The Innovators 2020: North America

Covid-19 is pushing companies to improve cash forecasting and build liquidity buffers; innovators are looking to help them.

The biggest concern for companies struggling with both a pandemic and a lightning-fast economic unraveling is continued access to liquidity. A lot of companies are being forced to revise their business model, and most will need to convince financial institutions to keep lending to them. “Any company should always have lines of credit ready to be filled in the not-so-good times,” says Wolfgang Koester, senior strategist at Kyriba, a leading treasury-management software provider and our 2020 Most Innovative Fintech in North America. “The importance of liquidity requires bringing together all the silos that impact liquidity.”

Getting procurement, accounts payable, working capital, supply chain finance and treasury all sitting around the table together means companies can get a better handle on cash management. “This really does touch on pretty much everyone in the C-suite,” says Koester. He predicts the emergence of a chief liquidity officer to help steer cash deployment, rather than leaving everything to the CFO, whose fiduciary and corporate responsibilities might limit liquidity optimization.

Kyriba launched a new payments network in February aimed at facilitating this transformation and helping companies make more-effective decisions where to deploy cash and liquidity. It enables CFOs to centralize all payments and receive complete visibility of all outgoing cash, including detection of fraud and payment anomalies.

A payments hub goes a long way in transforming outgoing payments into a single source of record for all,” Koester argues, providing companies with greater visibility and control of their payments data. “It enables you, within seconds, to move money, to pay or not to pay, or to push on receivables,” he says, adding that technology can also provide flexibility to combat fraud and provide liquidity levers.

“Now, lots of people are adjusting levers,” he says. “People are paying later, or they’re negotiating, or they’re holding a payment, or they might actually want to speed up payments. The ability to adjust becomes the lifeline of the company.”

Covid-19 has also put a spotlight on social distancing. Bank of America, our 2020 Most Inno-vative Bank in North America, expects this to spur more choice and innovation. “Client interest in solutions like contactless cards and mobile wallets has climbed in equal measure over the last few months,” says Jennifer Petty, head of Global Card and Comprehensive Payables in BofA’s Global Transaction Services. “Certainly, there are differences in terms of geography and demographics. But that’s actually evidence that we need to provide the end users with choices around their payment experience.”

Koester believes the crisis and these new preferences will also accelerate acceptance of the cloud: “In the US, no one is interested in on-premises solutions anymore. The world is going cloud, and this is accelerating it.”

Partly as a consequence of the pandemic, “all of us have realized that digital solutions are no longer just nice-to-haves,” says Julie Harris, head of global banking digital strategy at BofA. They are critical to business continuity and the stability of global supply chains. “Like many in the industry, the crisis has accelerated our innovation agenda; and later this year, we’ll be introducing additional options for our clients to maintain safety procedures, like social distancing, while still being able to make and receive payments.”

Taking proactive steps to manage cash through a crisis is the sign of a well-run treasury; in the current moment, it could make the difference between survival and failure. Banks and fintechs are betting that the need for technology tools to accelerate decision-making has never been greater.