19 September 2023

The treasurer of the 21st century… Once again

Álvaro Bárez, Head of Transaction Banking Europe

March 2020. Everything slowed down and eventually came to a halt.

And, suddenly, the 21st century started running again. Time to run.

During the pandemic, the priorities of companies and, therefore, of the treasury function had to go back to basics: controlling cash flows, controlling collections and processing payrolls, paying suppliers and taxes (requiring a control system to be set up for remote work, never from the computers at the office).

After the pandemic, the treasurer's role is being driven to a different level and at an unstoppable pace. Without a doubt, this is a role that is starting to become more and more important in a company's strategic decisions.

Certain tasks now have a special importance. This is the case of the need to optimize cash-flow performance, which had lost economic relevance in times of very low and even negative interest rates. The chances of boosting and optimizing performance in this environment were very low and fewer resources were allocated to them. Currently, the rapid rise in interest rates in the inflationary environment in which we operate has turned this into something that is now more relevant than ever. Some no longer remembered what this was all about.

To face these common tasks, companies have broken the piggy bank where they kept their savings from investments not made and have resumed the projects aimed at increasing control and optimization, identify collections, track payments, consolidate positions, automate tasks, reconciliation, projections, etc.

However, it is no less true that new tasks are turning the treasury function into an essential area that will help companies in their strategic development processes. The treasurer of the 21st century ... the story remains the same. Companies have changed the relationship with their customers and suppliers, and the role of the treasury function is a vital one.

There are two very good examples that enhance the work of the treasurer of the 21st century, both to boost sales and the ESG strategy. Well, almost nothing.

With regard to sales capacity, companies, especially those with bulk invoicing procedures (utilities, telecoms, retailers, automotive sector companies, etc.), have discovered that it is necessary to have all possible collection products ready, with a view to driving digital collections, an unstoppable trend, in the most convenient way for their customers. New e-commerce collection solutions are now replacing point of sale cash payments at stores or at the bank, increasing the capacity to identify these transactions and ensure proper reconciliation.

With regard to suppliers, the need to classify their sustainability within payers' ESG plans means that payment methods and their relationship with them will also change. They are classified, provided with the advice they need, receive rewards, maintained, canceled, etc.

What do financial institutions need to do now? I think that simply accompanying companies and new treasury functions on this journey would not be ambitious enough. I would say that we have to lead this process together, through solutions that allow them to meet their new objectives, all with a stronger investment and commercial effort.

We must now get used to talking about virtual accounts, request to pay, all sorts of centralization processes, new forms of collection, digital channels - proprietary and direct - for all types of operations, automation processes, confirming platforms with sustainable supplier cataloging procedures, open banking solutions, full accessibility and simplicity. We must get used to offering these services; we cannot stop the trends right now.