2023 research highlighted that despite strong economic headwinds and market uncertainty, a significant number of treasury teams are still expecting to add more staff and adopt new technologies in the year ahead. In fact, while 48% of teams expected to add more staff, only 3% planned to reduce their headcount. Similarly, over 50% of respondents plan to invest in new cash management and payments-related technologies.

This should be taken as generally reassuring news for practitioners, especially given the wide-ranging budget and staffing cuts that have occurred within many U.S. companies and institutions in the past few months. However, these new technology and staffing additions are also being coupled with a new set of responsibilities and expectations from business leaders that may place greater strain on practitioners. These heightened expectations were clearly evident in our research, with 77% of practitioners indicating their list of responsibilities would increase in 2023, while just 2% believed their workload would be reduced.

Regarding the nature of these new responsibilities, it appears that many treasury teams are being relied upon to execute and contribute towards more “strategic” internal functions. Based on the data, 57% of practitioners indicated that the strategic role of their treasury group would expand in 2023, while just 4% indicated a decrease. Going a step further, when asked whether treasury was viewed as more “operational” or “strategic” by management, practitioners were evenly split in their perspectives at 48% strategic and 52% operational, respectively.

Treasury's strategic impact is projected to grow in 2023 based on recent industry survey data.

Looking deeper into the growing influence and responsibility of treasury, another interesting finding was that most treasury teams seemed to exert heavy control over their company’s AP and AR operations, either directly or indirectly. On average, 69% and 67% of treasury groups maintained some level of control over these operations, with little deviation between companies of different sizes and industries.

 

Cash Forecasting is a Top Priority for Treasury in 2023 

Although cash management and forecasting operations have long-been standard treasury responsibilities, data shows that practitioners have been placing an even greater focus on these operations over the past year.

Since early 2022, several major U.S. corporate treasury studies including AFP’s 2022 Strategic Role of Treasury Survey and Strategic Treasurer’s 2021 Treasury Perspectives Survey saw cash management, forecasting, and working capital projects ranked as top priorities for treasury teams. Our 2023 research corroborated these results with data showing cash management technology being the top priority for new software investments over the next year. In addition, cash management skillsets were listed as the most emphasized area of professional development focus for treasury teams in 2023.

Turning to cash forecasting, one primary focus of our research was learning more about the various forecasting workflows and strategies leveraged by treasury groups and companies of different sizes and industries. At a high level, we found that nearly half of survey respondents used a TMS to produce cash forecasts, with 20% leveraging an ERP and nearly 30% relying on Excel Spreadsheets. While Excel is still used predominantly by smaller teams, the use of TMS and ERP products was much more popular for companies with $500mm+ in annual revenue.

Cash forecasting trends for treasury in 2023 based on company size.

Regarding the preferred forecast horizon, 27% of teams focused on monthly forecasts, while 38% were prioritizing weekly analysis and 25% daily. Generally, smaller companies were only half as likely to conduct daily forecasts compared to larger firms, but 2x more likely to conduct quarterly forecasts. On the other hand, larger firms were more likely to conduct forecasts across numerous time periods including daily, weekly, and monthly. In aggregate, weekly forecasts were the most popular analysis period across all sizes and industries.

As a final point on forecasting and in-line with the broader digitalization shift that has been occurring in treasury for years, the top priority for practitioners when improving their forecast process revolved around either migrating away from legacy Excel-based processes or upgrading their existing software to achieve greater accuracy and automation.

To learn more about this research and for extended results and analysis, download the full whitepaper here. You can also watch our recent results webinar that features commentary on the key survey themes by a panel of industry experts.


3 Ways Treasury Can Save Money & Boost Revenue in 2023

29-12-2022 | treasuryXL | TIS | LinkedIn |

As 2023 approaches, many treasury teams are actively evaluating their operations to identify areas in need of improvement during the year ahead. As these analyses are performed, TIS has compiled a short list of projects that treasury should consider undertaking in order to save costs, boost revenue, and drive further efficiency for their companies.

Source

This blog serves as a precursor to TIS’ recent whitepaper, 5 Ways Treasury Can Save Money & Boost Revenue in 2023. You can download the full whitepaper using this link to review the full list of strategies and tips.

Introduction

Given their position at the helm of global cash, payments, and working capital activity, modern treasury teams play a vital role in controlling the various operational, financial, and technological costs that impact their companies. From monitoring and reducing banking and transaction fees to preventing payments fraud, managing daily liquidity, optimizing working capital, and developing short-term debt or investment strategies, today’s treasury groups are often in the ideal position to analyze their company’s cash flows and make improvements to boost revenue or save costs.

However, because most treasury teams have a relatively small headcount and are tasked with an ever-growing list of responsibilities, it is critical that practitioners maximize their available resources and focus on projects that will have largest impact on their company. This is especially true in today’s volatile economic environment, where cutting costs and maximizing revenue is more important than ever.

Given this context, it is likely that treasury groups will be seeking to undertake a variety of cost-savings or revenue-boosting projects in the months and years ahead. In-line with these expectations, this blog will highlight three strategic ways in which treasury teams can have a positive impact on their company’s bottom line in 2023. For extended analysis, you can also download our full whitepaper for additional strategies and tips.

  1. Rationalize Your Bank Partner & Account Landscape
  2. Simplify & Streamline Your Back-Office Technology Stack
  3. Deploy Payment Smart-Routing Tools for Cross-Border & Domestic Transactions
  4. Strengthen Your Treasury Security to Limit Losses from Fraud (See Whitepaper)
  5. Optimize Cash & Working Capital to Improve Short-Term Debt & Investments (See Whitepaper)

1. Rationalize Your Bank Partner & Account Landscape 

Today, it is common for global companies to work with numerous banks across different regions and entities. In fact, a 2022 TIS survey of over 250 treasury practitioners found that 40%+ of companies were actively using more than 10 banks globally. But while organizations obviously need a certain number of bank relationships to accommodate their geographical and operational scale, a larger than necessary group can result in higher costs, fragmented visibility, siloed workflows, and obscure points of communication.

For some treasuries, rationalizing bank relationships can be an effective way of reducing costs. By concentrating on a smaller number of relationships with a select group of core institutions, companies may be in a better position to negotiate more favorable pricing for their banking services. A more streamlined relationship structure can also improve operational efficiency by limiting the number of banking systems and connections required, reducing annual maintenance or service costs, and increasing transparency over all the related operations.

Data showing the complexity of treasury's global bank account structures.

In addition to analyzing each bank relationship, it’s also important to consider the number of bank accounts in use. Because the number of accounts can easily become inflated over time through organic growth and M&A activity, many multinational corporations end up with more accounts than they want or technically need. In 2021, a Strategic Treasurer survey showcased that nearly 40% of companies used more than 100 bank accounts. Furthermore, 38% of companies indicated the number of bank accounts they used were increasing, and 20% of practitioners had identified previously unknown bank accounts attached to their company within the past 2 years (2019-21).

In the long run, companies with excess numbers of accounts that have not been closely monitored will be confronted with excess manual labor, inefficient cash management structures, and higher-than-necessary costs. It will also be much more difficult for treasurers to maintain visibility and control over the company’s cash and to detect fraud or compliance exposures.

Given these challenges, a streamlined bank account structure can not only reduce bank account fees, but also help to minimize idle cash balances and support more efficient cash management. As such, treasurers may be able to save money by rationalizing both the number of banks and accounts that they maintain.

 

2. Simplify & Streamline Your Back-Office Technology Stack

Similar to how a company’s banking structure grows more complex over time, so too does the back-office technology structure that treasury groups rely on to manage operations.

While modern-day treasury software is undeniably critical for today’s practitioners to automate and streamline their processes, such solutions are not always implemented or integrated in an efficient manner. Sometimes the configuration is never completed, or various features are inactive and not functioning as intended. In the long run, a common result of company growth is to wind up with a large assortment of spreadsheets, banking portals, ERPs, and TMS solutions that are collectively causing redundant and fragmented workflows, overly manual processes, a lack of integration or interoperability, and unnecessary subscription and maintenance costs.

In recent years, industry data has demonstrated the effect that unnecessary technology complexity can have on companies. In fact, data from Strategic Treasurer found that 3 out of 5 companies that purchased a TMS were using less than 80% of the functionality they implemented. In addition, one of TIS’ recent research initiatives found that 38% of treasury and finance respondents were using more than 15 different treasury, vendor or payment systems – with two thirds using more than five systems. With this amount of diverse technology in place, it’s easy to see how processes can become inefficient and inconsistent, and how data can become siloed and difficult to consolidate.

Data showcasing the complexity of treasury technology.

In order to promote greater automation and transparency and to reduce overall technology costs, treasury teams with an excess number of systems should strongly consider a consolidation project. A simpler and more unified technology structure can result in more efficient processes, greater transparency, and improved decision-making as a result of more accurate information. Simplifying treasury’s technology stack can also result in other benefits such as improved reporting, reduced IT reliance, more secure fraud controls, and more standardized compliance management.

 

3. Deploy Payment Smart-Routing Tools for Cross-Border & Domestic Transactions

Considering that many companies today operate across multiple countries and regions, it makes sense that treasury teams are managing payments using a broad variety of currencies, channels, and methods. For example, a true multinational company will likely leverage ACH, check, wire, cards, and a variety of other options to send and receive payments. They will also probably use a diverse range of banking channels and financial messaging formats to transmit payments data, along with an equally diverse number of integration and service-level partners to assist with the process.

So how can treasury simplify these payment workflows?

When it comes to cross-border payments, one helpful consideration would be to execute transactions at the local level (i.e. in local currency), rather than relying on traditional correspondent banking or FX conversion services. Because many cross-border payment networks charge exorbitant fees for swapping currencies and delivering funds, companies that regularly transfer money between different countries and regions could save substantially by leveraging a more specialized service.

On the other end of the spectrum, there are also plentiful opportunities to optimize the use of domestic payment methods. In the U.S. for example, switching from physical checks (still a common instrument) to ACH can save time and effort, while other options like virtual cards may offer rebate or cash-back rewards. For companies that have a large network of suppliers and partners in the U.S., joining a rebate program or converting paper-based payments to ACH and virtual cards can provide substantial efficiencies and cost-savings, especially when such projects are executed at scale.

How TIS helps companies streamline domestic ACH, check, and card payments.

Final Thoughts: How Can TIS Help Treasury Unlock New Cost-Savings Opportunities? 

In today’s uncertain and volatile economy, it’s essential that companies take every opportunity to minimize costs and maximize revenue. As we’ve seen with treasury, there are numerous areas where cost-savings and revenue-generation projects can be pursued. Whether it’s through bank and technology rationalizations or improved payments execution and liquidity management strategies, treasury teams have numerous options at their disposal to impact the bottom line. Moreover, the benefits associated with many of these projects often create efficiencies outside of pure costs savings and include enhanced workflow automation, streamlined data management, and the elimination of error-prone, non-compliant, and fraud-exposed processes.

For organizations interested in pursuing any of these strategies or projects further, we strongly encourage you to consider how the TIS solution can help foster the desired outcomes.

At a high level, TIS helps organizations simplify and streamline their global payments and liquidity management operations. Our cloud-based platform empowers businesses to optimize critical functions surrounding cross-border and domestic payments, bank connectivity, cash forecasting, fraud prevention, payment compliance, and more.

Today, corporations, non-profits, and institutions all leverage TIS to transform how they connect with global banks and financial systems, collaborate on payment processes, execute outbound payments, analyze cash flow & compliance data, and promote working capital efficiency. Ultimately, the TIS technology platform enables businesses to improve operational efficiency, lower risk, manage liquidity, gain strategic advantage – and achieve enterprise payment optimization.

For more insight on ways treasury can save money and boost revenue in 2023, download our full whitepaper.


Understanding the Importance of Working Capital for Treasury

27-10-2022 | treasuryXL | TIS | LinkedIn |

Working capital is a critical consideration for any business – particularly in an uncertain economic environment. If a company’s working capital is not managed effectively, the company may struggle to meet its obligations, secure the right level of funding, or invest in growth. But for many companies, gaining full visibility over working capital is often a difficult task – especially given how it is an activity that spans many different parts of the business.

Going a step further, recent economic and geopolitical events from the past couple of years have presented even more challenges to working capital management. In fact, PwC’s Working Capital Study 21/22 found that net working capital days reached a five-year high in 2020, “driven by the shock and uncertainty of the COVID 19 pandemic.” More recently, the 2022 AFP Strategic Role of Treasury Survey identified working capital improvements as one of the two most challenging tasks faced by treasury professionals today.

In order to manage working capital effectively, companies first need to understand it – you can’t manage what you can’t measure, as the saying goes. With this in mind, let’s dive a bit deeper into the core dynamics of working capital and the subsequent implications for treasury and finance.

What is Working Capital Anyway?

Simply put, working capital is the cash that businesses can use to meet their day-to-day financial obligations, such as for paying rent, employee salaries, and supplier invoices. Calculated as the difference between a firm’s current assets and its current liabilities, a strong working capital position is essential to the smooth running of any company. For this reason, working capital is often described as the lifeblood of a business.

Working capital can be measured using a variety of metrics. The following concepts are key when it comes to understanding the component parts of the working capital cycle:

 

 

  1. Days Sales Outstanding (DSO) measures how long it takes a company to collect cash from customers and clients (i.e. accounts receivable).
  2. Days Payables Outstanding (DPO) measures how long the company takes to pay its suppliers (i.e. accounts payable).
  3. Days Inventory Outstanding (DIO) measures how quickly the company sells its inventory.
  4. Cash Conversion Cycle (CCC) measures how long the company takes to convert the cash spent on raw materials into sales. This is calculated as follows: CCC = DSO + DIO – DPO.

As a rule of thumb, the shorter a company’s cash conversion cycle, the more efficiently it is using its working capital – although typical cash conversion cycle times can vary considerably between different industries, world regions, and company sizes. Any company’s cash conversion cycle can also be adjusted by optimizing one or more of the above components: companies can speed up customer collections, delay/expedite payments to suppliers, and/or alter the timeframe that cash is tied up in inventory.


You might also like: What is Working Capital Management, examples of typical acitivties and frequently asked questions; Explained by treasuryXL experts


How Does Working Capital Impact Treasury & Finance?

Treasury and finance teams have an important role to play in optimizing their company’s working capital.  Working capital is critical to a company’s financial health: if the business doesn’t have enough cash readily available, it may struggle to pay its obligations on time. It may also seek more external financing than is really needed or may lack the funds needed to invest in innovation or business growth.

In order to effectively manage these cash inflows and outflows, treasury must not only have an accurate and timely view of their “current” working capital status, but they must also have a grip on future cash flows as well. This means that treasury must be proactive in developing cash forecasts that reflect anticipated changes in working capital, including deviations in supplier invoicing or payment behavior, as well as changes to the level of planned spend by procurement and other internal departments.

By working with other departments such as procurement, AP, and AR, the treasury team is well placed to drive improvements to the cash conversion cycle and unlock the company’s working capital. Because treasury typically seeks to maintain global visibility and control over cash positions, payments activity, and general financial workflows, they are in the perfect position to evaluate and influence high-level working capital decisions. For this reason, treasury is sometimes referred to as the “steward” of working capital internally.

However, there are a variety of hurdles that can negatively impact treasury’s view of, and control over, working capital.

 

Challenges in Managing Working Capital

While the importance of effective working capital management is clear, there are a number of reasons why this can be a challenge:

 

 

Disparate Data Sources: By its nature, managing working capital means optimizing activities that span different departments within the organization, including accounts payable (AP), accounts receivable (AR) and procurement, as well as treasury and finance. Working capital needs to be managed holistically, with access to data from these different parts of the business – but this can be constrained by siloes and disparate systems and data sources.

Lack of Alignment & Communication: Effective working capital management can be held back by a lack of awareness or competing priorities across different parts of the business. Because there are a range of departments that need to be on the same page in order to drive working capital optimization, it can be difficult to align the KPIs and drivers of each department to achieve a cohesive strategy. For this reason, a strong focus on working capital is needed from senior management in order to ensure a consistent approach across the organization.

Global Operational Complexity: Payment practices, vendor or customer behavior, and internal business models can vary considerably across different countries and regions, which can make it difficult to manage working capital consistently at a global level.

Supply Chain Relationships: The relationship a company maintains with its vendors and suppliers within the supply chain can have a massive impact on working capital. For example, companies frequently adjust their working capital position by either reducing or extending the time they take to pay invoices to suppliers. However, these strategies can have an adverse impact on vendor relationships, especially if companies choose to delay payment as long as possible. As such, working capital strategies that focus on altering vendor invoicing or payment terms should always be treated carefully.

 

How Does TIS Help Treasury Manage Working Capital?

In order to drive improvements to working capital, treasury teams first need full visibility over their company’s global cash, payments, and invoicing activity. As noted above, obtaining this data in an accurate and timely manner presents a major challenge for most companies, as does the task of effectively analyzing and leveraging it.

In order to simplify these tasks for treasury, TIS recently launched a new solution, TIS Working Capital Insights, which provides companies with 360-degree visibility over their core working capital metrics and KPIs.

 

 

With this suite of capabilities, organizations can seamlessly integrate their ERPs and corresponding AP and AR data with our solution in order to review payment terms and behavior for vendors and customers, analyze invoice and billing activity, and measure all elements related to their net working capital status and cash conversion cycle.

As TIS enables clients to aggregate and classify their data, users can evaluate their metrics globally or granularly according to specific entities, regions, or customers and suppliers. Users can also leverage TIS’ visual dashboards for intuitive reporting and refine their analyses by any timeframe to view activity and cash flows through customizable and flexible parameters.

By leveraging these tools in conjunction with TIS’ other liquidity and payment management solutions, organizations can access all data and information related to their global cash balances, payment statuses, and broader working capital operations for the entire company. The result is total visibility and control over working capital, and a much easier workflow for identifying the best strategies to optimize it.

For more information about TIS Working Capital solutions, download the full factsheet or request to speak with one of our experts!