From Cost to Profit Center: How Banks Can Flip Treasury Management

Automation is revolutionizing treasury services. With a nuanced view of cash flow and opportunities, CFOs finally have the ability to run their treasury like a bank.

Treasury management has grown increasingly complex over the last decade. The task once consisted of bank selection, reconciling statements, and managing daily transactions. Today, it focuses more on finance, risk assessment and mitigation, and ever-evolving banking and governmental regulations.

As the job of a CFO or treasury manager changes, so do the tools they use. Automation already takes care of many of the tasks that once took up most of a treasury manager’s day, and it’s poised to take on today’s treasury tasks next. 

Particularly when it comes to cash management, technology already exists to monitor and optimize cash flow, predict future liquidity, and even enable better corporate finance strategies. Treasury management systems like Kyriba lure CFOs away from bank-provided treasury management services with attractive solutions like process automation, even if those systems are still linked to the customer’s existing bank account.

“Banks that offer treasury management services are empowered to better understand the unique processes, cultures, and needs of each individual business,” FVC Bank explains. To offer competitive services, however, they need to leverage modern technology.

The Challenges of Today’s Treasury Manager

In addition to keeping up with regulations and mitigating risk, CFOs and others managing treasuries today have to deal with:

  • Manual processes: Not only are tasks completed by hand, but there are often a dozen or more steps from invoicing to reporting. Many of these steps are also paper-based, leading to the next problem—

  • Lack of detailed reporting: Paper-based processes make it difficult or even impossible to get the kind of granular data treasury managers need to accurately predict cash flow and liquidity. The data they do have access to is also often aged, because it’s been tied up in outdated workflows.

  • Addressing errors and other issues: Manual reconciliation leaves room for error, which can lead to chargebacks, delayed payments, and friction with vendors and customers. Cross-border payment situations also require extra attention. Handling these situations takes time and resources.

  • Determining ideal payment dates and types: Based on cash flow, the cost of using each payment type, vendor/customer payment preference, and, in some cases, discounts for early payment, there are many considerations that go into deciding when and how to pay each invoice.

When you consider the manpower, time, and fees associated with handling these processes and issues, treasury management comes at considerable cost and, ultimately, reduced working capital. Fortunately, digital solutions that leverage automation algorithms can address all of these issues, cutting costs and possibly even generating profit.

A well-designed treasury management system automates reconciliation, uploading incoming and outgoing payments to the accounting system without manual intervention. It can also alert managers when something needs attention, like potential fraud or exposure, unusual spend, approaching limits, and more.

What’s more, automation eliminates the need to re-key data at different points in the reconciliation process. It integrates payments and accounting, making plug-and-play payment options possible while still allowing for exceptions to be identified. All of this decreases friction and lowers credit and fraud risk normally present in paper-based processes, especially for large transactions.

The artificially intelligent solutions that enhance these processes have another useful byproduct: data. This data makes it possible to take treasury management even further for a bank’s customers.

Allow CFOs to Manage Their Books Like a Bank

As treasury management software completes tasks digitally, it takes in and generates data at inhuman speeds. All this data gives treasury managers and CFOs on-demand access to detailed reporting on budgeting, savings, compliance, and more.

These are exactly the conditions a CFOs needs to run their treasury like a bank. With an enhanced view of opportunities to, say, maximize discounts by paying early or with a vendor’s preferred payment method, they gain more control over cash flow and opportunities to retain funds that can be invested elsewhere.

In this scenario, the bank customer’s treasury becomes a profit center. Paired with the speed and agility automation provides, it unlocks opportunities to trade terms, dynamic pricing, and commoditization of vendors by making it easy to switch between them.

Think of all a CFO could do with data at the helm ensuring smooth cash-flow management and worry-free expense coverage. The treasury management system’s AI would know contract dates and pay out or invoice accordingly, as well as forecast liquidity month-over-month. If the treasury manager knows their risk thresholds, they could use the software to ensure they stay within them.

The benefits to the bank’s customers are undeniable. As detailed treasury data and process optimization bring growth and success, loyalty is sure to follow.

Serve Treasury Customers Better with Digital Solutions

Wells Fargo, BofA, Citi, and Chase all offer treasury management services with varying levels of automation. Neobanks like WeBank are joining in, with digital technology and automation sure to power their services.

Treasury’s days of being overlooked are dwindling—customers are beginning to expect competitive management services. Banks should aim to provide treasury customers with digital solutions that can be easily accessed online. Without that, customers may turn to third parties to meet their management needs.

For more information on how to empower wholesale treasury customers with AI-enabled treasury service software, reach out to us here at Kunai.



Sandeep: Tell me a bit about the early part of your career.

Tom: I spent a decade helping to build start-ups focused on application and database software. This was where I learned how to sell and do business development. I was fortunate to be part of one company going public and another being sold to IBM.

Sandeep: What is something you learned during this time that helped you with consulting?

Tom: I began to appreciate how different customers achieved varying levels of success with the same foundational technology. This made me understand just how critical getting your team and process right can be.

Sandeep: This is something I only came to appreciate years into consulting, especially after the sale of my first consultancy to Capital One.I saw teams in different parts of the company trying to solve challenges like real-time messaging. Same corporate culture, same technology, same internal support mechanisms. Night and day outcomes.

Tom: We saw a lot of the same thing after selling our practice to EMC (sold to Dell in 2015). This is probably the thing I'm most proud of when it comes to the teams I've helped to build: the ability to perform well in a variety of contexts, sometimes in ways that inspires the client team to up their game as well.

Sandeep: Yes. It's particularly cool to see your team succeed in individual ways after an skills definitely translate into the corporate environment.

Tom: Totally. We have people who've stayed on at Dell and risen up the ranks, while others took the opportunity to become successful executives at other Fortune 100 companies....or to start their own agencies and startups.

Sandeep: We've both been around a while. My first consulting project was a Y2K thing for Cisco back in 1998. You've been around a little longer than that :). How do you think consulting has changed most during the past five years?

Tom: I think because there is so much infrastructure available now, consulting has become more delivery and outcome-oriented. A better blend of strategic and tactical. Public Cloud has also enabled velocity to increase at a pace unfathomable 5 years ago.

Sandeep: What has stayed the same?

Tom: It's still mostly about people. People who thrive on change and are focused on their personal and professional development. I love that this has not and will not's what I love about consulting.

Sandeep: I know you're adjusting your work style to COVID. You're still a dude who clearly prefers to drive an hour for a socially-distanced hike or outdoor meeting over Zoom any day of the week :) But personal styles aside, what is specifically compelling about a remote agency during the era of COVID?

Tom: Kunai has been remote for years, which gives them an inherent advantage. There is something about the communication and management styles that just works in a way that other organizations are still figuring out.

Sandeep: Yeah, I think what a lot of people fail to realize is that remote work isn't just office work over Zoom. it's an entirely new paradigm. There needs to be an understanding for asynchronous efficiency...and this just takes time and effort to develop. How do you approach remote work and family? What are you learning about separating work and personal time?

Tom: No matter what the form of interaction, Focus. Be present. Quality over quantity. The best weeks are the weeks where I proactively schedule work and personal time. Neil (Kunai's Head of Delivery) shared a great quote with me "With discipline comes freedom." When I am proactively addressing the majority of my professional and personal commitments, I find I earn a little flexibility. A little freedom.

Sandeep: Tell us about a business hero of yours that I may not have heard of before.

Tom: Paul O'Neill is someone you may not know. His work in both the public and the private sector created a profound impact

Sandeep: We are both over forty years old :). How have you learned how to work smarter during the past decade or so? What do you wish you knew about consulting when you were 25 that you know now?

Tom: Consultants want to make lasting change. Lasting change is often not the act of a single person. Today I work much harder bringing others along on the journey.

Sandeep: Last question. What are you doing here? :) Why join a small consulting company this late in your career when you could have a cushy job somewhere else?

Tom: I love a good challenge personally and professionally. When I turned 40, I decided I would run a 10K every Thanksgiving weekend and try to have my finishing time be less than my age. With the exception of one year where I did not run due to a health issue, I have met the goal. I also recently completed the Leadville 100 Mountain Bike race. So, I guess I'm here because I'm a glutton for punishment :) Jokes aside, our customers have a job to do and I intend to put Kunai in a position to execute flawlessly on their behalf. I love committing jointly to audacious goals for our customers and our business.

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