Companies could save money by catching up with digitisation

Companies in both the US and Europe are behind on digitisation planning even though it's a major cost-saving step necessary for businesses to maintain a competitive edge, a new report says.

The global 2022 report by Topline Strategy and commissioned by GTreasury and PNC Bank, sets out tips for CFOs considering technological initiatives to boost operational performance.

"While digital transformation has been a topic of conversation for years, the data shows that the majority of companies have not progressed in making a formalised plan or approach to meet marketplace demands," the report says.

The report, Pressure Points, Payments & Plans for Automation: The Road Ahead for CFOs and Treasurers, found that the majority of companies surveyed (58%) have not progressed in making a formalised digital transformation plan or approach to meet marketplace demands.

The report relays the findings from research conducted in 2022 with a group of 93 executive-level treasury and finance professionals, representing over 20 industries. Most respondents came from US-based companies headquartered in the US with many from European companies.

Eighty-five per cent of CFOs and treasurers surveyed expect significant or moderate company growth into 2023 even as many face challenges in the digital era, according to a news release that accompanied the report. That optimism is grounded in the fact that 49% of these leaders (CFOs, according to the report) identified cost efficiency as the primary strategic imperative for the New Year.

Improving treasury operation efficiency (53%) and gaining real-time insight into cash positions (26%) are the top priorities for treasury teams, the report said. Another strategic priority for CFOs included the ability to manage company growth (41%).

The survey shows an increased interest in planning for investments in technology to help reduce business costs, which is more vital during a volatile market, the report said. This aligns with the findings from the Everest Group and WNS Global CFO Survey 2022.

The report found that the top three investment areas for finance professionals are electronic payments, transactional integrations, and treasury systems — and that 56% of companies prefer cloud-based technology.

The main focus areas for software projects in the coming years include accounts receivable (AR) and billing, financial planning and analysis (FP&A), and budgeting, followed not too far by treasury, accounts payable (AP), and payments, in order to meet cost-cutting and operational goals, the report said.

Small treasury teams looking to get more work done with less are also more reliant on outsourced payment solutions. Working with multiple currencies each month also increases complexity, the report said. Technology can help smaller teams stay efficient.

While the report found that 82% of companies indicate that payments automation is very or extremely important, 20% — many smaller companies with under $1 billion in revenue working with smaller banks — are dissatisfied with current integration capabilities, the report said.

In order to utilise digital tools to streamline operations, CFOs and treasurers need to consider the company-specific functional challenges that could impede growth in the future, the report said.

The report recommends four ways finance teams can enhance their transformation initiatives:

Examine various functions. Many activities and functions could benefit from automation. Find out which ones are time-consuming and prone to error, omission, or fraud risks. CFOs should also question what tools can fill the knowledge or experience gaps of in-house resources.

Fill resource gaps with digital tools. Using specialised tools to fill resource gaps can provide companies with more visibility to data, expertise for more complex issues, and resources to compile and analyse information.

Outsource and consolidate treasury functions. Companies that have considered outsourcing should do so in a compressive fashion, including both their primary and secondary banks. Consider consolidating bank account management and payments functions through third parties. It is also important to seek out partners that have invested in technology.

Invest in solutions. Treasury and risk management solutions — with capabilities for cash forecasting, financial risk management, and more — will help companies streamline functions and achieve growth.

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.