Cash management has continually developed and evolved over the years, sometimes taking major strides forward.
In no particular order, this article discusses issues relating to Treasury 4.0. It outlines key topics and provides food for thought about the direction in which treasury departments will move. But it also invites the reader to debate these issues with our authors.
Cash management has always been with us. That is how it feels, at least. It has also continually developed and evolved over the years, sometimes taking major strides forward (planning support provided by treasury management systems, EUR cash pools), and sometimes contenting itself with smaller steps (cross-currency notional pooling, virtual accounts) that have yet to become fully established. One thing that has barely changed up to the present day, however, is the personnel expense that cash management involves at many companies. Rather than talk about the reasons why this is so, let me simply paint a picture of what cash management in a digitized world should – and will – look like in the future.
Before doing so, let us take a step back. Ultimately, cash management is nothing more than the residue from fundamental entrepreneurial decisions about the capital resources made available to subsidiaries. Logically, therefore, the question of the strategic orientation of cash management will be predetermined substantively by the equity and debt structure of the individual company, and by the target system that results from this structure (e.g. the optimization of interest expenses or total costs after tax).
Our focus, however, is on the daily routine process of cash management (excluding payment transactions). What should this process look like under Treasury 4.0? How can it be shaped and molded by the technological possibilities we already have today? The following processes – sketched only briefly here – are of relevance to our subject:
At this point, you might be asking yourself what cash managers will spend their days doing in this scenario. Essentially, their job will be restricted to monitoring the automated processes and handling the manual postprocessing of exceptional cases. This in turn automatically raises two further questions:
Either way, it is a fact that the process automation steps described in this article are, to a very large extent, already technically feasible today (albeit not yet with all systems) and will prompt a significant change in the job profile of cash managers. Digitization stops at nothing, and cash management is no exception.
Source: KPMG Corporate Treasury News, Edition 66, April 2017
Author: Carsten Jäkel, Partner, Finance Advisory, firstname.lastname@example.org
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