Expanding treasury’s role


Even before the coronavirus crisis, technology’s impact on treasury is growing ever more profound and the tech sector itself is seeing new tools reshape the role and skills of treasury teams and related staff.

by Julian Lewis

Published: 14 April 2020

As reported here recently, traditional industries are harnessing the benefits of tech-savviness in treasury. But engagement is especially strong in tech.

“The world is going there – get on it or get left behind,” summarises Priti Kartik, Corporate Treasurer, Head of Credit, Collections & Data Analytics at Logitech.

Priti Kartik, Head of Global Treasury, Credit & Collections, Logitech

Logitech is emphasising cloud computing, advanced analytics, ML and RPA in its technological reshaping of treasury. It is also partnering with fintechs where they can provide ‘plug and play’ solutions.

Kartik stresses that the company’s engagement with tech in treasury “is still very much a work in progress to where we want to get to”.

While the current crisis is forcing it to focus on risk (notably, country risk, customer credit risk and how best to balance new sales and the timing of AR/collections as requests for extended payment terms increase), it is also using cash flow modelling under different scenarios to understand its inflows and outflows fully.

HP, meanwhile, considers ‘reskilling’ of its team one of the pillars of the major treasury transformation it has been undertaking since its demerger in 2015. This should save it an annual $40m.

The project has involved: implementing SAP Hana alongside multiple APIs and dropping an older treasury management system; adopting Swift for Corporates to gain a precise daily global cash balance and get close to straight-through processing; making substantial use of RPA, with 10 bots running tasks such as balance sheet hedging, FX processing and cash flow gain/loss reporting, and a similar number to follow; centralising tasks like cash flow forecasting, hedging and cash management; and advanced analytics.

Zac Nesper, VP & Assistant Treasurer, HP

“We’re moving away from a transaction model and towards digitization with a focus on digital skills,” explains Zac Nesper, SVP & Global Head of Treasury at HP.

The firm emphasises design training and learning. It recently put the treasury team through a week-long analytics programme on Power BI and the Python programming language, for example.

“We want to go very hard at it and attack this vigorously,” Nesper comments.

Seat at the table

Thanks to dashboards that centralise data previously spread across its ERP system and not always easily accessible, the Logitech treasury team now hopes to “have a seat at the table” in broader areas, Kartik judges. The advanced tools that it is working on will enable it to perform analytics such as correlating sales invoices with collections, credit performance and DSOs or write-offs at the individual customer level versus overall company or regional performance.

“The goal is to show ‘here’s what we’re seeing’ and push the sales teams to be more cognisant,” Kartik explains.

This untraditional role enables treasury to contribute “very much more at the operating level”, she judges. “That’s definitely business-focused and enabling.”

Ultimately, treasury’s adoption of technology has to serve broader corporate strategy, argues Nesper. For example, HP treasury has lowered operational cash balances substantially and achieved greater visibility via a TMS upgrade & Swift connectivity. Coupled with the elimination of over 300 bank accounts and 25 banks, digital transformation has proved a key element in HP’s recently announced strategic and financial value creation plan – helping to see off a takeover bid from Xerox.

Although the circumstances were very different, this is reminiscent of the freeing-up and greater visibility of cash highlighted in Microsoft’s 2019 EuroFinance Award for Mastering Strategic Change.

Similarly at Logitech, treasury has responded to a significant shift in its business model. Traditionally the company sold its products to distributors and retail chains. But after a series of acquisitions (including Astro Gaming and Blue Microphones in 2017 and 2018, respectively) it now sells direct to consumers as well.

Logitech’s treasury partnerships with fintechs have added value in this area. Stripe has solved issues over credit card payments, for example, while C2FO is enabling it to use its significant cash holdings to negotiate discounts with vendors for early payment.

Renamed ‘analysts’

As treasury rapidly adopts new technology tools, the skills it requires of team members to manage and exploit them are shifting in turn. “In the future we’ll be asking, ‘Can they leverage advanced technology and analytics to drive financial strategy?’” anticipates Nesper at HP.

As a result, Logitech’s Kartik disputes that bringing new technology into treasury will inevitably bring redundancies as human tasks are automated. “I’m not worried about reducing headcount at all. We are changing the whole mindset and giving people tasks they never had time to do before,” she comments.

“That’s more fulfilling for them and very powerful for us together.”

Collectors in Kartik’s collections team are asked to see themselves as ‘analysts’. Most have embraced the shift from a classical back-office function and welcomed broadened responsibility.

“Before, if we made a sale they just had to collect. Now I’m asking, ‘what can you as an expert deduce from this data?’”.

RPA relief

New tools like RPA eliminate pain points that can undermine treasury teams’ motivation. Before it implemented bots team members at Logitech had to be in the office by 5am at month-end to upload exchange rates before the new day in China.

Meeting treasury’s appetite for new tools is also bolstering Logitech’s broader technology skills. “We build a lot in-house, which gives training in things like RPA that are new to our IT teams,” Kartik notes.

Logitech is already using bots to match account receivable balances to invoices. This automation, which has reduced the work of several days to seconds, frees team members to focus only on exceptions. A similarly repetitive monthly FX upload also went live recently.

IT and treasury now hope to roll the new RPA capacity out across the company.

Human capability

As the skills it requires alter, is technology changing treasury at a deeper level? Tech treasurers don’t see it that way.

“The principles are the same, though the technology is different,” Nesper judges. Even though the company’s extensive adoption of digital technology has sought “to harness its capabilities with as few human touchpoints as possible”, he still emphasises human capability.

“Treasury is a very technical, fast-moving area involving a lot of disciplines. But your interaction with the toolkit – the human element – remains really critical.”

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