Nik Romano reveals six key areas where CFOs can provide more significant insights through digitised treasury functions.
Treasury has always been the most under-invested function in any business, large or small. That’s what treasury software solution company Kyriba’s managing director, Nik Romano, had to say during a webinar hosted by CFO South Africa. But, in recent years, companies have been pouring more resources into upgrading manual systems in their finance department.
The post-modern CFO role extends beyond number crunching and leading the accounting team. Today’s CFOs of today have to be financial storytellers using insights from big data sets that automate manual functions. More often than not, treasury teams are responsible for gathering, interpreting, and providing that analysis and insight.
“We in treasury are looking at the real scenario. What cash or liquidity do we have available? What are our obligations and needs? What is the current view of the organisation’s liquidity, not the accounting of what may have happened in the past?” said Nik. “It's important to understand cash flows and know how to forecast that information, and to manage that additional leverage that many businesses took on in the past year,” he added.
There are six key areas where CFOs can delve deeper into the company’s books, according to research by the Hackett Group:
- Managing fraud and mitigating risk remains the number one priority in any finance department.
- Performance risk management, including foreign exchange risk and interest rate risk challenges.
- Strategic/operational risk management
- Growth strategy support
- Cost control/reduction
- Strategic decision-making
Digitisation of manual processes began a few years ago with the introduction of ERP systems. But automation within these systems still operates in silos and requires manual processes to connect them.
“ERP systems have wonderful workflow systems around APs, producing invoices, approving items for payments to suppliers, etc. But often, the process ends there, and someone has to take a file to the bank physically,” explained Nik. “These manual processes not only leave a gap potentially for security, but it also disconnects great information about the outflow of funds from the organisation.”.
One of the main benefits of digitising treasury-led operations lies in liquidity performance management. Payments and cash management go hand in hand in any business. The ability to manage bank relationships from a more centralised platform signals a departure from using spreadsheets, emails, and letters to the bank.
“Initiating digital transformation with expansive liquidity performance management can deliver significant value while reducing risks and increasing digital adoption in finance,” said Nik.
But digitising financial systems is not without risk and opens businesses up to cybersecurity threats. Nik says at least 22 percent of Kyriba’s annual revenue goes into developing advanced security systems.
Kyriba teams began developing a fraud mitigation tool before the onset of the pandemic, where companies can design rules and identify fraudulent activity before the money leaves the company. “We accelerated efforts to build machine learning and AI into the product, and over 1,100 clients use it,” said Nik. The program can red flag suspicious activity and notify team members to take a closer look at those activities.
Kyriba has three certified affiliates based in South Africa.