The effects of digitalisation on corporate treasury of SMEs

The effects of digitalisation on corporate treasury

The increasing complexity and dynamics of the competitive environment require flexible and fast solutions in financial organisation.

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The increasing complexity and dynamics of the competitive environment require flexible and fast solutions in financial organisation. Such solutions are created in particular as a result of the digital revolution. This revolution also does not stop at the treasury departments of SMEs and – due to previously unknown automation possibilities, more cost-efficient core functionalities of treasury management systems and a wide range of specialised third-party solutions – leads to new possibilities in financial analysis and control as well as reporting.

Many SMEs are faced with new challenges these days: the volatile and complex market environment as well as changes in business models and risk structures, disproportionate growth, ever greater internationalisation of business, as well as new regulatory and changed accounting requirements are shifting the focus of treasury activities away from processing activities to the analytical responsibilities of a Centre of Knowledge and Excellence. But, especially at SMEs, organisational and operational structures have not been able to keep pace with these developments in many cases. This means that existing teams are shouldered with more responsibilities, more manual tasks are required, specialised knowledge is lacking, and additional capabilities and innovative technologies are in ever greater demand as a result.

The ongoing digital revolution, triggered by digital megatrends such as big data, cyber security, cloud computing and mobile devices, makes IT into a driving, if not the driving benchmark for good market practice. Currently available systems, and the system landscapes that are configurable based on these, provide for a very high degree of automation of treasury processes ('real straight-through processing'). This results in a major reduction of manual activities and thus significant gains in efficiency.

The transparency necessary for proper control of financial risk has become affordable also for SMEs with the new IT solutions available, because technical developments in recent years in the SaaS environment and their increasing acceptance by companies have significantly reduced the cost of treasury management systems. These already cover the basic requirements of professional financial risk management in many cases, also for SMEs, such as liquidity overview and planning, ensuring solvency, payment-related functions, hedging currency risk, etc. This is enhanced by further benefits from avoiding non-compliance, which should not be disregarded.

It is therefore possible for the first time for companies of all sizes to organise their financial structure functionally and technically in a manner which previously was possible only for large companies. KPMG supports this development by offering services tailored specifically to SMEs: 'Treasury in a Box'. In addition to functional processes and methods, we provide the perfect solution of an established system supplier. Because technology is far from everything: only combined with appropriate methods and processes will the leap into the digital age be successful.

Source: KPMG Corporate Treasury News, Edition 61, November 2016
Author: Nils Bothe, Senior Manager, Finance Advisory, nbothe@kpmg.com 

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