Last month, Nomentia released the key findings from ‘Successful Businesses Excel At Cash Management’, a commissioned research study conducted by Forrester consulting across 163 decision-makers at Global 500, Global 2000, and companies with <€1bn revenue responsible for cash management and treasury strategy. The intensive global study by Forrester examines what are the priorities of cash management and treasury professionals and the impact of COVID-19. 

Forrester’s study indicates that the current tools hinder firms’ priorities with cash flow management and the lack of visibility into cash flow has high costs. 

Key findings

Current tools hinder firms’ priorities with cash flow management

Over 80% of business leaders are prioritising increasing cash management and payment efficiency and maximising cash flow liquidity. However, only about one in three has capabilities to improve visibility and generate accurate forecasting, and of those, about half are dissatisfied with these capabilities.

Poor cash flow visibility has high costs

Cash flow transparency, flexible reporting, and data collection are challenging for about 70% of decision-makers. These challenges have serious implications for firms: They add time to review and audit processes, increase data security issues, and slow the transformation into an agile business.

Firms have allocated budget to improve cash flow capabilities

Sixty-six percent of enterprise decision-makers report their firms have invested or are expanding investment in financial data analytics, 58% in centralisation of user-right management, 42% in cloud-based bank connectivity, and 47% in automation.

"This study provides an excellent insight for any businesses looking to reap the benefits of cloud-based treasury management technology to increase organisational flexibility, cash management process scalability, and B2B payment security," said Jukka Sallinen, chief executive officer of Nomentia. "We wanted to understand what the current state of digitalisation across treasury and cash management is and what are the challenges decision-makers are looking to overcome."

The importance of visibility and control

The study also demonstrates that business leaders at large multinational enterprises have experienced that the COVID-19 pandemic has increased the importance of cash liquidity, transparency, and certainty. As a result, three-quarters of the decision-makers plan to improve cash management capabilities, they deeply recognise the urgency and importance to digitalise and enhance their processes. Businesses that want to strengthen their resiliency will emphasise the importance of cash excellence to improve decision-making and successfully navigate the changes in customer behaviours, work, and technology accelerated by the pandemic.

Almost four in every five decision makers (78%) believe tools to control how batches are routed through the system are valuable for their treasury and cash management activities, while 76% believe bank connectivity for fetching statements and intraday material are valuable for their treasury and cash management activities.

Report recommendations

Firms tackling the challenges of the current pandemic deeply recognise the urgency and importance to digitalise and enhance their cash management processes. The report says that cash excellence will become the 'North Star' leading businesses to strengthen resiliency and improve decision-making to successfully navigate the changes in customer behaviours and the modes of production, work, and technology accelerated by the pandemic. The report concluded with the following recommendations for corporate treasury teams:

Switch cash management from a cost centre to a strategic revenue-creating opportunity

Many companies are used to thinking of cash management as a cost rather than a revenue-creating opportunity. Cash management and payments are the core to every business process, so they are essential for a company’s adaptability and financial stability. Cash management should be a critical strategic consideration for multinationals as they execute ambitious growth plans in a highly volatile and competitive market. Firms that see their cash management solution as an opportunity to grow revenue and market share will enjoy a competitive advantage.

Embrace future fit cash management technologies and solutions

Adaptive companies integrating future-proofed, technology-forward cash management solutions now will be best placed to stay ahead of the curve. Win the post-pandemic business world by increasing investment in data analytics capabilities, cloud-hosted solutions, automation, treasury and payment centralisation, and easy plug-and-play connectivity and integration with multiple enterprise resource planning (ERP) systems.

Equip your organisation with advanced risk mitigation capabilities

COVID-19 accelerated digital transformation for most firms, but their naivety with digital also increased opportunities for fraudsters. The economic downturn and uncertain global geopolitical landscape added in the complexity of sanctions and money-laundering activities. Multinational companies need more advanced risk mitigation capabilities to cope with country-specific compliance and smarter fraudulent and financial crime activities, safeguarding their payments and financial stability. Seventy- five percent of decision-makers say that risk mitigation is one of the top drivers for investing more in cash management solutions.

Foster cross-functional collaboration for cash management

Treasury and finance executives report that the top barrier to improve cash management efficiency is the lack of alignment between treasury and finance departments. Besides optimising people and processes to foster collaboration, enterprises can also coordinate their treasury and finance functions by implementing a solution that offers a holistic and centralised view of cash flows, thus enhancing reporting, data analysis, and forecasting.

Methodology

In this study, Forrester conducted an online survey of 163 decision-makers in Benelux, the UK and Ireland, and DACH regions to evaluate cash and treasury management practices and technologies. Survey participants included decision- makers in treasury, finance, and IT. Questions provided to the participants asked about their current stage and future plans on cash management and B2B payments. The study began in February 2021 and was completed in March 2021.