EuroFinance

In the business world, one thing is for certain: change is inevitable. The swift transformation from traditional practices to innovative digital solutions has propelled companies to adapt and evolve. At the 2023 EuroFinance Global Treasury Americas Miami, treasury executives from the Swedish car manufacturer, Volvo and the multinational food company, Kraft Heinz shared their experiences navigating this digital sea change.

Understanding digitalisation in treasury

In today’s economic landscape, the term ‘digitalisation’ is no longer a mere buzzword; it has evolved into an indispensable business strategy. It refers to the process of leveraging digital technologies to modify business operations and provide new revenue opportunities. 

Digital transformation is reshaping the corporate treasury, as evidenced by experiences at Kraft Heinz. Here, digitalisation has been instrumental in improving analytics and internal decision-making, while also enhancing the company’s understanding of their consumer connections. In treasury operations, digitalisation is seen as a tool for efficiency, helping reduce manual, repetitive tasks. According to Rebecca Hirschboeck, assistant treasurer at Kraft Heinz, the treasury team is encouraged to see such tasks as ‘easy wins’, areas ripe for optimisation through digital means.

Another aspect of digital transformation involves leveraging untapped data within existing systems, a wealth of insights that corporations like Kraft Heinz are learning to mine. Furthermore, digitalisation also influences external relationships with vendors and banks, streamlining operations and freeing up time for strategic undertakings.

Meanwhile, at Volvo Cars, digitalisation has moved beyond a corporate strategy to being the heart of the company. Their aim is to utilise technology to enhance safety, connectivity, sustainability, and, importantly, customer experience.

Aligned with the broader company strategy, the treasury team is also adapting digital tools to streamline financial processes, enhance efficiency, and bolster risk management. One unique challenge lies in navigating the growing connectivity of Volvo cars with the internet and related services. In essence, cars are becoming more than just vehicles; they are nodes in an interconnected data network, necessitating financial solutions, especially when services shift to low-value, recurring subscription models.

From a treasury perspective, digital tools are vital in developing new collection models, aiding reconciliation of e-commerce and subscription flows, and managing the unique risks presented by these evolving revenue streams. A crucial aspect of this transformation is to enhance the customer experience, particularly in the realm of online purchasing.

The treasury team at Volvo is focusing on developing marketplaces, a concept that requires the onboarding of all Volvo dealerships, in order to streamline payments and deliver more value to customers. This innovative model of online marketplaces facilitates the flow of payments, making the purchasing process smoother for the customer while ensuring the Treasury department supports the business with the right product and service.

In essence, the digital transformation of Volvo’s treasury operations is about striking the right balance between internal efficiency and external customer satisfaction, making it an integral part of the company’s overall digitalisation strategy.

Potential pitfalls

However, digitalisation is not a fool-proof process; it carries potential pitfalls. Ouassila Sayd, senior treasury cash manager americas at Volvo Cars shared an instance where a promising AI-based invoice matching solution fell short of expectations despite lengthy and complex implementation. The product, which was expected to automate and enhance the reconciliation process, only achieved a sub-optimal success rate. This experience underscores the importance of in-depth due diligence before adopting new technologies. There’s a need to question vendors, explore potential system touchpoints, and understand the dependencies created by the new product.

“One of our partners advised this to us as a product and in such a scenario you tend to create a lot of dependencies on your vendors from their technology system…I think treasurers need to be aware of such instances.” Sayd told delegates at the conference. 

On a brighter note, Hirschboeck presented a success story in automating their balance sheet hedging program. By consolidating data from multiple ERPs into a data lake and creating a dashboard with Tableau, they managed to streamline their processes, reduce manual work, and have real-time visibility for decision-making. It’s an excellent example of how well-implemented digitalisation can revolutionise business operations.

Ultimately, treasurers agreed that both the business process and treasury aspects of digitalisation offer significant benefits, provided that the decision to adopt new technology is rooted in a clearly identified need and demonstrable ROI. Treasury teams should avoid implementing digitization for its own sake or because it’s the latest trend. Instead, they should focus on how it can solve existing problems, enhance processes, and create long-term value.

Digitalisation is not merely about the adoption of new technology; it’s about the transformation of business practices and strategies. And as companies like Volvo and Kraft Heinz continue to innovate and share their experiences, others can learn and adapt, making the digital landscape a little less daunting for everyone.

Step outside of the day-to-day, benchmark your operations and future-proof your strategy alongside 2,000 senior treasury leaders this September 27th-29th in Barcelona. On the theme of “Navigating a new world,” this year’s agenda will empower treasurers to tackle today’s new and complex challenges and optimise treasury for the new economic cycle. Hear from 150 world-class speakers including treasurers from eBay, JTI, Under Armour, Booking Holdings Inc., Airbus, News Corp, L’Oreal, Anglo American, Dr Martens and many more. Find out more