On the Path Towards Cash Management’s Digital Endpoint

Following the COVID-19 pandemic, treasurers today face greater pressures than before.

The disruption to business operations and trading relationship might have been stark – and is not yet over. Of course, the need for a fully-digital and secure cash management function was still critical pre-crisis, but now it is nothing short of critical to maintaining operational procedures – especially while in the home office.

Providing some respite, the banking and fintech community are equal to the challenge ahead. Doubtless, the current situation has put wind in the digitalisation agenda’s sails, but the matter of creating fully-automated and digital cash interfaces has long been of utmost importance – meaning that solutions are already available, with Commerzbank and other leading institutions, that can keep cash management functions on track.

Managing the crisis today, while thinking about tomorrow

Certainly, though the COVID-19 shock has made the need for digital cash management more pronounced, clients have requested more sleek, state-of-the-art solutions for some time. Such demands have been in parallel with the evolution of treasurer’s daily function itself. Indeed, partly as a result of opportunities afforded by increased digitalisation, the treasurer role today is much more than processing payables and receivables. In addition, they are the first line in ensuring robust liquidity management, optimised cash and working capital positions, more accurate cashflow forecasts and – crucially – sound risk mitigation procedures. And, partly due to the insights originated from cash management platforms and the close studying of cashflows, treasurers are – more often than not – the first-responders to operational issues. Thanks to this broader overview, treasurers are now firmly at the top table when it comes to strategic decision-making.

The pressures of fulfilling the treasury function, therefore, have only been amplified due to the situational changes created by the COVID-19 pandemic – namely remote working. That said, any suggestion that the pandemic has rendered clients’ cash management needs beyond recognition are overplayed. Operational precision, speed and safety: these are the (evergreen) characteristics our clients often tell us are their utmost priorities – and this is unlikely to change as we continue to traverse these extraordinary times.

Frank-Oliver Wolf, Global Head of Sales Germany, Trade Finance & Cash Management, Commerzbank AG.

Digital cash management: more than a remote-working enabler

One key change in today’s working environment is treasurers’ uncompromising need to work flexibly. As such, manual processes – if merely burdensome before the pandemic – are simply unfeasible today.

Efforts to abolish paper-based processes have been a longstanding goal of our industry but there’s no denying that the COVID-19 outbreak has given the digitalisation drive for treasurers a welcome push. For some corporates, increased home-working arrangements have exposed how many still rely on hierarchical approval processes centred upon interactions in the office space. Others have been agile to adopt legally binding eSignature solutions, which are also available to use on mobile devices.

Yet despite the seismic changes to daily operations our clients experienced earlier this year, many saw little to no interruption to their service through the pandemic and, with our support, have adopted further measures to improve efficiency in these testing times. For instance, Commerzbank’s portal solutions were accessible from the home office long before the pandemic hit – enabling clients to continue with pre-existing authorisation structures and an already-established electronic signature scheme. As such, clients who had considered remote working in their contingency planning prior to the pandemic were able to work with virtually zero interruptions.

From the customer’s point of view, topics such as the company’s internal processes and procedures and treasury services – namely effective financial management and liquidity planning – became more important again during the pandemic. For instance, real-time account information that can be visualised in user-friendly applications and further processed in the customer’s own systems became increasingly critical. Against this backdrop, and to provide our customers with even simpler and clearer solutions with additional helpful features, we upgraded the Cash Management App last year. Further, we are constantly developing our online banking application Global Payment Plus (GPP) to ensure that it keeps pace with evolving client needs.

The opportunities ahead

The extraordinary challenges that have faced cash management teams this year demonstrate that, together, banks and market participants still have some distance to go in creating a homogenised suite of cash management tools.  

At present, we are seeing more procedural adjustments, such as the adoption of instant payments or the shifting of transparency and payment release functions – particularly for use on mobile devices. These app-based solutions are more than simply “in vogue”; they have the potential to give decisionmakers the freedom to respond to unique situational requirements (for example, to manage last-minute payment requests or to address threats such as unauthorised access).

But, looking further ahead, what other emerging technologies might treasurers embrace? The typical responses from our clients are rather telling: beyond functionality as a requisite, they require easy-to-implement, secure and adaptable solutions and, ideally in the current environment, they should be cost-effective.  We can also foresee that the future of cash management will be in the cloud and driven by an array of API-based tools that seamlessly plug in to existing systems.

The path to digital cash management has so far been long, but the ways in which treasury functions have adapted to the new normal with considerable ease shows the potential for further adoption of emerging technologies ahead. Commerzbank, in this endeavour, will never be standing still: by working in close cooperation with our peers and pioneering fintechs, we will commit to bringing our clients the best-in-class technologies that can futureproof their business, ready for any ebbs and flows ahead.

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