Treasury Advancement Takeaways from 2020

When the year 2020 began, virtually no one suspected what wholesale disruption and upheaval awaited just around the corner. But now that the year has concluded, organizational leaders can look back with some perspective on what these unanticipated and unprecedented events – brought on by a global pandemic – have meant to businesses, and treasury, in particular.

While the trend toward digitization of payables and receivables functions has been unfolding for some time, the pandemic has only served to accelerate the value of implementing digital advancements that simplify, automate and enhance the mobility of vital business-to-business (B2B) processes. As professionals in every vertical segment of business and public service have had to adapt to work-from-home restrictions, the world has become increasingly reliant on remote access to support mission-critical systems. This has been no less true for the treasury and payments community.

The Association for Financial Professionals’ 2020 Survey on the Impact of the Covid-19 Pandemic found that 39% of treasury teams had implemented electronic payment systems with another 26% of respondents stating they were planning to implement electronic payment processing. The need for digital tools that can work effectively in all circumstances has never been more critical.

“The concept of portability and straight-through processing solutions have gone from being a future nicety to a present-day necessity,” stated Bridgit Chayt, Senior Vice President and Director of Commercial Payments and Treasury Management for Fifth Third Bank. “Whole business operations have had to shift to a decentralized approach overnight. The entire value chain - from purchase order to invoice, payment, reconciliation, and archiving - now requires remote access and decision-making. Managed services, which might once have seemed an aspirational objective for treasury, now makes good business sense and needs to be on every treasury manager’s radar for implementation if a deployment plan is not in place.”

The pandemic has accelerated the realization that day-to-day processing of treasury functions are still hampered by inefficiencies and higher-than-desired costs. And that the digitization of B2B processes holds tremendous potential for driving treasury efficiency, cost savings, and affords the flexibility to operate remotely as needed.

Leveraging Next-Generation Solutions to Improve Payment Processes

Next-generation payment solutions, such as managed services, have proven to be a boon for organizations that embraced these technologies. As companies had to pivot and rapidly shift to running treasury operations remotely, having convenient, online solutions for payment management proved to be a game-changer.

Many companies discovered that onboarding managed services was fairly easy, and alleviated the treasury burden of back-office processing. For those that had already put in place such advanced solutions, having another built-in layer of business continuity helped them to avoid business disruptions.

Leveraging analytics to address specific client needs and improve the customer experience is another area that has proven invaluable this past year. By extracting information from customer payment histories, banks have been in a unique position to provide the data needed to fuel analytic-driven decisions. Having access to this information has been tremendously beneficial to treasury organizations, supporting their efforts to service customers during this very disruptive year.

Best-of-Breed Partnerships Focused on Ensuring Business Continuity

While financial services industry partnerships have been responsible for many innovative solutions in the payments space, the pandemic has highlighted the risk that any disruptions within the value chain could negatively impact corporate clients. That is why best-of-breed partnerships have taken a closer look at dependencies within card, payables and receivables solutions. These partnerships are applying industry best practices to ensure business continuity, so treasury can be assured solutions are able to weather any regulatory or disaster recovery storm in the future.

The Importance of Continuous Dialogue with Banking Partners

One key learning that has come from the experience of 2020 is the importance of maintaining a continuous dialogue with banking partners. Conversations between corporates and their banking colleagues grew in frequency during the early days of the crisis as treasury professionals sought council in dealing with hurdles in the shifting payments landscape.

“Corporates would be well advised to continue this robust dialogue with banking partners,” explained Chayt. “Banks have a critical role to play in helping treasury be prepared for whatever comes next and in setting long-term strategies. Over the past year, we have seen a surge in educational outreach from financial services organizations, bringing corporates together and providing best practice forums. This sort of outreach has been invaluable for sharing lessons learned.”

This dialogue also enables banks to better understand those industries that have been most severely impacted, so the financial services industry can quickly support needed changes in business models. In some cases, this has meant finding ways to continue to engage in commerce and support customers.

Financial institutions have risen to the occasion, stepping up efforts to support corporate treasury in these fluid, uncertain times. For savvy corporates, preparing their treasury organizations to be ready for possible future disruptions can only serve to strengthen the overall business.

Finding the Silver Lining

“Despite the many challenges we have all faced this past year, there is a silver lining for all who have weathered the proverbial storm,” concluded Chayt. “When you take a historical perspective, times of disruption have always created new opportunities and new revenue streams amidst what might seem like insurmountable chaos.”

Instead of simply waiting for things to get back to “normal,” corporates should see this as an opportunity to accelerate their digital journey. No matter how prepared or unprepared an organization was for the events of 2020, it is never too late to build for business continuity and resilience. Next-generation tools, such as Fifth Third Bank’s Expert AP, a full-service, B2B AP solution, can help prepare treasury for future disruption, while driving enormous efficiencies today.

Banks have a crucial role to play in supporting treasury through good times and bad, which is why it’s important for corporates to turn to their trusted partners to stay on top of the latest trends and the newest innovations.