Feb 9th 2022

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6 Factors Changing the Future of Treasury Management

Feb 9th 2022

Supply chain snafus, the pandemic, and climate change add pressure on corporate treasurers to better track cash, monitor and forecast liquidity, and assess financial risk. No wonder 83% of treasury professionals say the value assigned to treasury grew during COVID-19.

Here are 6 forces reshaping treasury management:

#1: Customer & Partner Awareness

Pandemic-related shutdowns and volatility made customer and partner awareness critical to liquidity management. Supply-chain and climate-related disruptions are having similar effects.

  • 86%: Executives who say cash flow and liquidity management was a priority in 2020—more than 2X 2018 responses
  • 103%: Growth in transaction deposits in banks in 2020 vs 6% in 2019

#2: Real-time Data and Tracking

Real-time payments and reporting are helping companies cope with turbulent economic conditions.

  • 73%: Percentage of US demand deposit accounts with access to the Clearing House Real-Time Payments Network
  • 35%: Treasurers who use or plan to use APIs to facilitate integration for real-time data exchange

#3: Payments Automation

Report automation technology is streamlining workflows and facilitating automated payments.

  • 70 billion: Real-time payment transactions processed globally in 2020, up 41% from 2019
  • $6.7 trillion: Estimated value of digital payments in 2021 globally, a 20% increase from 2020

#4: Forecasting Challenges

“Forecasting is probably the greatest source of angst for any treasurer. What was predictable in the past is no longer predictable.” -H. Chip Spiegel, Director of Treasury Solutions, Bank of the West.

  • 75%: Companies had supply disruptions in March 2020
  • 39%: Small businesses that reported delays from domestic suppliers in July

#5: Internal Risk

Treasury risk now includes internal cybersecurity controls for the flow of information. Security measures must include multilayered, risk-based protection.

  • 140%: Increase in data records leaked worldwide in 2020
  • 63%: Percent of cyber incidents caused directly by employees

#6: Communications

Communication have become more vital to customer relationships and business operations in these volatile times.

  • 95%: Treasury professionals who say communication is a critical skill for treasury leadership
  • 52% of treasurers are interested in exchanging information in real-time

Footnotes

1. Customer and Partner Awareness

IBM Institute for Business Value: COVID-19 and The Future of Business
https://www.ibm.com/thought-leadership/institute-business-value/report/covid-19-future-business

Federal Reserve Bank of St. Louis: Banks Navigate Surging Deposits Tepid Loan Activity Since COVID-19 Onset
https://www.stlouisfed.org/on-the-economy/2021/august/banks-navigate-surging-deposits-tepid-loan-activity

2. Real-time Data and Tracking

The Clearing House: The RTP Network
https://www.theclearinghouse.org/payment-systems/rtp/institution

The European Association of Corporate Treasurers: Treasury Insights 2020 -The Results of the EACT Survey
https://eact.eu/articles/covid-treasury-insights-2020-survey/

3. Payments Automation

ACI Worldwide: Global Real-Time Payments Transactions Surge by 41 Percent in 2020 as COVID-19 Pandemic Accelerates Shift to Digital Payments – New ACI Worldwide Research Reveals
https://investor.aciworldwide.com/news-releases/news-release-details/global-real-time-payments-transactions-surge-41-percent-2020

Pymnts.com: A New Approach for Modernizing Payments in Banking
https://www.pymnts.com/study/modernizing-banking-payments-red-hat/

4. Forecasting Challenges

The European Association of Corporate Treasurers: Treasury Insights 2020 -The Results of the EACT Survey
https://eact.eu/articles/covid-treasury-insights-2020-survey/

The U.S. Census Bureau: U.S. Small Businesses Suffer Supply Chain Disruptions
https://www.census.gov/library/stories/2021/08/united-states-small-businesses-suffer-supply-chain-disruptions.html

5. Internal Risk
Association of Corporate Treasurers: Lessons for Cash Management 2021

https://www.treasurers.org/research/cash-management-lessons-2021

Willis Towers Watson: After COVID-19: Cyber and the Coming Remote Work Revolution
https://www.willistowerswatson.com/en-US/Insights/2020/06/after-covid-19-cyber-and-the-coming-remote-work-revolution

6. Communications

Association for Financial Professionals: Strategic Role of Treasury Key Highlights
https://www.marshmclennan.com/content/dam/mmc-web/insights/publications/2020/september/Strategic_Role_of_Treasury_Highlights_final.pdf

The European Association of Corporate Treasurers: Treasury Insights 2020 -The Results of the EACT Survey
https://eact.eu/articles/covid-treasury-insights-2020-survey/

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