Cash & Liquidity Management

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Results of the EACT Survey Although the EACT Summit unfortunately could not take place this year, 200 treasury professionals from across Europe shared their thoughts on treasury’s role and priorities as part of the EACT survey.

Treasury Insights 2020: Results of the EACT Survey


Although the EACT Summit unfortunately could not take place this year, 200 treasury professionals from across Europe shared their thoughts on treasury’s role and priorities as part of the EACT survey. Survey responses were received between 11 March and 15 April 2020, a period that coincided with the start of Covid-19 lockdown in many locations. Although some participants responded before the official lockdown in their countries, many companies had already implemented measures such as stopping business travel and moving to home working. Markets were also experiencing significant volatility at the start of the survey period and supply chains had been disrupted. Consequently, it would seem fair to assume that most people responded to the survey in the context of crisis-related issues.

 

Executive Summary

  • 200 treasury professionals from across Europe responded to the survey between mid-March and mid-April 2020
  • Cash flow forecasting is the highest priority for treasury, indicated by 55% of respondents, continuing a longer-term theme and reflecting the importance of liquidity management during the crisis
  • 62% use, or plan to use, data analytics, compared with 43% in 2019
  • 35% use, or plan to use, application programming interfaces (APIs) to facilitate integration for on-demand or real-time exchange of transactions or data
  • Just over half (52%) of treasurers are interested in the opportunities to exchange information in real-time information, and 47% in realtime liquidity and real-time payments and collections
  • 37% reported that working capital management (WCM) is a significant priority for treasury, but more than half (56%) indicated that they have neither role nor influence in working capital decisionmaking, although they are responsible for WCM
  • Although treasury centralisation has been a long-term trend, it remains a priority for 28% of respondents. Fragmentation and lack of standardisation across processes and controls, bank relationships and account structures, and technology platforms remain the biggest challenges to centralisation
  • Treasurers are motivated to support their companies’ environmental, social and governance (ESG) agenda, but most of this involvement is at an operational level, such as shifting from manual, paper-based processes (50%), reducing business travel and encouraging home working (41%).


Identifying priorities

Cash flow forecasting was the highest treasury priority for 55% of respondents. This is not surprising bearing in mind that cash and liquidity profiles, supply chains and customer behaviour were already affected by the pandemic before lockdowns were imposed. However, the focus on cash flow forecasting is not a ‘crisis phenomenon’. The issue has consistently appeared at the top of treasurers’ list of priorities, as reflected in the most recent bi-annual PwC Global Treasury Benchmarking Surveys in 2017 and 20191.

Likewise, technology and treasury digitalisation, and working capital management have remained significant priorities. The value of automation and digitalisation has been emphasised by the pandemic, particularly as people rapidly shifted to home working, with manual, paper-based processes becoming all but impossible. Similarly, optimising working capital has become essential, not simply improving individual metrics, e.g. days payable outstanding (DPO) and days sales outstanding (DSO) but a holistic approach to optimise liquidity and increase supply chain resilience2.


Leveraging technologies

Treasurers have always been motivated and engaged by the opportunities to leverage innovative technologies to solve problems and add value to the business in new ways. Even so, there has been a notable jump in treasurers’ current or planned use of new technology capabilities over the past year, a trend that seems likely to have accelerated since the start of the Covid-19 crisis. A significant 62% of respondents noted that they were already using, or intend to leverage, data analytics to create intelligent insights into liquidity and risk dynamics, compared with 43% in 2019. Analytic tools are becoming more widely available in treasury management systems (TMS) and enterprise resource planning (ERP) platforms, as well as specialist solutions. The need for analytics to understand and respond to fast-changing, exceptional market and economic conditions has also been amplified during the crisis.

Likewise, treasurers are increasingly recognising the potential of robotic process automation (RPA) to replace high-volume manual input, and enrich the data on which analytics can be performed. In 2019, 24% of respondents were using RPA, but in 2020, 46% already do so, or are planning to in the short term.

Use of, or interest in, application programming interfaces (APIs) was not covered in previous EACT surveys, but current or planned use of APIs was highlighted by 35% of survey participants this year. In treasury, APIs are increasingly used to enable the real-time exchange of transactions and data between banks and corporates’ TMS or ERP, and to embed banking and payment services into internal or customer platforms.

Artificial intelligence (AI) is the sector of current or planned use of innovation that shows the biggest increase, with a leap from 6% in 2019 to 22% in 2020. AI capabilities are increasingly part of banks’ and technology vendors’ solutions such as predictive analytics, cash flow forecasting, bank account reconciliation and fraud prevention tools.

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