Many of us are approaching an anniversary we did not anticipate at the beginning of last year – a full year since the first lockdowns and the start of the homeworking era. In all likelihood, the companies that we work for are in very different financial and organisational shape compared to March 2020.
As organisations affected by the pandemic move from life support to recovery and growth-promoting activity, treasurers’ focus on cash and payments will be as rigorous as at any point over the past 12 months. Many of us may also be at an interesting stage in terms of our treasury technology. For instance, if your organisation is in a post-acquisition phase, like mine, you are perhaps combining treasury operations onto a single treasury management system (TMS), alongside enterprise resource planning integration and leveraging SWIFT and bank connectivity.
Lockdown or not, a renewed focus on cash management and payments structures with a view to maximising efficiencies and aligning processes as much as possible is never a wasteful way for treasurers to spend their time. The wider technology landscape also offers interesting possibilities, with treasurers looking at machine learning, robotics and artificial intelligence (AI) to find useful application in their working world.
In terms of our immediate focus, it’s never been more important to root out as much inefficiency as possible and reduce manual processes. If your approach includes a payments factory like NSG Pilkington, featured in this edition, then you will have had a focus on how this can be achieved in as homogenised a way as possible. Whatever your approach, it is crucial to streamline as much as possible, while applying the same level of controls, and freeing up time for other value-added activities.
In some ways, the new connectivity we’ve established via Zoom and Teams calls during lockdown has been a help. While never as good as face to face, it’s an effective means of quickly bringing people together from different locations and time zones – getting people’s attendance has become simpler in logistical terms and video calling is far more effective than conference calls. We have to remember, however, that it may be a quick route to getting someone’s attention, but on the flip side, you’re not building relationships in quite the same way – we will all need to address this post-pandemic.
There is little doubt, however, that tech providers and banks have been investing in workable solutions for treasurers. We have seen banks working with TMS suppliers, investing in application planning interfaces and cultivating fintechs. Increasingly, there is strong technology around AI and machine learning, particularly in the anti-fraud solutions embedded in payments technology.
So, there is plenty of new technology coming to the fore. It really falls to us in treasury to ensure we are planning to implement those at the right point in our projects. Foundations need to be built first – getting the right TMS, SWIFT and bank connectivity in place – and then leveraging off that infrastructure and layering in new technologies.
Alongside this, central bank initiatives around faster and immediate payments will add significant improvements. The prospect of releasing a payment, being able to track it and then receiving confirmation that it has arrived in the beneficiary’s account, will be a huge efficiency gain. That type of visibility and speed will be particularly relevant to larger payments such as for debt servicing and acquisitions.
How cryptocurrencies and distributed ledger technology will feature in the payments landscape is still hard to gauge. There is plenty of comment around crypto and high-profile companies like Tesla publicly stating that they are investing in crypto-based assets, and that customers might be able to pay for cars in cryptocurrency is an interesting development. The leap from companies such as Tesla to other businesses – particularly those in regulated sectors where there is a strong requirement to identify the source of funds – is a considerable one.
Other challenges include the potentially large environmental cost linked to crypto – with recent reports that mining for Bitcoin has a huge carbon footprint. These challenges, in my view, tend to favour central-bank-led digital currency projects over the longer term.
Steve Ellis is group treasury director at Flutter Entertainment with primary responsibility for front office. Prior to his current role, he led the treasury team at Pearson, and has held treasury roles at KPMG, Hess Corporation and Arco Chemical.