Treasury functions have become digital incubators
Treasurers have relied on traditional skills to navigate the circumstances they have faced over the past nine months. Changes forced by the pandemic will impact the way they, and their entire organizations, work in the future.
The events of the past nine months have forced many businesses to focus on survival rather than sustainability, simply because predicting sales and forecasting profits is much more difficult when revenue falls off a cliff.
Core treasury services and associated skills – such as cash management and financial risk management – have not changed. However, the ways in which these skills are delivered has changed, with new levels of integration and broader operational and finance processes and data sets.
“While we have always needed to know where our cash and liquidity stand each day, we now need to run shock and scenario analysis on large data sets to answer basic questions that arise when you have these kinds of external shocks,” says Steven Krippner, treasurer at energy technology company Baker Hughes.
Treasury teams require integrated modelling capabilities to understand how new shocks impact a company's financials and what levers they have to mitigate the effect of such shocks. This requires an agile, integrated treasury capability that combines analytics and financial modelling with a deep understanding of the financial markets.