Digital Transformation Can Unlock Treasury's Potential - Here's How!
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Digital transformation is the most important development of the past couple of decades, not only in Finance but across the entire business spectrum. It is opening up new opportunities for business leaders to drive significant efficiencies, and to unlock time and skills that had previously been taken up performing tasks that can now very easily be automated or streamlined using technology.
As we've seen throughout this series, the importance of Treasury has traditionally been overlooked within businesses of every size. In fact, Treasury has enormous potential beyond the assumed boundaries of its current remit, and forward-thinking leaders are using digital transformation to make that real.
The challenge of volume
One of those leaders is Tanya Kuznetsova. Tanya is Treasury Director at Baptist Health Care, based in the US, and has more than 16 years of treasury management experience in a variety of industries around the globe. Most recently, Tanya was with Centric Brands, a multinational fashion and apparel company headquartered in New York. Earlier in her career, she managed treasury affairs of X5 Retail Group, the largest retail company in Russia operating over 17,000 food stores.
Tanya explains that, whether it's retail or healthcare, almost all B2C businesses share the same issue: how do you handle the volume? While B2B firms may have a small number of high-value clients, consumer-facing retailers and service providers tend to be volume businesses - and this poses a challenge for Treasury and other Finance functions.
For Tanya, automation of the transactional and operational sides of the business is crucial in order to keep pace. Indeed, the combination of Treasury innovation, digital technologies, and innovative banking products is a prerequisite for the success of any scalable B2C business.
Tanya suggests that any roadmap for digital transformation should use the cash cycle methodology. Look at the cash cycle within your business, and identify areas for particular focus. Your approach, Tanya says, should be cross-functional, taking in procurement, inventory building, cash collection, and much else. In this way, the scope of the Treasurer's responsibilities cut across the entire business.
Closing the loop
The general principle, Tanya says, is that Treasury-led digital transformation should think of every function or activity as one piece within a whole loop and that success relies on every one of those pieces being successfully automated and interfacing correctly with every other piece. Otherwise, she says, cash gets stuck.
This is similar to Treasury's responsibilities in M&A activities, Tanya explains. In M&A, Treasury should play a major role in the future integration of processes, with the goal being complete control over the flow of cash. This is a challenge in many M&A scenarios, and Treasury's banking relationships and experience are crucial to solving it.
In every function, information has to flow very fast, she says, and this space is particularly receptive to new technologies. Meanwhile FP&A, for example, can leverage digital technologies to improve the quality of data, accessibility of reports, and the time it takes to produce them. Even in businesses that are heavily reliant on cash transactions, digital transformation can still reduce the burden, Tanya says.
Ultimately, she hopes that the modern economy will move away from physical cash entirely. This would, she says, be the ideal outcome for Treasury, and is one of the key reasons why she is excited about the various global Central Bank Digital Currency projects currently in development. But digital transformation can still help ease the burden of physical payments, as she points out.
In markets in which cash is still the predominating payment method, technologies like Smart Safes are hugely important not only for security but also for liquidity, with merchants receiving new balances on their account as soon as cash is received, as opposed to when it is banked.
However, the pace of change in this space is being held back by a lack of focus from the banking industry. Tanya says that most consumer banking customers now have more digital tools than many businesses do, pointing for example to cheque scanning technology. She hopes that banks and other financial institutions focus more on business products, and particularly products designed for midmarket firms. This is the area with the biggest need and highest potential, she says, but is also traditionally the most under-served.
What can I do today?
Tanya gave us some action points for unlocking the potential of Treasury. Here are some things you can do today:
Treasury represents a huge well of untapped potential for businesses of all sizes. By combining digital technology with the knowledge and expertise of Treasury professionals, we can turn the function into a real value creator. How are you approaching digital transformation in your Treasury function? Let me know in the comments.
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This was the fifth article on my series about Treasury. You can read the previous article(s) below. If you would like to be involved in this series and share insights about the latest developments in Treasury, don't hesitate to reach out!
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If you want to know more about what is happening in the wider Finance Function you can read my latest series "Finance Function 4.0". You can read all the articles in the series below.
You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.
All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)
Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)
Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)
Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with close to 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 60.000+ followers.
Attended Yangon. university. Hlaing. 2
3yGood
Commerical Payments and Money Movement Subject Matter Expert
3yGreat job Tanya, always happy to read and hear success stories from you!
Finance Business Partner | Writer | Geek
3yGreat article Tanya & Anders, thanks for sharing. My experience has mostly been at small and medium sized entities but my question is, is there a point of no return for the cash conversion cycle for large firms? It’s supposed to be part of finance’s controls and so I’m curious because years ago, there was a well known example of a great large company but the stakeholders focused on profit and demand, they grew quickly and had multiple investments and products but they underestimated treasury and ultimately they just couldn’t recover. In hindsight, I know it sounds like something finance should have focused on because there will always be warning signs to illiquidity, but I couldn’t help but ask if there is a limit and point of no return to the CCC?