Nordic Cash and Treasury Management: Digitalization starts with the analysis

Before you embark on a digitalization project, there are a few key things to consider. First you must know where to digitalize and how to prioritize your ongoing changes. To understand this you must identify the time that absorbs too much energy in your business.

This is the belief of Lars Beckman, CEO at Core Process – a business that installs and supports the treasury system tm5 by Bellin as well as the working capital and dynamic discounting programs from Taulia. Core always begin their work by analyzing the business and the financial flows of the client.

“Do not get caught up on technical questions. Hot topics right now are artificial intelligence, machine learning and blockchain technology. But most important is the underlying analysis. This determines the value you can achieve by digitalizing.”

If you do not know the weaknesses and risks involved in your current system, digitalizing will not help you much, Lars Beckman underlines.

“Remove the bottlenecks to get rid of manual handling. This way you will free up valuable brain capacity within the organization.”

Make all financial flows visible

Digitalization and the fourth industry revolution is already here and evolves as you are reading this. Corporates will make projects available in this area and take time for implementation of new systems. Considering only technology, all possibilities already exist. Lars Beckman emphasizes the importance of knowing how to use new technology and systems.

“Digitalization is basically about removing manual transactions and simultaneously being able to see all flows and have a possibility to move in and adjust when necessary. But there are only a few who comprehend the entire financial flow and have an overview today. This is where digitalization really can favour corporates, for example making all financial flows visible and accessible for the corporate central function”.

Use a risk matrix for the analysis

Mid size corporates and also sometimes large cap don´’t do the basic analysis. Lars Beckman recommends using a risk matrix with probability on one axis and impact of change on the other. It is also interesting to view internal and external risk drivers. If you then have major system risks in the top right corner, then you will probably start a process to change your treasury system or implement a working capital solution instead of upgrading and relying on the current system in use.

“A corporate can risk a percentage of their result, only by having the wrong financial information. The lower margins you have, the more aware you must be of your risks, for example currency risks.”

This is where digitalization comes in and can save you large amounts by using a complete treasury system or a third party integrated working capital solution.

“If you have an automated system that gives notice of deviations, you will get a new kind of control. In turn, this will free up your time to a focus on analysis and strategical work”, Lars Beckman explains and continues:

“This is about obtaining and posting transactions that provide information with no need to engage until completed. Every engagement point is a risk, a step that can lead to mistakes and losses.”

Will banks handle corporates payments in the future?

“The current market development is moving in the direction of payment systems and opening up for third-party solutions. In practice, we are already there. Using Swift, you can control the entire payment system yourself, and avoid possible extra bank fees. But this, of course, presumes that you have a treasury system that can handle payments as a third-party solution. We are already in the market where banks are challenged.”

A direct effect of the digitalization?

“Clearly. Digitalization makes it possible to be independent from banks. You can use your own treasury system with a cash management module and solution and cancel your internet bank for example. This will at the same time lead to complete control of the affiliated companies’ payments and other financial business deals. The payment transactions are for example executed locally but approved centrally.”

Meet Lars Beckman and Core Process during Nordic Cash & Treasury Management in Stockholm 19-20 March in their showcase.

Don’t miss any future blog post with insights and the latest in treasury and working capital solutions

Subscribe to The Treasury now!

Leave a Reply

Your email address will not be published. Required fields are marked *

3 × 3 =