Resources | Treasury Management | January 4, 2024

4 Best Practices for Digital Transformation in Treasury Teams

Digital transformation in treasury isn’t just about finding best-fit software solutions. Here are four other considerations for successful teams.

Digital transformation in treasury isn’t just about finding best-fit software solutions. Here are four other considerations for successful teams.

Corporate treasury is in an era of rapid change. Nearly two-thirds of chief financial officers at large organizations now consider treasurers as part of the C-suite and central to business strategy. Along with this shift, treasurers are experiencing a need for digital transformation. Technologies such as artificial intelligence (AI), advanced data analytics and cloud computing can provide:

  • Efficient treasury processes, enabling teams to focus on more complex analysis and decision-making.
  • Real-time insights that drive more accurate forecasts and risk assessments.
  • A competitive edge over businesses that are slower to adopt digital technologies.
  • Greater compliance with changing regulatory environments.

However, digital transformation in treasury is time-consuming and costly. As a treasury professional, it’s likely that if you’re in the market for new technology, you want to make sure that the implementation is smooth and your investment delivers on its intended outcomes. Here are some best practices to consider as you plan treasury digital transformation and roll out solutions.

4 best practices for treasury digital transformation

 1. Create a data governance strategy

Data is at the core of treasury innovations such as automated cash flow forecasting. However, it needs to be relevant, accurate, accessible and secure to form a solid foundation.

Your organization most likely already houses an abundance of valuable data. To get the most value from it, you’ll need to implement a data governance strategy that:

  • Ensures data accuracy and accessibility. These are considered huge challenges by nearly 1 out of 4 organizations.
  • Supports treasury’s evolving strategic role by breaking down data silos and enabling easy access to information across departments.

One solution is to ensure that digital transformation involves integrating your treasury management system (TMS) with your organization’s enterprise resource planning (ERP) software. This will give treasurers easier access to the data they need. Your TMS may even need to integrate with multiple ERP systems if these are present due to mergers or if your company is globally distributed.

Data governance is key to eliminating silos, but it’s important to also consider the human element. While software helps connect scattered data, various departments — such as treasury and procurement, for example — must also collaborate and communicate more effectively.

2. Achieve buy-in across the organization

One way to establish better collaboration is to ensure buy-in for your digital transformation effort. This starts with having a well-defined plan and vision (more on this below) with clear benefits for internal stakeholders. Establish how your initiative will make their jobs easier, and have a strategy to communicate this. Some other ways to encourage buy-in include:

  • Assigning someone to advocate for the transformation. Some companies may hire a chief technology officer (CTO) to oversee implementation.
  • Hiring personnel who are highly motivated to learn new technologies and are willing to adapt to change.
  • Integrating digital transformation into your company’s culture — for example, through your mission statements and professional development opportunities.
  • Procuring solutions that are user-friendly, with sufficient training and support resources to encourage adoption and usage.

Remember, a lack of buy-in will slow down and even harm the rollout of digital transformation in treasury. Creating a company culture where change and new technologies are welcomed is necessary for progress.

3. Build momentum with scalable solutions

We know that a first step in treasury’s digital transformation is to evaluate what needs to be changed and create a business case that will support buy-in: What treasury processes will benefit the most from technology upgrades? What other aspects of the organization will benefit? What is the anticipated return on investment (ROI)? And what resources will be needed to support the change?

It can be useful to think both in the short and long term when planning digital transformation. Start with smaller changes that will still have an impact rather than with larger, more complex projects — but also think about your five- to 10-year road map.

Consider solutions that align with your long-term goals while enabling flexibility. This means acquiring technologies that can be easily scaled up or down based on changing requirements. Additionally, anticipate the resources needed for effective scalability over time — such as more employees, support for new devices and apps, or IT infrastructure to keep data safe and secure.

When it comes to the pace of transformation, the most important thing is to maintain momentum, make changes stick and ensure the transformation is delivering real value. According to McKinsey, companies that proactively remove barriers to progress are four times more likely to succeed. The strongest transformation projects typically realize 74% of their full value in the first year.

4. Leverage fintech to drive immediate value

One way to help your initiative hit the ground running is to invest in digital solutions that support your balance sheet. Working capital optimization is identified as a top treasury priority, second only to cash flow forecasting. This need has propelled the growth of supply chain finance (SCF), which helps enterprises fund supplier payments by partnering with a lender — usually a bank.

Fintech companies have emerged with supplier financing solutions that are more flexible than traditional SCF offered by banks. Most notably, bank-led programs often use outdated processes and limit participation from small and mid-tier suppliers.

Fintech solutions such as C2FO’s Dynamic Supplier Finance are easy and efficient to set up. C2FO’s solution also enables you to fund early supplier payments either yourself or through a third-party financing network — whichever makes the most sense for your balance sheet at the time. This flexibility is ideal for realizing quick wins as you ramp up digital transformation and for delivering value within a few months of implementation. For example, Albertsons Companies, a US retailer, was able to launch C2FO in two months and achieve 2.5 times its anticipated returns, including EBITDA improvement, in that time.

The bottom line for treasury digital transformation

Treasury has never been more important for informing business strategy, with digital transformation at the core of this shift. A successful change requires diligent data governance, stakeholder buy-in and investments that support a sustainable pace for your transformation. For many treasurers, technologies that provide immediate value to the balance sheet, such as supplier finance platforms, will prove to be a wise first-line investment.

Learn more about C2FO’s supplier finance solutions.

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