Digitalization 4.0 & Its Effects on Corporate Treasury & Finance

Treasury and finance are being forced to grow and adapt in an ever-changing world. Dr. Daniela Maruhn, VP, Global Customer Success, discusses Treasury 4.0 based both on her experience as a corporate treasurer and her work at Treasury Intelligence Solutions (TIS). TIS is a fintech specializing in Enterprise Payment Optimization (EPO).

We started the discussion by examining the ability and readiness of treasury staff to embrace the changes facing them today. Daniela explained that going back ~15 years, many companies didn’t even have a formal treasury department. This function has evolved from a pure operational job covering low-value-added tasks into a role with high strategic relevance. Today, the Treasurer acts as a business partner to the CFO and CEO, providing recommendations to help the C-level make vital decisions. As noted, this department has evolved into an essential function within finance and not only due to the pressures of the financial crisis.

Daniela believes that treasurers certainly can adapt, but whether or not they are ‘truly equipped’ for change is another question. “Forward-thinking Professionals are making the most of technology and digitalization by implementing globally standardized workflows. This allows both straight-through and fully automated processes.” But Dr. Maruhn also recognizes that not all companies can achieve the same results despite the clear benefits available today. They are each at a different level or stage in their development and optimization journey.

Another clear challenge is melding the enthusiasm of the beginner, who is often a digital native, with the experience of their seniors. Change – even the right kinds of change – can be challenging to fund and also implement. Daniela speaks of the challenge to explain why change and evolution are so significant when everything ‘seems to work just fine’. “There can be the issue of a ‘don’t fix it if it isn’t broken’ culture. However, the velocity of change is enormous and those who don’t go on the digital journey with the right staff, technology, processes, partners, and attitude, may be left behind,” explains Daniela. Other important ingredients include a team with a data-based and data-driven mindset. It is also crucial that treasury is well integrated into the finance function. Breaking down silos in order to access data company-wide, is key for the entire enterprise. This also enhances the ability to collaborate and create meaningful change.

“TIS has developed a new way to support a client’s journey to payment optimization called EPO. This is a perfect framework to take stock of where treasury is today, where it wants to be tomorrow, as well as future aspirations. We have split this journey into four stages of maturity: Isolated, Controlled, Networked and Optimized,” explains Dr. Maruhn. The TIS EPO technology platform supports the EPO layer at the client, combining and synchronizing both processes and data. “This is exactly the ‘equipment’ you need to achieve the next level of digitalization,” states Daniela.

When analyzing a client’s profile, TIS works with five different EPO parameters: Connect, Collaborate, Pay, Analyze, and Improve. Each enterprise can see where they are through the lens of these five capabilities on the scale of Isolated to Optimized. The next step is to do goal setting and milestone planning. TIS supports treasury and finance and other areas such as procurement to benchmark against peers, identify the right products and services, and determine appropriate timelines for action. By following an Enterprise Payment Optimization plan, a company can successfully implement improvements, and the Treasurer can position herself as a change agent in the company.

When asked if the treasury is easier or harder to run today, i.e., higher complexity but better tooling, Daniela admitted that this was difficult to answer. However, she pointed out that the equation is a lot more complex! “A Treasurer has more responsibility, and the risk profile of the job has increased dramatically. So, in essence, it may be easier to achieve transparency, but harder to stay up-to-date technologically while meeting high and demanding expectations.”

As technology moves us in the direction of increased automation and standardization for the more ‘boring’ tasks within treasury, what will be the consequences? Daniela feels that repetitive, manual work will be replaced by more value-adding, strategic functions. “I would describe the shift as moving from being a task-oriented player to a strategic business partner for the C-suite. For example, when it comes to liquidity planning, a tool can give you a proposal based on historical data and artificial intelligence. However, this draft needs to be reviewed and adjusted with human intelligence to allow more accurate financing decisions.” Treasurers are certainly overqualified to do repetitive, operational tasks, so this type of evolution will improve their work-life balance as well.

Digitalization 4.0 is a chance for every treasury and finance department. Daniela recommends that we challenge our mindset and make sure we are ready to embrace change. She feels that we must be bold and open to new technologies so that treasury can indeed revolutionize finance!

4 min read