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How to automate Treasury management


Treasury management today is gaining unprecedented importance. The pandemic accelerated digitization and innovation at a rate never seen before. As a consequence, people’s expectations are increasingly high regarding digitization in all areas, especially in the area of ​​finance. Because the final consumer is getting used to a very high degree of digitization in all applications aimed at him (B2C), these expectations are also being transferred to the business environment (B2B). Finance staff are tired of the lack of innovation that has occurred in business, and that is why change is happening faster and faster.

The digitization of finances has only just begun. Until today, the main source of digitization in the business environment were accounting systems or ERPS. Currently, however, we see numerous changes in the business environment, with the appearance of software that supports all types of processes. For example, the programs that digitize the management of human resources, both the management of hiring, as well as the management of existing personnel. Another example is the contract management software that integrates the electronic signature that makes it possible to digitize the signing of contracts. In other words, we are heading towards a stage of maximum automation and digitization of all financial areas of companies. One of the areas linked to this and that have recently been subject to innovation, has been that of company expenses, tickets, through corporate cards. The next thing, therefore, is the digitization of business payments, invoice management, approvals, and treasury management.

What is treasury management?

As we mentioned in previous articles, the treasury refers to the daily management of money. This term is usually used mainly in the field of companies, and in the field of states, referring in this case to the management of a country’s finances.

In this article, we will focus on the concept of treasury applied to the management of money or company cash.

In this sense, the management of the treasury of the companies is focused purely on the management of the box, the entries, and the exits that occur in the company. Therefore, the treasury department focuses mainly on monitoring the flow of money in and out of the company, that is, the management of collections and payments as well as the forecast of future cash.

Treasury management is a task that varies greatly from company to company. The size of this, as well as the sector in which the company operates, will require a greater or lesser level of sophistication in treasury management. So, for example, a small bakery does not have the same demands as a payment company that manages global rental payments for platforms like Airbnb. In both, the work of treasury changes drastically. In the first, since the sale of the product occurs in situ and is made in cash or by card payment, the main concern will be the management of payment to suppliers and the evaluation of investment needs, such as buying a new oven, or two to produce more product. In the second case, when managing global money flows, the company will have to manage relationships with banks globally, as well as move money globally to offset the capital needs from one country to another. In addition, this will force you to have a very professional vision of the evolution of exchange rates, to more effectively manage cash on a global level.

The 5 problems of Treasury management

As we described in a previous article, treasury management is still lagging far behind today in terms of digitization and evolution. Let’s say that everything remains to be done in this sector. As we indicated, there are a number of issues that we have identified in the global treasury sector, which, in order not to be redundant, we briefly summarize here. To read the full article, you can see this other previous article. (Link).

  • (1) Access to multiple banks and decentralized bank accounts

Most businesses, especially over a certain size, have numerous bank accounts at multiple banks. This forces them to have multiple accounts or access credentials to consult and operate on all accounts. This is a very cumbersome and inefficient process. In addition, at the end of the month, it is necessary to download the statement of movements to be able to reconcile each of the payments and receipts, therefore, if a company has numerous banks and accounts, this process is repeated as many times as the number of banks in which that it operates

  • (2) Decentralized and manual receipt of invoices

Most companies receive their invoices in a generic accounting email, and extract the information from the invoices manually, with the high risk of errors that this entails. This process of dumping or extracting the information from the invoice is done either in Excel, or in the accounting system, even in many cases in both. Which is a total waste of time.

  • (3) Payment execution by traditional methods

The most common means of payment between companies are bank transfers, since there is practically no other way. Banking interfaces are generally outdated, making the process quite inefficient. Currently there are two ways to operate when making payments via transfer. The first would be typical of a small company, in which you simply go to the bank to make transfers, and update an old one with the new information. A totally inefficient process. The other is by importing an XML bank file to the bank generated in the ERP or accounting system. A path that is also not very digital and tedious, since afterwards there is still the need to reconcile.

  • (4) Disconnection between banks and the rest of the systems

Linked to the previous point, today’s banks are totally disconnected from ERP systems. What this fact causes is that actions have to be duplicated in both systems, both in the bank and in the accounting system.

  • (5) Null visibility and forecast of treasury

There is currently no platform that provides real-time treasury forecasts. All reports are static, and generally provide past information. Therefore, more than forecasts, they are financial reports. In other words, a treasury “cash flow” that shows the past, is usually part of the financial report of companies, on a certain date, usually at the end of the month or year. It is necessary to create systems that provide future visibility of the treasury in real time.

How to automate Treasury management?

Well, as we have seen previously, the world of treasury has many problems that must be solved. But more importantly, what can companies do to digitize all these processes and automate treasury management?

Next, we will describe what a company should do to automate all payment, collection and treasury management.

Automating the receipt and extraction of invoices

The first way to automate the treasury is to automate the receipt of invoices. For this, software is necessary that has an email integrated into the platform that allows the direct entry of invoices into the platform. On the other hand, current companies, until the arrival of the electronic and digital invoice is implemented, need an Optical Character Recognition (OCR) system, which is capable of reading all these invoices and extracting their information automatically. This will make it possible to replace those manual excels where invoices are typically entered, with an automatic process. In addition, for larger companies, this allows the content of invoices to be inserted directly into the accounting system, with hardly any manual and tedious tasks.

Connecting banks in a centralized way

The second way to automate treasury management is through software that allows connection to the multiple banks that the company has. This will allow finance teams to have an integrated and consolidated view of treasury in real time. In addition, this avoids having to carry multiple bank credentials, and allows you to avoid having to access each one of them every few days to extract bank statement statements. Today, through the PSD2 regulation that enabled Open Banking, it is very easy to connect to existing bank accounts.

Digitizing the payment process

As we described earlier, the B2B payment process today is still very old-fashioned. To solve the problem of manual payments, in which old transfers are updated, or to replace the typical XML file that is imported into the bank, the payment system must be changed. Currently, thanks to embedded finance, it is possible to make invoice payments to suppliers, fully synchronized and without the need for subsequent reconciliation. This is because you can pay invoices, leaving from that moment a link between the payment made and the invoice and registering that transaction in the accounting system at that moment. For this, therefore, you need a B2B payment automation software.

Generating automatic treasury forecasts

As we explained previously, neither banks nor accounting systems or ERPs make treasury forecasts in real time. To do this, you need software that, firstly, allows you to connect to existing banks, and later, allows you to make treasury forecasts. Attention, not only through past transactions, but also through the consideration of future invoices to be collected or paid. With past and future information, the platform will be able to generate treasury forecasts in real time and updated to the date you consider.

Synchronizing information with accounting systems (ERP)

Finally, and a large part of the key to success, is the synchronization of information in real time with the accounting or ERP systems. In other words, when the platform receives an invoice, it is directly and automatically registered in the accounting system. In addition, when a payment is made, it is also registered directly in the ERP. Today we are moving towards a future in that direction, in which every platform has to be connected to multiple sources of information and systems.

All this and much more is solved by SNAB!

Snab was born precisely after experiencing first-hand all those problems that exist in the field of business banking and treasury. Snab was born, to solve all these processes, and create a new world of treasury, digital, and automatic. Snab, therefore, does everything that is necessary today to digitize and automate those processes that we described before and that waste so much time for financial and treasury teams.

Snab as a Treasury tool

Snab is a pioneer treasury cloud platform in Europe, which helps precisely in each and every one of the functions and tasks related to “cash management” and treasury management and which precisely solves the 5 problems that we mentioned to those finance teams face today. Snab acts primarily as a bank aggregator, allowing companies to access all their bank accounts at different banks and in different countries with absolute independence. Secondly, Snab serves as a tool for receipt of invoices, scanning, and automatic registration of the same. In addition, Snab is a payment and collection management tool, giving full control and visibility to the accounts payable and receivable functions, since the tool allows you to pay and collect in one click. Snab not only shows you alerts and helps you monitor the status of payments and collections, but also generates treasury forecasts in real time, based on both historical and future information. Lastly, Snab is synchronized with the main ERPs in the market, which eliminates the disconnection between systems that we mentioned earlier.

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