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AP/AR automation, order to cash and treasury visibility

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In a landscape where precision and speed in financial operations are increasingly crucial, Norsk Hydro’s integration of API technology showcases a strategic pivot towards optimising treasury functions, ensuring real-time data access and enhancing liquidity management.

 

In the realm of treasury management, the journey from traditional banking interfaces to cutting-edge digital solutions marks a pivotal transformation. This narrative is vividly illustrated through the experiences of Norsk Hydro, a global powerhouse in the renewable energy sector, as shared by Erik Snersrud, Global Head of Payments within the group treasury. Norsk Hydro’s foray into API (Application Programming Interface) technology, as detailed at the 2023 EuroFinance International Management, showcases their commitment of treasury teams to innovation.

Embracing change in treasury management

Norsk Hydro, with its expansive operations spanning over 140 locations in approximately 40 countries, faced the quintessential challenges of managing an extensive network of bank accounts and transactions. The organisation’s centralised treasury, undertook a strategic initiative to enhance operational efficiency, governance, and integration with banking partners through technology. This initiative was rooted in a clear vision that recognised cash as a pivotal corporate asset, necessitating a high degree of control, visibility, and agility in its management.

Snersrud details Norsk Hydro’s strategic shift toward embracing API technology, a move aimed at surpassing the limits of traditional banking communications. This transition was not merely an upgrade in their technological infrastructure but a profound shift towards real-time, automated treasury operations that promise greater control over cash and liquidity.

The API transformation

The implementation of a suite of apps from the Fintech partner Findroids ApS on the current Treasury Management System epitomises the core of Norsk Hydro’s API integration efforts. These apps facilitate the direct conversion of bank API messages into camt.053 messages which reuse the same transaction codes as from the ordinary camt.053 messages, thereby streamlining the entire process of bank statement reconciliation. This innovative approach not only ensures the prompt and accurate reflection of transactions within the TMS but also significantly reduces the dependency on end-of-day bank statements, enabling more timely and informed financial decisions.

Perhaps the most striking aspect of this transformation is the ability to construct bank statements based on real-time API data. This capability allows the treasury team to update account balances and process transactions with unprecedented speed, offering a glimpse into the future of treasury operations where real-time data reigns supreme.

Navigating challenges and celebrating successes

The journey towards API integration was not devoid of challenges. As Snersrud shared with delegates at the conference, the path involved meticulous planning, negotiation with banking partners, and a keen focus on aligning bank capabilities with the organisation’s technological framework. The collaboration with banking partners was instrumental in overcoming these hurdles, highlighting the importance of strong corporate-bank partnerships in the digital era.

Beyond the tangible benefits of accelerated transaction processing and enhanced liquidity management, the outcomes of this transformative journey are manifold. Norsk Hydro’s API integration has paved the way for more strategic, data-driven decision-making in its treasury operations. The project also exemplifies how embracing technological innovation can significantly mitigate operational risks and compliance concerns, particularly in the dynamic and often unpredictable global financial landscape.

Looking Forward: the future of treasury innovation

As Norsk Hydro continues to expand its digital transformation initiatives, the insights shared by Snersrud offer valuable lessons for other organisations embarking on similar journeys. The emphasis on quality, automation, and the strategic use of API technology underscores a broader trend in treasury management towards leveraging digital solutions for competitive advantage.