The function and responsibilities of Treasury go beyond only managing cash today

Photo by DigitalCFO Asia, during the DigitalCFO Asia Roundtable with Kyriba on 22nd November 2022

The pandemic has already substantially impacted the Treasury and business in general. Many challenges arose from the realities of a treasury staff being able to work remotely, but they weren’t the only ones; it also necessitated a reevaluation of treasury strategy and a study of how things need to be done in this contemporary setting.

Regarding fintech, corporate treasurers have had a difficult year as they deal with new problems, including cash flow, liquidity, and currency volatility. Treasury has duties beyond just managing cash, but providing the CFO with accurate and timely information can be challenging without the right tools and controls. During the DigitalCFO Asia Executive Roundtable – Accelerating Insights, Action and Growth with Digital Treasury Transformation in collaboration with Kyriba on 22nd November 2023, CFOs and finance leaders had an insightful discussion while sharing their treasury process challenges.

Corporate treasurers have experienced a challenging year pertaining to fintech as they deal with new issues related to cash flow, liquidity, and currency volatility. During the roundtable discussion with Shalini Shukla, Consulting Editor at DigitalCFO Asia and Eugene Chua, Head of Treasury, DTOne, they uncover the top 3 Challenges facing the Fintech industry:

  • Cash Visibility
    • Flying Blind: No single source of truth, minimal automation, no connectivity to banks, and concerns for audit and regulatory requirements eclipsed the challenges of posting errors to the wrong accounts. As banks were added, more fees added up.
  • Risks & Fraud Prevention
    • Operational Risk: $40M at risk per month with burdened by manual processes and required one Treasury team FTE to manage cash positions and consolidate transactions; including manual consolidation of 3,000+ transactions per month from emails, and spreadsheets.
  • Payment Automation
    • Massive Growth: DTOne accelerated growth to $620.3M in 2021 from $273.9M in 2017, adding 11 new product offerings. Banking presence consequently increased from 9 countries to 14 countries. Treasury now manages 122 bank accounts with 27 unique banking partners.

In a survey conducted during the session, we found that instant payments are still one of the main priorities and challenges faced by CFOs and the treasury department. Payment networks, commercial banks, and central banks compete to make payments even faster. This is all very beneficial because timing delays in payments and the information they bring with them wreak havoc on cash predictions and liquidity reserves in addition to introducing risk and uncertainty.

Understanding the attendees’ standpoint during the roundtable discussion, we can see below that most organizations are still in the starting phase of finance transformation while some are already in the ongoing and mature phases.

Steps to take in streamlining treasury operations to improve automation and mitigate operational and regulatory risk

  • Full audit to determine the impacts of accelerated growth against the already high operational risk resulting from legacy processes and systems within the finance structure.
  • Appoint a Treasury team to manage the specialized and strategic functions around cash, liquidity and bank transactions during a rapid growth stage.
  • Set up a small 4-person treasury team to solve The Big Problem, and deliver more value-added services.
  • Take an API-first approach to bank connectivity – demonstrating the best practice and innovation that solved the major problems of scalability, financial controls and strategic liquidity management for the company today and in years to come. (Bank connectivity and consolidation of accounts’ views enabled the team to negotiate a uniform fee schedule across a single banking group despite the account location. With a complete and real-time view of cash, DTOne converted idle cash to investment opportunity – yielding $450,000 per year.)

The treasury team’s responsibility is to gather and produce data for budgeting and cash flow statements, among other things. With the use of Kyriba, the team is not only able to grow as the Company does as needed, but the workflow is also more effective and fewer avoidable human errors are made. In essence, the launch of Kyriba will enable the Treasury team to scale up its network of banking partners and accounts to maintain pace with the expansion of DTOne and stay one step ahead of the competition.