Treasury Matrix Revolutions
by John Gibbons, EMEA Regional Executive, J.P. Morgan
How did we ever cope without the technology that is so much a part of our everyday lives?
Technology has changed the very fabric of today’s society. In business, visibility and control is a constant need, and for the treasury and finance professional alike, the greater need for visibility is an absolute for the fittest to survive in today’s global tribe of commerce. Like the first human to walk out of the cave, to walk to the ocean, to cross the seas, to reach the moon, humans continually strive to understand more so that they can evolve, which is probably why we are never satisfied with the tools we have and continually suggest (being the gurus on such matters) how technology should be improved.
In various polls conducted this year (e.g., EuroFinance’s Treasury Verdict), it is encouraging that more than half of treasurers seem to be satisfied with their cash forecasting. If you look back to the turn of the decade, many might have thought, whilst pondering the meaning of life, that day would only come when technology had reached its evolution that Keanu Reeves was mastering in The Matrix.
There is no doubt that technology has advanced the ability of obtaining a much better global picture. Will we ever be satisfied, though, and what else can be done? While the customer still has some control over their payment timescale, the collection process will always remain a non-exact science. Many companies have encouraged their customers to move away from paper based payment methods and go the direct debit route by charging extra for non-adoption. Others are simply offering discounts to embrace it – the same principle one might suggest, but with some finer effort in the marketing spin on the latter. Even the politicians are trying to help SMEs to get cash flowing with legislation around payment timeframes. SEPA DD (you didn’t think I’d forget to mention it did you?) certainly increases the reliability of forecasts – if, of course, your customer agrees to adopt it or is too young to know exactly what a cheque is.
It seems to me that banks are playing their role in developing tools to help improve cash management. With the evolution of the internet, technology, and its electronic devices, treasury has evolved and will continue to evolve. Virtual reference numbers that address the age-old difficulty of reconciling low-value receivables is a perfect example. The customer actually directs the payment to a unique collection account number – it’s a number in cyberspace!
The revolution in mobile technology is already prompting many banks to think about what is next? Where does this fit today, but more importantly tomorrow? Let’s not forget that treasury’s DNA survives on visibility and control. Given all the knock-on effects of the global economy, knowing your cash position, at any point in time, is surely crucial going forward, so therefore, a mobile is fast becoming a must too. It seems that the migration to mobile is inevitable, but is the security tight enough? J.P. Morgan for example, has launched voice recognition and gesture technology in its mobile features as an added risk mitigation step. It’s also important to remember that whether using an app, or a browser application, it is essentially a means to access the internet. It’s misleading to think of it as anything other than a messenger, but that messenger needs to deliver information quickly, securely and efficiently. But back to basics is always at the top of one’s mind. How many accounts do you have to reconcile on a daily basis? Why? Do you really need them, or has it just become a way of life? The next challenge for many will be keeping abreast of what’s new in treasury and payments technology, which is almost a full-time job in itself; Cloud is now on most IT meeting agendas, so one must wonder if blue sky thinking will be covered? (Sorry!)
I leave you with something to ponder over the festive season. I don’t need to tell you that the role of the treasurer has significantly expanded over the past five years. More responsibilities including increased risk management techniques are required, yet resources have for the main part remained static, if not reduced. While new technology continues to be rolled out, now is the time to sift through the treasury matrix and eliminate or merge unnecessary duplication, identify any risks and embrace the right technology for it to be the efficient tool it is designed to be. Will not the ancestors of treasury, who only had a twinkle in the eye towards Lotus123 nod their approval that their descendants have evolved as nature expects? Now is the time Because Timing is Everything!