Treasurers Forge a ‘Holistic’ View of Firms’ Financial and Technological Health

As credit becomes more expensive, businesses need to examine how they manage working capital — and how technology can help them do so.

Ron Chakravarti, global head of client advisory, treasury and trade solutions at Citi, told Karen Webster that treasurers can help break down the silos between far-flung accounts and various departments — creating a single, unified view of the financial health of the enterprise itself. Along the way, he said, treasury operations need to be supported (and remain a source of investment) through all cycles.

“These are not bean counters sitting in the corner just making sure that commercial paper is issued and accounts funded,” said Chakravarti of treasurers. “They have a perspective that’s critical to the firm.”

The treasury team is critical in identifying and mitigating risks, and with the right technology and organizational backing — call it “buy-in” from staff and executives — they can help their organizations achieve long-term success in an increasingly complex and competitive global marketplace. Treasury helps to lay the foundation and financial pipes that a business runs upon.

“What you want to have happen as the business expands is adopt the principles that you put in place and build up the infrastructure that supports them … rather than running behind and adapting” to changes in the environment, Chakravarti said.

A Unique Vantage Point

The treasurer sits at a unique intersection between financial markets and a range of tools that can be leveraged to receive the proceeds of sales, to pay suppliers and employees and manage foreign exchange. And at that intersection, they can continue the investments in people, technology and resources that accelerated during the pandemic when the cost of capital was low. In doing so, they can forge forward-looking analyses that are strategic rather than reactive.

Technology ties together the organizational philosophy and structures inherent within a firm, Chakravarti said. The more adept the technology, the more that can be done with the technology itself. Automation, he added, takes away the burden of data entry and repetitive tasks.

Real-time payments — whether already being embraced or on the near-term roadmap — have also had a significant impact on treasury management. Cash management practices and corporate technologies (and their banks’ technologies) are all being “pushed” toward adopting, and adapting, to systems to cope with the demands of real-time data flows. Getting there involves having a strong application programming interface (API) strategy and bringing in trusted partners and providers to make the journey toward real-time visibility easier.

“If you accept the premise that the best-run businesses are process dependent and rely on automation, then you need to have a planning function that is working within the business,” he said.

That planning function needs to extend across all departments, from payments to sales, building a culture of “joint accountability,” he added. Done well, automation can help free teams up to think long term and develop contingency plans.

Corporate governance and the finance function are becoming more important topics in the boardroom due to banking turmoil, cyber threats and volatility in the macroeconomic environment, Chakravarti said.

“Governance and risk management are really much more holistic” than they’ve been before, especially as multinational companies have dispersed teams operating in different countries and jurisdictions around the globe, he explained.

“Now, if I have all of the data about all of my suppliers around the world that I’m paying instead of region by region, country by country and episodically, I can really think about where they are in terms of their resilience and sustainability, and what I am going to do about it,” he said. “Everything from ‘who do I work with as partners’ all the way through to the pricing that they’re charging me to ‘how can I support them in various ways through various sustainability programs?’”

Generative artificial intelligence (AI) is one such technology that will have a positive impact on those data collection and analysis processes and will bring new regulatory considerations to be figured out.

“The productivity enhancements of adapting tools to specific data sets within a company are enormous, making it an exciting journey to see how technology will change the future,” said Chakravarti.

However, there are also concerns about the black-box nature of generative AI and the potential for false results, data privacy and regulatory considerations that need to be addressed.

By staying ahead of the curve and embracing new technologies and approaches to risk management, treasury teams can help their organizations achieve long-term success in an increasingly complex and competitive global marketplace.

Chakravarti emphasized the need for treasurers to “come in and show the value they’re creating and make sure that they’re really delivering their value to the company and not just when crises happen.”