Benchmarking Treasury for Shareholder Value

9 Benchmarking Treasury for Shareholder Value Furthermore, 91% of respondents use cash flow forecasting, which can provide visibility into future aggregate cash positions across currencies and can be invaluable in helping companies to identify natural offsets and opportunities for internal hedging. Somewhat surprisingly, given the importance placed on effective cash flow forecasting, 72% of survey respondents reported that inputs are compiled manually, possibly reflecting underlying inadequate or outdated infrastructure (Figure 12) . Quality and availability of data a persistent challenge While some clients are already looking at the potential benefits of AI and ML, others clearly need to rapidly address basic TMS and ERP connectivity and improve the quality and availability of data. Specifically, in order to improve forecasting accuracy, corporates must first understand the forecasting error, then once the source is identified, steps can be taken to reduce and remedy the error. Forecasting continues to be a major focus for corporates — it was selected as the top priority by 44% of respondents who attended the Citi hosted “Top Treasury Priorities 2019” webinar — suggesting that many of these challenges will be addressed in the coming years. “Managing and reducing forecasting error will be a core key performance indicator for many leading global treasuries in next three to five years.” — American Treasurer Conclusion: Getting the basics right is a prerequisite for innovation Despite continuing hype over emerging technologies such as AI, ML and blockchain and the real benefits that they can deliver to treasury experimentation and deployment of new innovations are not yet treasury’s primary focus. Instead, the Citi Treasury Diagnostics survey shows that many corporates appear to be ensuring effective deployment of existing proven technologies. However, getting the fundamentals right and leveraging innovation are not mutually exclusive. They are interdependent. Some companies have commenced the journey to remedy their fragmented technology and data landscape as a prerequisite to embracing predictive and prescriptive analytics in treasury. Others are naturally benefiting from emerging technology opportunities through scheduled upgrade of incumbent technology. Further insights into the responses of treasury technology vendors can be found in our recent collaborative “The Future of Corporate Treasury” white paper. Corporate treasury management is at the critical juncture in terms of balancing proven technology with the need to adapt emerging technologies that will deliver actionable intelligence and predictive analytics. As the survey points out, identifying what programs to invest in along with cost and integration of technologies will be major challenges to overcome. As new treasury technologies come to market, corporates will want established partners to advise them on delivering the latest solutions that will help them drive treasury transformation in their organizations. In conclusion, against an uncertain global environment with increased market volatility, corporate treasurers face many challenges around visibility, efficiency and controls. Emerging technology and solutions are accelerating the centralization and digitization of business models, presenting a huge opportunity for the treasury function to reinvent itself successfully as a strategic advisor to their core business in this ever changing landscape. Forecasting Methodology Figure 12: Forecasting: A largely people-intensive process Manual Input Forecast of collections Forecast of payables Automated from TMS/ERP Statistical analysis of past patterns Other 72% 44% 35% 34% 9% 32%