Thought Leadership

Figure 1. IDC MarketScape Worldwide SaaS and Cloud-Enabled Enterprise Treasury and Risk Management Applications Vendor Assessment Source: IDC, 2023   IDC Opinion In times of uncertainty, businesses rely heavily on liquidity management to stay...

Figure 1. IDC MarketScape Worldwide SaaS and Cloud-Enabled Enterprise Treasury and Risk Management Applications Vendor Assessment Source: IDC, 2023   IDC Opinion In times of uncertainty, businesses rely heavily on liquidity management to stay prepared for the unknown. Between global conflict, natural disasters, political unrest, and the ever-looming shadow of economic uncertainty, the ability to manage liquidity and cash is becoming a higher priority than ever. The current state of the world gives treasury management software (TMS) providers the opportunity to capitalize on an ever-growing need. Businesses use liquidity to determine how easily assets can turn into cash. A liquidity ratio shows how financially stable a business is by demonstrating what a business owes versus what it owns. With a high liquidity ratio, businesses are more prepared to pay short-term liabilities and any unexpected expenses, bills, or obligations. A low liquidity ratio shows that it may be difficult for a business to turn assets into cash within a brief period if an unanticipated situation occurs and, therefore, is at a greater risk of bankruptcy. The ability to accurately determine a business' current state of liquidity is essential for making wise business decisions. In addition, a business' liquidity ratio is usually a factor in decision making for lenders and investors looking to provide loans or funding. They want to have an idea of how easily the business could obtain cash if needed. In times of increased inflation and skyrocketing interest rates, liquidity ratios can make or break a business. For these reasons, the ability to accurately determine and manage liquidity and cash is an even greater concern to business owners now than ever. Using the proper treasury management system can assist with these liquidity concerns while guarding against error-prone manual processes, low cash flow awareness, compliance issues, and disorganized data. Key features to take under consideration when determining the best treasury management solution for a business include automation capabilities, analytics and reporting, forecasting capabilities, compliance functions, reconciliation, security and, of course, liquidity tracking and cash management. These features assist with a variety of pain points a treasurer and accounting department may face and provide decision makers with real-time views of the business' financial standings. As a result of current events and a growing emphasis placed on liquidity and cash management, treasury management solutions are finding themselves in the spotlight. Common features of treasury management systems include liquidity and cash management, proving them invaluable to businesses struggling to maintain an accurate picture of their cash flow and current liquidity ratios. While these features are extremely useful, they can fall under scrutiny if not updated and streamlined according to the current needs of users. Now is the time for treasury management software providers to highlight their liquidity and cash management features when interacting with potential clients. This is also a perfect opportunity to improve and streamline processes that may be outdated, overly complicated, or difficult to implement, as these features will be under greater scrutiny than usual. Taking the initiative to meet the evolving liquidity and cash management needs of today's treasurer will set up a software provider apart from the competition. Enterprise Difference Within the enterprise segment, organizations often have dozens (sometimes hundreds) of back-office applications connected to the process or resulting data from travel and expense management. Data from treasury activities must flow between all the relevant finance functions, including accounts payable (AP), accounts receivable (AR), FP&A, order management, and procurement. In addition, the data must flow outside of the finance teams as well including investors and lenders, certain government agencies, banking/financing partners, and even to certain customers and suppliers. Here are few issues that enterprise businesses feel more acutely than smaller businesses, including: Centralized liquidity/cash data: The centralization of liquidity data streamlines financial operation, allowing for better control for financial leaders. Centralization provides financial leaders with the opportunity to standardize cash management across all legal entities, reduce the number of bank accounts in use, and provide a more holistic view of bank or foreign exchange (FX) exposures. Deep liquidity analytics: Having access to deep analytics provides users with the ability to better predict future liquidity. More importantly, it allows them the chance to find patterns or overlooked items that have business significance (e.g., identifying cash as a revenue-generating asset, monitoring bank fees, and deposit rates). Real-time massive data: Finance leaders need real-time information to optimize decision making but often must wait to the end of day/period/quarter to get an accurate and holistic view of the current state of the enterprise liquidity. Today's liquidity manager needs real-time data to build accurate forecasts and market simulations. Real time is also essential in effective communication of the business cash position between stakeholders. IDC Marketscape Vendor Inclusion Criteria The vendor inclusion list for this document seeks to accurately depict the vendors that are most representative of any given treasury functional buyer's selection list. Vendors were further investigated to ensure that their offerings qualified as "software as a service (SaaS) or cloud enabled" and the vendor had won recent deals. Further, participant companies indicated which other vendors they most often compete against in deals. Also, the treasury software must be able to be purchased and implemented separately from other associated financial/enterprise resource planning (ERP) software. Preference was given to companies with revenue of more than $10 million and/or that were on our watch list of companies within this market. The vendor inclusion list for this document seeks to accurately depict the vendors that are most representative of any given software application on a buyer's selection list based on the following items: Vendors must have a SaaS or cloud offering — on-premises-only applications are out of scope. Software applications can be purchased separately (not just functionality built into a larger system) and are available off-the-shelf without required customization. Software application has capabilities for treasury management features including bank relationships management, corporate payment management, financial risks management, cash and liquidity management, debt and credit ratings, debt and investments, and hedge accounting. The vendor had 2023 revenue in at least two countries. The vendor had at least $5 million in 2023 treasury management software revenue. The vendor had minimum of one treasury product in market for at least three years. The vendor must have a significant footprint with business with more than 1,000 employees. Advice for Technology Buyers The process of transitioning treasury management from a manual model to an intelligent model can be a challenging one. It is important to structure your treasury department to be more efficient and agile to cope with the ever-changing compliance/regulatory/liquidity demands. Here are key steps in the journey toward optimizing your treasury management department through the addition of an advanced software package like the ones listed in this document: Begin by looking inward: Before you choose your treasury management software vendor or even whether a dedicated TMS is a sound investment for your organization, first you should take the opportunity to do some self-reflection. Here are key questions to ask regarding the internal resources and processes: What are the issues I would like to resolve with this new system? Are the issues technology related? What are my internal support resources and capabilities? How should we define success for this implementation? Which internal stakeholders should we include in the evaluations processes? Select the right partners (internal and external): The first step in the journey to TMS is developing a strategy and plan for the implementation. This includes doing due diligence in finding the right TMS vendor. Here are key questions to ask regarding the TMS vendor: Does the vendor have experience with my type of product, service, and company size? Can the vendor show you a live demo with your organization's "live/real" data to show the benefit to the business? Does the vendor understand the regulations that will impact my business? How are these regulations reflected in my current product, and how will they change in the future? What is the vendor's strategic investment outlook for the next three to five years? Why? How will that change and enhance my business? Take ownership of the implementation: For optimal results, organizations must take an active role in the actual implementation of the software. Treasury management software touches upon other back-office systems (ERP, finance, accounts receivable, supply chain, inventory, etc.). As a result, extreme attention must be given to how the TMS system is set up and how it interacts with other systems within your organization. Here are key questions to ask regarding the TMS implementations: What levels of support are available, and are they geographically available for my business? How should I set up the service-level agreement (SLA) before signing any contracts? Can TMS integrate with my company's other IT systems and those of my partners? Which IT systems need to integrate and to what degree? How are we set up to deal with frequent product updates? Note that post-implementation is critical: The success of any SaaS implementation hinges on what happens after the implementation is up and running. This is where change management takes center stage, and the people side of treasury management becomes essential. Here are a few key questions to ask regarding the post-go-live phase of TMS implementations: Do we have a strategy to encourage rapid adoption among treasury employees? Do we have the right amount of training for employees to master the new features within the TMS system? Are we communicating the purpose and benefits of the system change to the treasury employees? Have we aligned existing policies and procedures to enable the adoption of the new workflows? This IDC MarketScape vendor assessment assists in answering these questions, among others. The goal of this document is to provide potential software customers with a list of treasury software companies that have taken great strides to incorporate the previously listed capabilities. We have profiled and assessed their capabilities to support the complicated area of treasury management software. Kyriba After a thorough evaluation of Kyriba's strategies and capabilities, IDC has positioned the company in the Leaders category in this 2023 IDC MarketScape for the worldwide SaaS and cloud-enabled enterprise treasury and risk management applications market. Kyriba is a secure, scalable SaaS platform that leverages artificial intelligence, automates payments workflows, and enables multinational corporations and banks to maximize growth, protect against loss from fraud and financial risk, and reduce operational costs. Kyriba's platform offers a range of solutions, including cash and liquidity management, forecasting and budgeting, risk management, payments and bank connectivity, and financial accounting. The platform is designed to help companies of all sizes, from small businesses to large enterprises, and manage their financial operations more efficiently and effectively. Quick facts about Kyriba are: Employees: 1,000 Total number of clients: 2,500+ Globalization: 100+ Industry focus: Chemicals, consumer goods, energy, financial services, healthcare, higher education, insurance, manufacturing, nonprofit, real estate, retail, technology, transportation, hospitality, and utilities SaaS: Multitenant SaaS platform Pricing model: Combination of annual subscriptions and consumption based Partner ecosystem: 100+ Strengths Data and connectivity: Kyriba's platform uses APIs to unify data across the enterprise, AI to predict and enrich new data, and embedded Analytics to visualize and present data patterns and reporting. Kyriba offers out-of-the-box, certified connectivity to ERP vendors including SAP ECC and S4/Hana, Oracle, NetSuite, and Microsoft Dynamics and includes prebuilt connectors to over 1,000 global banks for bank reporting and payments. Kyriba offers a SWIFT service bureau alongside APIs and other direct to bank connectivity. More than treasury: Kyriba's platform offers treasury alongside risk management, payments, working capital, and connectivity products. Each can operate standalone or as a single solution. Kyriba was originally built as a cash management solution and has developed into a comprehensive TMS with products that are designed for IT and other branches within the office of the CFO. Challenges Client's short-term goals: Focus by clients on immediate functional requirements to replicate their current business practices without fully strategizing future requirements and involving their IT teams soon enough to leverage available transformation capabilities can be a challenge when implementing a new TMS. Client internal alignment: As Kyriba offers more than TMS capabilities (payment factory, payables finance, and receivables finance), there are challenges in obtaining an internal alignment of many teams in the client organization (CFO, treasury, accounting, procurement, IT, etc.) to leverage all Kyriba's capabilities. Consider Kyriba When Consider Kyriba if you are looking for a comprehensive TMS that features a robust cash and liquidity management system from a company that also offers many additional finance department capabilities. About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Copyright and Trademark Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or [email protected] for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or web rights. IDC and IDC MarketScape are trademarks of International Data Group, Inc. Copyright 2023 IDC. Reproduction is forbidden unless authorized. All rights reserved.

This eBook explores the use cases for AI in treasury management and corporate finance, as well as the barriers preventing mass adoption of the technology. These technologies are applicable in cash and liquidity management,...

This eBook explores the use cases for AI in treasury management and corporate finance, as well as the barriers preventing mass adoption of the technology. These technologies are applicable in cash and liquidity management, payments fraud detection, documentation of treasury processes, and more. AI/ML Today While artificial intelligence (AI) and machine learning (ML) have gradually worked their way into everyday life in treasury and finance, but we’ve only scratched the surface of their potential. It’s important to understand that AI and ML are not technically the same thing. While the terms are often used interchangeably, they are two distinct technologies. AI is a broader term denoting intelligent machines that can simulate human thinking capability and behavior. ML, in contrast, is an application or subset of AI that enables machines to learn from data without additional programming.1 What makes AI so powerful now, as opposed to just a few years ago? The simple answer is data. We have so much more now than ever before. Both companies and consumers are using a host of applications that generate mass amounts of data, and with the right systems in place, that data can be transformed for better decision-making. Data scientists train AI models on historical data. Next, they run new data through the trained AI model to make much more informed predictions. Such models are incredibly useful for treasury and finance, which have had to make rapid adjustments in recent years to keep organizations running. Applying AI in Treasury Management and Finance With applications proliferating across so many areas, as well as the connectivity that banks and technology providers are building through APIs, treasury and finance departments have more data at their fingertips than ever before. But processing all of that data manually is nearly impossible. That’s where AI comes in. Technology providers train AI models on data that is extracted from operational applications and placed in a central repository. These can vary and have different advantages. Data warehouses store data in hierarchal dimensions and tables. Data lakes, in contrast, store massive amounts of raw data, storing it in flat architectures to allow users more freedom for data management.2 Unlike robotic process automation, which can only replicate processes, AI models can analyze data and identify trends and patterns in a fraction of the time that humans can.3 This allows for much faster and complete conversion of raw data into meaningful information that treasury and finance departments can use. AI models can be used for various treasury functions such as cash forecasting, payments fraud detection, and working capital optimization. For example, AI can drastically improve receivables management. As noted in a recent AFP Treasury in Practice Guide, a technology company’s accounts receivable (AR) team was struggling to manually process over 2,500 monthly checks, leading to major delays. Realizing that it needed to make a change, the AR team worked with its banking partners to implement an machine learning-enabled receivables solution. The solution automated the manual gathering, consolidation and formatting process that the AR team had been doing every morning, allowing most payments to process within two days. Furthermore, over time, the machine continues to learn from exceptions, improving accuracy. It has also provided the AR team with more opportunities to increase electronic payments adoption. How Machine Learning Works for Treasury Payments Fraud Detection Modern payments fraud detection software uses AI to screen payments against historical payment data pulled from a data source. All the characteristics of payments—the payment amounts, payment types, the number of payments, where they’re going, etc.—reside within that data source. A machine then analyzes that data, which enables it to identify anomalies in future activity. A number of different models can be used to pinpoint those anomalies. One of the most effective is an isolation forest methodology. This model compares all the different variables in the data source against new payments to determine the normality of those payments. Any payment that has an unusually high abnormality rank is flagged and set aside for further review. Machine learning solutions can even show users that variable comparison, providing them with insights into how that normality/abnormality rank is calculated. Users can even set their own levels for abnormality tolerance. Companies that work in industries that are high targets for fraudulent activity might want a very low abnormality tolerance, whereas organizations that are less at risk might want to set it much higher so that minor anomalies won’t disrupt payment activity. Additionally, workflows can be embedded to swiftly resolve anomalies. Real-Time Screening, Alerts and Notifications The rise of same-day and real-time payment systems has increased the need for real-time responses to fraud attempts. Modern fraud detection software uses AI/ML to screen payments against historical payment data, pinpointing any anomalies. By providing more complete data, these solutions enable data-driven decision-making. Solutions can flag any abnormal payments, providing insights into the variables that determine payment normality. Generative Adversarial Networks The lack of data around fraud can be a problem for AI models. Training AI models can thus be challenging because the algorithms often can only learn from good payments and, at best, a handful of bad ones. Generative adversarial networks (GANs) can solve this problem. GANs are deep learning models that pit two separate neural networks against each other. One network mixes real data and synthetic data together and attempts to outwit the opposing network. By training fraud detection models on these competing networks, fraudulent transactions can be more easily identified in real data. Cash Forecasting Manual processes persist in treasury, even with the advent and evolution of technologies like AI. Many treasury departments continue to rely on Excel, even though it can produce highly inaccurate cash flow forecasts that can negatively impact the business. Organizations can increase the accuracy of their short-term cash forecasting with AI-based tools that learn from the history of cash flows and continuously improve inflow projections over time. With deeper analysis of this data, organizations can better predict cash flows by season or region, which in turn reduces efforts for key functions like accounts payable by, anticipating free cash flow closing, and adjusting the payment campaign budget. AI/ML users also can select what companies, currencies and cash flow types to include, as well as adjust the forecasting period to align on short-term payment/funding/investment decisions. With interest rates increasing, treasury teams can optimize liquidity by reducing their maximum idle cash while also minimizing the risk and cost of overdraft. Treasury will be able to determine how much of its budget it can allocate towards certain expenditures over a period of time, or whether it will need to borrow funds to make certain payments. AI tools can factor in multiple variables and errors found in historical data to better estimate cash inflows and outflows over the next seven days. This allows treasury to determine how much of its budget it can allocate towards certain expenditures over that time period, or whether it will need to borrow funds to make certain payments. Soon, as these tools accumulate more data, they will be able to make predictions on mid- and long-term horizons. Check out Kyriba's latest AI-powered cash forecasting module: Cash Management AI to see how AI in treasury management can already be used fluently for short-term cash forecasting. ChatGPT and Generative AI in Treasury Management ChatGPT has become a popular generative AI app, in part because of a $10 billion partnership with Microsoft. ChatGPT is well known for its natural language processing chatbot abilities that answer any question. Yet the real opportunity for ChatGPT and generative AI is to change the way we interact with online software applications, including online search and business applications like ERP and treasury management systems (TMS). ChatGPT can also be used within a TMS where the user gives instructions to the system using keywords or questions. With a user experience (UX) that has been optimized for natural language processing, the TMS can respond to basic queries such as “What is my exposure to the Yen?” or more complex requests, including “What caused the variance in my forecast last week?”. Treasury may also find this technology to be useful in documenting treasury processes and procedures. Documentation and how-to manuals take time and effort to compile. Fortunately, ChatGPT and similar generative AI models can do all the writing for you after being fed a minimum amount of information. Take Action The demands of today, and tomorrow, dictate that CFOs and treasurers must act. While pervasive economic hardships and rising global inflation may make it difficult for companies to justify spending on new technology, they are facing massive challenges if they don’t adjust to the pace of the modern business world. Rest assured; if your peers aren’t investing in this technology yet, they will be soon. Many companies have also stockpiled their cash reserves throughout the pandemic — now is the time to begin spending some of that cash on tech enablers, one good area to look into being AI in treasury management. Treasury teams would be wise to look for a trusted partner as they explore possible use cases of AI in treasury management. There are technology providers with teams of data experts and portfolios of treasury apps available. Many tools are already in production and require minimal effort on the part of the company. As we emerge from the pandemic—a time when companies were focused primarily on survival—the focus now needs to be on growth. As more data becomes available, growth will come from those organizations that are able to harness that data and turn it into useful applications. Others will drown in it and fall behind. With AI in treasury management to assist the human, treasury teams can ensure that they are positioning their organizations for success. Related Resources Javapoint: Difference Between Artificial Intelligence and Machine Learning TechTarget: Data Lake AFP: Identifying Value for Treasury: Automation, Machine Learning & Artificial Intelligence PYMNTS Intelligence: How Payments Automation and Digitization Can Reduce Errors and Streamline Transactions Gartner: Success With AP Invoice Automation Requires More Than Paper to Digital ERP News: Automation for Business Intelligence Kyriba: 15-Minute Guide to Payment Hubs Want to see how AI in treasury management improves cash forecasting? Join Kyriba's upcoming monthly live demo sessions. An on-demand demo session is available here.

Cash is still king — but the value of cash and forecasted liquidity held or planned by the company can only be realized via cash visibility, when the treasurer knows what cash is available,...

Cash is still king — but the value of cash and forecasted liquidity held or planned by the company can only be realized via cash visibility, when the treasurer knows what cash is available, where it is held and what flows are expected in the future. However, all too often, treasurers do not have access to their organization’s full cash picture. There are many good reasons for working with multiple banks across different markets, but complex banking structures and sprawling geographical footprints can make it difficult to achieve complete cash visibility into current balances, never mind impacting the accuracy of cash and liquidity forecasting. Luckily, achieving full cash visibility over cash is not an insurmountable goal. This eBook outlines the action plan treasurers can take to gain full visibility over their cash, from gaining a clear view of current bank accounts to increasing the accuracy of the cash forecast. "More than a quarter of global cash is not visible to corporate treasury on a daily basis.” Source: PWC’s Global Treasury Benchmarking Survey   What is Cash Visibility? Cash visibility is critical to making effective decisions. Armed with clear visibility over the company’s current cash position and future liquidity flows, treasurers can: Invest cash strategically Support the CEO, CFO in strategic initiatives with the right levels of cash and liquidity Use cash management structures effectively Minimize debt and interest expense Make better informed hedging decisions Reduce bank fees Bolster treasury’s reputation within the organization Key Vocabulary Cash Visibility means knowing what cash the company currently has and where it is held. It also means being able to predict what cash the company will have in the future. Cash Budgeting generally performed by FP&A, is more focused beyond one year and has an increased emphasis on free, cash-flow guidance. The reconciliation of indirect budget-based forecasts with direct cash flow forecasts are increasingly managed quarterly. Cash Positioning is concerned with today and often the next five business days. The purpose is to manage daily liquidity to ensure shortfalls are covered and surpluses are concentrated to earn some yield on excess cash. Cash and Liquidity Forecasting typically extends cash positioning with horizons anywhere from one week to one year. Forecasting leverages multiple data sources to increase confidence in the projected liquidity balances so that better cash decisions can be made. Why is Cash Visibility Important? Cash visibility is the lifeblood of any organization. A company that has clear visibility can invest or deploy cash strategically while minimizing debt and interest expenses. Accurate visibility also increases the effectiveness of hedging decisions and enables the treasurer to mitigate their organization’s risk to exposures while supplying the CFO with funding in support of strategic initiatives. Conversely, a lack of clear visibility can result in numerous issues, including: Insufficient buffer of surplus cash to absorb unforeseen expenses Idle cash, lower returns on investments Insufficient return on cash Higher than necessary borrowing costs Unnecessary bank fees and costs Inadequate support for CFO strategic decision-making Less competitive results and less effective treasury organization as a partner for finance Related Resource Unreliable cash visibility and forecasting is the treasury issue that causes CFOs the most concern. "The top benefits of using Kyriba are the visibility that it provides, the timeliness with which it provides that visibility, and the ease of use, in that it provides it all in one simple one-stop shop.” TRISH FISHER Director, Treasury Operations, WeWork The Path to Cash Visibility Whether the treasurer is seeking to pay down external borrowing or maximize return on investments, the first step is to know what cash is currently available. But that’s not all, treasurers also need to be able to predict future liquidity flows and keep the right people informed. Achieving cash visibility is possible by using 5 definitive steps to move towards greater cash visibility and flexibility: Identify and Record Without an inventory of your banks and accounts, a complete cash visibility picture is unattainable. Prioritize and Rationalize Identify where to begin, difficult regions or banks, and determine accounts for closure. Automate Bank Connectivity and Reporting Harness the most costeffective and leading connectivity methods to access data from banks in an automated way. Generate and Streamline Cash Positioning with Liquidity Forecasting Accurately predict cash flows over the coming hours and days, and match actuals to forecasts to speed up daily reconciliation and cash application. Enhance and Optimize Future Cash Flow with Liquidity Planning The ability to see a holistic, aggregated view of cash and liquidity sources creates more accurate views and predictable free cash flow. Knowing your predictable liquidity creates a better understanding of any future liquidity shortfalls. Step One: Identify and Record Regardless of the scale and breadth of your organization’s banking and accounts structure, it is important to understand the banking landscape of all business units and subsidiaries. Whether operating in a domestic or international capacity, banking relationships. the accounts, the purpose of those accounts, and the core attributes of the bank, the accounts and their purpose all are necessary to begin a cash visibility project. This has many implications for the success of global cash visibility projects, such as: Establishing a full inventory of managed accounts, ensuring all balances are identified Ensuring the proper scope and prioritization of your project Optimization and rationalization across banks and accounts Effective comparisons and evaluations across banks for technical capabilities for connectivity, tech, regional coverage and other important services An effective bank relationship and bank account management database is the starting point for successful projects, but particularly when it comes to cash reporting. Where cash is rolling up in concentration or pooling structures, how funds are being transferred, purpose of the accounts, and even regulatory limitations all have a say in how you engage with your banking partners and the extent of cash flexibility. Step Two: Prioritize and Rationalize Bank reporting rationalization ensures accounts are identified and open for the right reasons. Often, particularly in international or more complex organizations, accounts are opened in haste to support business development and decisions. This is often necessary for statutory purposes, or to deal with an unforeseen acquisition or reorganization. However, if this situation exists, it’s possible cash and liquidity is not well defined or identified, as well. Organizations must understand and rationalize accounts, prior to moving into the next ‘step’, but this can continue throughout the project in parallel, too. The focus here is on creating a streamlined, but effective banking and account structure that fulfills treasury’s mission of safeguarding and optimizing cash, while still meeting specific business unit or subsidiary’s requirements. Bank improvements in reporting quality as well as the leading application of configuration within leading treasury management systems, creates the scenarios where previously opened, special-purpose accounts are no longer required to serve special purposes such as revenue, collections, treasury, or payables accounts. With banks being able to provide significantly improved quality of liquidity information within bank statements and other special purpose reports, and the speed of that data increasing through APIs, some companies can conduct business with one or two bank accounts per legal entity, business unit or country office. The focus here is on creating a streamlined, but effective banking and account structure that fulfills treasury’s mission of safeguarding and optimizing cash, while still meeting specific business unit or subsidiary’s requirements. Step Three: Automate Bank Connectivity and Reporting Visibility over multiple accounts requires automated bank connectivity. Companies of all sizes are often challenged in finding and implementing the right bank connectivity solution and is a critical driver of lack of visibility into cash. On the surface, bank connectivity is easy, so long as treasury teams prioritize the following: Security Automation Speed and Cost There are a variety of connectivity options to deliver security, automation and cost objectives. Yet, not all connectivity options are alike. Bank connectivity comes in a number of different forms, including: Host-to-host solutions, such as FTP, or leading practice connections using application programming interfaces (APIs) Country or region-specific protocols such as EBICS, Editran, Zengin Global cooperatives like SWIFT , which offer flexibility to manage your own connectivity or use a service provider and fully managed service bureaus The ideal connectivity solution for an organization will actually depend on factors such as bank and payment transaction volumes, bank account structures, and the location of company banks. These characteristics — in combination with what technologies the banks can (and prefer) to support — will drive the ideal connectivity choices. In practice, a combination of connectivity methods is likely the best solution to optimize costs while maintaining automation and security. Without utilizing varying connectivity methods, the company may spend more than necessary and potentially sacrifice information transparency. While managing multiple connectivity methods on your own may seem complex, connectivity-as-aservice models gives organizations faster global access to banks with pre-configured and existing connections. This coverage of the connective landscape for banks saves effort and time spelling big cost savings for the project phase as well as ongoing productive operations. When you select the right vendor to simplify bank connectivity by taking care of everything — from building connections, monitoring availability, and delivering automation all while providing new technology like APIs, organizations win and save money. Step Four: Generate and Streamline Cash Positions and Liquidity Forecasts The goal of cash positioning is to establish a realtime view of cash at any point in time and to be able to reconcile prior-day forecasts to enable the deployment of cash throughout the organization more quickly and accurately. Effective cash positioning reduces idle cash, creating opportunities to earn immediate yield while providing certainty over risk exposures that cash is exposed to. As a process, cash positioning involves gaining a real-time view of the company’s cash position at any moment in the current day(s) by consolidating a number of different sources and replacing old data with more up-to-date information. With today’s APIs gaining the real-time, near-instantaneous view of cash and liquidity is easier than ever. Within treasury technology, building the cash position typically involves combining a number of data sources: Prior-day balance — automatically downloaded from banks at the start of the day Current-day bank reporting — automatically downloaded from banks throughout the day, either at specific times (e.g., 1st or 2nd presentment) or as a constant stream of data via an API Expected payables and receivables — from the organization’s ERP and reported/cleared from bank statement details Treasury financial transactions and settlements — which are integrated within the treasury system Building a cash position is just the start. After building a cash position, it is then necessary to maintain and reconcile it. Maintaining the cash position involves updating and replacing cash flow data with more accurate information via intra-day updates from internal systems and banks. Reconciliation of the cash position is the matching of actuals to forecast flows, which is often done first thing in the morning as a part of typical treasury processes. The goal is to identify and understand surprises — for example, if a transaction did not happen yesterday then it may happen today, meaning the unreconciled variance needs to be rolled into today’s position. For many organizations, this process can be time consuming, so rules-based automation or artificial intelligence can be introduced to simplify the process. Key requirements for cash positioning include interactive dashboards and clear communication within — and outside of the treasury organizations: Interactive dashboards enable cash managers to drill down through multiple levels into any component of the cash position. Positions should be viewable by multiple dimensions in real-time by line item, bank, entity, currency, etc. Communication within and outside of treasury is critical. The treasurer, CFO and finance personnel managing subsidiaries all require cash visibility, so delivering visual and detailed reconciled cash positions is a critical outcome of daily cash positioning. Effective cash positioning and liquidity planning leads to numerous benefits for the finance organization: Keeping the CFO and the Board up to date with reliable and accurate cash position information Mobilizing cash across the organization for funding and investment purposes Enabling cash management processes such as pooling, sweeping and intercompany borrowing Optimizing interest income and expense via better informed borrowing and lending operations Reducing external borrowing by using internal cash resources effectively Step Five: Enhance, Optimize and Predict Cash and Liquidity While cash positioning can be used to predict cash flows in the coming hours and days, cash forecasting with liquidity planning information creates more accurate, longer horizons beyond weeks, extending into months, years. Cash forecasting must not only be accurate, but predictive using more historical and current data to be truly effective. Without complete confidence in projected forecasts, the cash forecast cannot support treasury in improving cash utilization. Cash forecasting is needed to help treasury invest cash over longer maturities, secure borrowing to fund operations and make more effective hedging decisions. And confidence in the cash forecast is the difference between achieving these outcomes and hoping to do so. So why do so many companies struggle to achieve an accurate forecast? Common challenges include a lack of accurate data sources, lost results from past forecasts, ineffective methodologies and a lack of alignment with performance metrics. If a forecast isn’t reliable, treasury is unable to trust it and therefore cannot use the cash forecast to make critical decisions. It is crucial to incorporate data sources from treasury, like financial transactions along with all the normal P2P and O2C cycle flows from the ERP Cash forecasting and Liquidity Planning creates future views of anticipated free cash flow and helps all of finance from FP&A to the CFO better strategic accuracy in decision-making. Identify, Find the Data Consolidate the Information Measuring Forecast Accuracy Predictive Analytics: Optimize Your Forecast Find the Data: Collaborating with Other Teams Forecasting incorporates key data points from elsewhere in the business so that effective collaboration can be administered between AP, FP&A, IT and regional controllers who own valuable forecasts data and/or administer systems to enhance forecast visibility. This collaboration is essential in making sure everyone involved knows what they are expected to provide with executive oversight to ensure that collaboration is prioritized. Consolidating Forecast Data Automating the integration of forecast data into a single system of record is the next critical factor in achieving effective forecasting. In many cases, source data may come from various ERP modules or in some cases other special purpose systems like procurement or revenue recognition/accounts receivable. In the past and in some situations, spreadsheet data to augment or provide coverage for areas or business units without systems could be a source, too. While consolidating data into a single system could be an IT-intensive exercise, best practice is to eliminate the need for internal IT resources, reducing the cost and time required to integrate systems. This can be done by having pre-built connectivity and integration through APIs provided by your treasury system. Measuring Forecast Accuracy The final piece of cash forecasting is to measure the accuracy of the cash forecast at a detailed level. Measuring forecast performance is critical to understanding how effective each line item and source of information was, offering valuable insight into where the forecast can be improved. This analysis must be done at a detailed level. For example, measuring accuracy before and after a 90-day/13- week period can hide many anomalies and offers no meaningful conclusions. Many organizations will measure week over week, while some will drill down at a daily level. Once accuracy is measured, the treasury team must implement a feedback loop to effect meaningful change. Regional controllers, for example, can only improve if presented with detailed facts. Further, standardized KPIs — that ideally would form a component of performance reviews and compensation calculations — go a long way in reinforcing desired forecast behavior. This is where commitment from the CFO will drive effective forecast performance. Optimize: Predictions for your Cash and Liquidity Once the foundation is established for forecasting your liquidity with the prior steps, the next level naturally leads to identifying the technology solution that will offer your organization and team the support and improvements for your liquidity forecasting. Technology can do more to provide value through expanding the horizon of your forecast, depth of insight, accuracy, and enhanced user experience with information already within your organization’s grasp. Through tools that leverage artificial intelligence companies today should be more advanced and be capable of: Create predictive dashboards and enhanced reporting Cash forecasts with risk models built-in Identify optimum cash cushion, draw-down levels, and investment levels Characteristics to look for when evolving and upleveling your forecasting efforts should include looking to solutions using AI-based predictive analytics for forecasting including calculations based on risk models that give treasury and FP&A teams the optimal cash cushion. Additionally, look for solutions giving you: Cash flow by level of confidence Recommendations for optimal investment strategy Predict liquidity requirements To successfully deploy an AI-driven predictive forecasting model, organizations must prepare structured and normalized historical data. Machine learning algorithms will identify patterns within the data to make predictions about when, for example, customers will actually remit payment. This AI-predicted data stream will align with other forecast data sources to deliver a more intelligent cash forecast to predict future liquidity needs. Human interaction remains important to ensure liquidity forecasting and planning aligns with internal risk policies of the team and organization. AI is a tool to complement, rather than replace, treasury teams as they execute more complex tasks and processes. In this role, AI is a critical piece in the drive to towards real-time treasury decision making and the progressions towards 24/7 liquidity management. Optimizing Cash Visibility Benefits Achieving full cash visibility takes time and effort, but the rewards are significant. Armed with a complete, accurate and up-to-date picture of the current cash position and liquidity planning flows, treasurers can: Make timely and confident decisions about activities, including investments, borrowing, cash concentration and hedging Pay down external borrowing with a clearer view of the cash available Invest strategically with a clear picture of current and future flows Reduce bank fees by closing or combining redundant bank accounts or negotiating with banks from a position of knowledge Minimize debt and interest expense by making the best use of internal cash and reducing external borrowing Gain a clearer picture of risk exposures and manage those risks more effectively Optimize planning of borrowing and lending operations Increase effectiveness of hedging by ensuring decisions are based on complete pictures of current balances and planned future transactions Cash Visibility – Final Thoughts The future of treasury technology is here and advancing rapidly; some banks have deployed their own APIs to integrate with their customers’ systems. New platforms are opening new products and services for corporate customers. One of these innovations is the movement towards real-time bank reporting. In many parts of the world, intra-day reporting happens less than twice per day, and in some cases not at all, meaning that daily cash positioning is largely driven by prior-day reporting and expectations of clearings throughout the day. Real-time bank reporting, delivered only by APIs, is the future and will be a game-changer for cash managers looking to achieve instant cash visibility into accounts. Additionally, Liquidity Planning extends the value of real-time treasury with the inclusion of cash, treasury instruments, planning information and liability information to deliver longer range strategic decisions by the CFO. Combined with real-time payments, treasury teams will be in an enviable position of not only having real-time views into bank accounts but also being able to mobilize cash domestically — and eventually cross border — within seconds. The transformation to real-time reporting will further pressure treasury teams to employ the right processes and analysis to effectively manage cash information in real time. It will be a change for those organizations that lack modern treasury technology, but an opportunity for enabled organizations to earn a competitive advantage in the utilization and deployment of cash. How Kyriba Can Help Kyriba can support you in achieving full visibility over cash. Kyriba helps organizations reduce the cost and complexity of bank connectivity — whether a company is connecting via SWIFT, using APIs, leveraging country protocol or using a combination of channels prioritizing security, automation and cost minimization. Organizations can easily keep track of signatories, manage workflows and store documents thanks to the control over all global bank accounts given by Kyriba’s bank relationship management solution. Additionally, companies can maximize the accuracy of their cash and liquidity reporting with Kyriba’s detailed and flexible variance analysis and feedback loop to forecast sources. With a full picture of current balances and future flows, you’ll be better positioned to make confident decisions about cash.   Want to learn more about how to achieve cash visibility for better cash forecasting? Check out this webinar to hear Kelkoo Group, a leading e-commerce company, shares their best practices and the payoffs of superior cash forecasting.

The IDC White Paper commissioned by Kyriba validates the emergence of a new practice area in Enterprise IT that includes risk management, payments, real-time connectivity, treasury management and working capital optimization. Download this report...

The IDC White Paper commissioned by Kyriba validates the emergence of a new practice area in Enterprise IT that includes risk management, payments, real-time connectivity, treasury management and working capital optimization. Download this report to understand more about the emerging trends and critical areas of practice that define how leading companies can outperform in operational efficiency, technology adoption, and process maturity. Enterprise Liquidity Management: 51% of leaders can produce a consolidated view of cash and liquidity in under one hour compared to 8% of the less equipped companies; Risk Reduction: 79% of leaders have implemented very effective payment fraud prevention and 69% of them effectively hedge to protect their liquidity; Real-Time Decisions: 93% of leaders leverage real-time insights, while 85% of them have integrated data from partners and third-party members into their enterprise platforms. Situation Overview For CFOs, treasurers, and corporate boards, the COVID-19 pandemic represented a moment of clarity. Seemingly overnight, CFOs were faced with a crisis bigger in many ways than the 2008 financial crisis. In the space of days, treasurers had to shift from managing long-term strategic initiatives of the business to ensuring immediate access to cash to fund basic business operations. Corporate finance leaders long burdened by dwindling IT budgets and limited head count were forced to lean heavily on their treasury and cash management tools. Unfortunately, some treasurers were hampered greatly by their legacy software packages, thwarted by a lack of agility and visibility with their legacy software. Yet, as with all major events, CFOs are often the powerful catalyst for change. The role of the CFO was already changing, but now, because of the past year, the CFO’s environment has changed as well. Corporate finance leaders long burdened by dwindling IT budgets and limited head count were forced to lean heavily on their treasury and cash management tools. Key Pain Points for Today’s Liquidity Management Teams To better understand these changes, IDC conducted a survey of more than 800 corporate finance leaders and practitioners in August 20211 to explore the emerging importance corporate finance leaders are assigning to liquidity management, both during times of crisis and to leverage opportunities for growth. The results of the survey were compelling in many aspects including findings that strongly indicate urgency for CFOs, treasurers, and other financial leaders to design and deploy strategic initiatives to manage liquidity holistically. Effective and efficient liquidity management is among the top priorities for survey respondents2. Here are a few reasons driving increased urgency for liquidity management for treasurers and other financial leaders: Ineffective communication of key treasury/financial metrics to key stakeholders through the company. Many financial leaders struggle to gather the data needed to effectively surface the key metrics to the executive teams and board members. A major part of this issue is the relative lack of real-time access to liquidity data. The survey shows that less than 30% of treasurers can leverage treasury insights in real time. Managing points of revenue leakage including fraud and payment optimization. Given the current environment of uncertainty, financial leaders are doubling their focus on areas of revenue leakage including bank fees/changes and fraud management issues. Only 42% of leaders would characterize their ability to protect their cash/liquidity against fraud as very effective. Given the average company will experience 5–10 fraud incidents per year, the impact on liquidity/cash is immense. Fraud is not the only source of revenue leakage, according to the survey; the reduction of transaction costs and fees paid to third-party payment providers was among the top 5 priorities for treasurers seeking to improve their ability to move cash and liquidity. Managing constant regulatory changes. The regulatory landscape is in constant flux for treasury operations including VAT changes, open banking implementation, and upcoming LIBOR changes. The CFO must have the tools to cope with these regulatory shifts. It seems that CFOs understand the urgency around this as the survey shows that increasing the budget for treasury technology and tools is the number 1 priority over the next two to three years. Liquidity Management Emerges as a Practice Area The events of 2020 have forced CFOs to prioritize business resiliency and continuity by optimizing liquidity management. This will mean a greater focus on working capital management3 including sourcing external funding and providing financing for critical suppliers efficiently. Given the current economic uncertainty, cash and liquidity management have been top of mind for financial leaders. The pressure to maintain liquidity is tremendous as companies of all sizes fight to retain market position and, in some cases, simply stay alive. As a result, businesses have found themselves needing to reforecast their liquidity and cash flow more frequently (weekly or even daily). However, this is a difficult proposition for any company considering the following survey data points, according to the IDC survey of more than 800 corporate finance leaders: Enterprise liquidity management is a “practice area” for 15% of the organizations. Survey leaders are well underway to operationalizing the building blocks of enterprisewide liquidity management (see Figure 1). Only one in eight companies has extensive visibility into the company’s current cash positions (i.e., real-time view of more than 90% of cash). Less than 5% of organizations can reliably forecast cash beyond three months, with most companies being able to only reliably forecast their company’s cash position out to four weeks. Further, less than 20% of organizations can forecast their company’s liquidity beyond one month. Only half (51%) of the businesses were able to build a consolidated view of their cash and liquidity within the same day of the request. In addition to being able to forecast and reforecast quickly and efficiently, financial leaders found that they desperately needed the ability to simulate future what-if scenarios and to create plans based on those what-if scenarios4. The benefit of this capability is that business leaders can remain in lockstep around core business objectives even as the business environment changes rapidly. Unfortunately, many financial leaders don’t have the tools to support scenario planning for liquidity, and as such, they must cope with limited visibility for decision making. The most prominent area of impact is in decision making for treasurers and their executive teams. CFOs with limited visibility are slower to make decisions regarding money movement, internal funding of projects, or M&A activity. Furthermore, a lack of visibility can even impact the bottom line as companies may choose to be less aggressive in moving money into/out of the exchange markets and may opt for expensive external funding sources unnecessarily. Managing Liquidity Enterprisewide Requires Unification More and more, organizations are coming to the realization that liquidity management is not only a critical aspect of functioning in this “new normal” but also a team sport. Organizations must have a unified approach to all data, processes, and human capital related to liquidity management5. Here are the key characteristics of an enterprisewide unified liquidity management process: Centralized liquidity / cash data The centralization of liquidity data streamlines financial operation, allowing for better control for financial leaders. Centralization provides financial leaders with the opportunity to standardize cash management across all legal entities, reduce the number of bank accounts in use, and provide a more holistic view of bank or FX exposures. Deep liquidity analytics Having access to deep analytics provides users with the ability to better predict future liquidity. More importantly, it allows them the chance to find patterns or overlooked items that have business significance (e.g., identifying cash as a revenue-generating asset and monitoring bank fees and deposit rates). Partnering environment Financial line-of-business professionals are often left on an island. This is often the case for finance directors, controllers, and heads of accounting. In fact, only 20% of survey respondents have their CEO as their champion who initiates unified liquidity management initiatives. The key to executive participation goes beyond simply getting the CEO involved in liquidity management decisions. The key here is to develop a partnering environment for all operational decision makers and stakeholders. This can be exceedingly difficult without the proper tools to support partnering and collaboration across business leaders. Dedicated tools to quickly expose key liquidity metrics to all stakeholders within the business are essential. Seamless integration Data must flow between all the relevant cash functions, including treasury, accounts payable, accounts receivable, FP&A, order management, and procurement6. In addition, the data must flow outside of the finance teams as well including investors and lenders, certain government agencies, credit rating organizations, and evens to certain customers and suppliers7. Only then will financial leaders be able to gain a holistic view of the organization’s current cash/liquidity position. Real-time massive data Finance leaders need real-time information to optimize decision making, but often they must wait till the end of day/period/quarter to get an accurate and holistic view of the current state of enterprise liquidity. Today’s liquidity managers need real-time data to build accurate forecasts and market simulations8. Real time is also essential in effective communication of the business cash position between stakeholders. Follow the Leader The process of managing treasury at the corporate level is complex and ever changing. In these cases, it is not unusual for CFOs and their treasury managers to reach out to gather advice from trusted sources. Leader companies, as defined by the survey, are more likely to reach out to their fintech partners and their accounting/audit partners for guidance than their laggard counterparts9. This is an example of how leader companies create a road map for other companies to follow. Here are a few other areas where leaders are blazing a trail for other companies: Involvement of the top management: A unified liquidity management strategy, when done properly, incorporates feedback from all departments. In short, a unified liquidity management strategy demands a unified approach from top finance leaders and even from the broader business leaders. For example, sales and supply chain have a massive impact on liquidity. As such, the leadership in these areas must also move in a coordinated fashion regarding liquidity management for the business. Visibility for financial leaders and decision makers: Leaders are significantly more aware of their real-time cash availability. Over 79% of leaders were able to get >75% visibility of past liquidity compared with <20% of laggards. Over 75% of all firms can predict their cash up to four weeks reliably; however, beyond four weeks is a struggle for all firms. The logistics of cash and liquidity: All (100%) leaders are very efficient at using pooling and sweeping to manage cash and liquidity; almost no laggards are. Leaders are focused on increasing the adoption of new and existing payment systems. Keeping cash and liquidity protected: Close to 100% of leaders are effective at using business continuity and contingency planning, payment fraud protection, and hedging compared with 35–55% of laggards. Leaders are focused on greater digitalization of end-to-end payment authorization. Setting financial operation up to grow cash and liquidity: Nearly all (99%) leaders have adopted business intelligence techniques to make better decisions regarding liquidity compared with 25% of laggards. Close to 100% of leaders are effective at using business continuity and contingency planning, payment fraud protection, and hedging compared with 35–55% of laggards. Benefits of Enterprise Liquidity Management Liquidity and cash management will be important to adapt to the rapidly changing business environment going forward. Importantly, liquidity management is essential amid any rapidly changing business environment, whether it is a global crisis, supply chain disruption, shifts in a competitive environment, or rapid internal growth as seen with many technology companies. Here are the key benefits of a cohesive and unified enterprise liquidity management strategy: Improved visibility: During the height of the pandemic, business decisions needed to be made within a matter of hours. Unfortunately, in the survey, IDC found that about 50% of organizations need more than one full day to build a consolidated view of their cash and liquidity. Decisions like layoffs and supplier payments had to be made quickly, and in nearly half the cases, according to the survey data, decisions were made without a consolidated current view of cash and liquidity. Companies can’t see upcoming shortfalls or dips in cash flow, which limits their ability to invest in long-term business initiatives like digital transformation, expand into a new geographic market, migrate to a new technology platform, or broaden product and service offerings. Better risk management: Today’s financial leaders are swimming in data and are finding FX, with all its moving parts, to be particularly difficult. Speed is another area of concern for treasurers that desire the ability to move money around the clock and in real time into and out of currency markets. However, with increased speed comes the need for more powerful real-time risk management capabilities. To highlight this, liquidity risk and fraud risk, collectively, were the most important strategic commitments, for financial leaders, to pursue over the next two to three years. More effective compliance: The tax and regulatory environment is constantly changing directly and significantly impacting treasury management processes. Today’s liquidity management professionals must be proactive to understand how these will impact treasury and other financial operations today and how they may impact these operations in the future. Greater process efficiency: The role of the average liquidity management professional is rapidly changing. While cash management and cash forecasting continue to be strategic priorities, liquidity managers and CFOs must also now focus on supply chain finance, insurance, and commodities. Even amid a period of expanding roles and responsibilities, many liquidity managers find themselves working with the same number of resources. The need to do “more with less” among financial professionals represents an opportunity for financial management technology vendors. According to the IDC survey, currently, 77% of financial leaders felt they lack either skills, head count, or budget to modernize their financial operation. Greater flexibility in financing: Businesses with an enterprise liquidity operation are better able to take advantage of a wider spectrum of asset-backed debt solutions including invoice financing, lines of credit, and demand loans. The visibility and control provided by unified coordinated liquidity management allow financial leaders greater working capital options. Further, this financing flexibility also provides a boost in business resilience, which is essential in times of uncertainty. As a result, establishing a receivables financing program was the top priority to improve cash and liquidity enterprisewide. The visibility and control provided by unified coordinated liquidity management allow financial leaders greater working capital options. APIs Unify the Practice of Holistic Liquidity Management The benefits listed previously and the road map laid out in the Follow the Leader section are all predicated on the smooth and rapid flow of data between various stakeholders and their corresponding applications. Specifically, unified liquidity management demands that the data from back-office applications be made available for processing and analysis. In many ways, topics such as cash management, liquidity forecasting, and treasury management efficiency all stem from robust data management practices and tools. The importance of data management has put the spotlight on application programming interfaces (APIs) and the promise they hold when deployed properly. The survey reveals that nearly 88% of respondents consider the adoption of APIs as important or very important. Liquidity management applications exist within a spiderweb of adjacent back-office applications and external data sources. Also, the liquidity/cash management process is a collection point for data from other multiple back-office systems/processes. Working capital management is an example of a process where data must be gathered from multiple systems/processes (e.g., ERP, procurement, accounts payable, reconciliation, and inventory). This interdependency places heightened importance on the smooth flow of data between these systems. This is where application programming interfaces become essential for liquidity management teams. The value of APIs can potentially extend beyond the four walls of the organization. APIs can be leveraged to incorporate external data sources to sharpen financial agility in areas such as FX, banking payments data, credit decisioning data, and even geopolitical factors that may impact the global flow of goods. Yet, according to the survey, just three of five companies are using APIs to integrate and optimize their internal system infrastructure (e.g., ERP, TMS). Further, a similar percentage uses APIs to extract/analyze internal data for reporting/management (e.g., dashboards). Leaders are always looking to adopt technology to support efficiency and agility in treasury operations. It is one of the essential differences between leaders and their laggard counterparts. For leaders, APIs are a core element of liquidity management operation. For example, 92% of leaders consider the adoption of APIs important or very important compared with 58% of laggards. APIs from a Global Perspective Major technology and economic hubs in Europe are significantly lagging behind the global average in terms of API adoption, according to the survey data. This represents hesitancy among major European Union (EU) players to adopt APIs (see Figure 2). Data residency and data privacy initiatives within Europe have tempered the demand slightly for cloud-native financial applications. However, this is changing rapidly as initiatives like the EU-funded project Open Clouds for Research Environments (OCRE) continue to grow and aid in accelerating cloud adoption in Europe. APIs Are Only the Beginning APIs, while important, are only the beginning. They are simply pipes that allow data to flow between systems, but it is not until this flow of data is harnessed that the real power of APIs emerges. APIs can potentially form the foundation of a platform where liquidity analysis and insights are harvested and shared with key stakeholders in real time. As such, the API layer must be paired with an additional layer of software that allows for data to be analyzed and structured into actionable insights. In a sense, APIs move financial data to a larger financial operating system where financial leaders get the business-critical information they need to make liquidity management decisions in real time. Future Outlook Liquidity Management Has Changed Permanently in the Past 24 Months CFOs and treasury managers suddenly find themselves facing a new reality where liquidity management is more strategic and more critical to the business than ever before. As a result, there will be permanent changes to the finance department going forward, including: The velocity of liquidity flow data will increase. Over 50 countries have adopted some form of real-time payment schemes in the past few years, with more to come. This has dramatically increased the speed at which treasury payments can move. This increases the need for improved security and enhanced reporting tools to manage enriched data sets from real-time payment platforms. Liquidity management becomes more essential. The pandemic will force treasurers to prioritize business resiliency and continuity by optimizing liquidity management. This will mean a greater focus on working capital management including sourcing external funding and providing financing for critical suppliers efficiently. The role of the CFO continues to expand. The role of today’s CFO is rapidly changing and expanding. While cash management and cash forecasting continue to be strategic priorities, CFOs are also increasing their focus on supply chain finance, insurance, and commodities. However, many financial leaders find themselves working with the same number of resources. Today’s financial management professionals require more advanced and innovative technology to keep up with the challenge. There will be a greater focus on advanced technology. To keep pace with rapidly changing market dynamics, treasurers will require their tools to be powered/enabled by cutting-edge technologies such as machine learning (ML), big data and analytics, microservices, and enhanced application programming interfaces. Digital banking / payments will be a focus area. Payment management was critically important during the pandemic and will remain so in the post-pandemic treasury world. As a result, digital banking platforms and bank connectivity will be a strong focus area for treasurers going forward. Finance departments long burdened by dwindling IT budgets and limited head count were forced to lean heavily on their treasury and cash management tools during the recent uncertainty. Unfortunately, some finance departments were hampered greatly by their legacy technology. But the survey data reveals that this is set to change (see Figure 3). Here are a few key future technology trends that will shape enterprise liquidity management going forward: Artificial intelligence (AI) is highlighted. Financial leaders for product-centric companies often must move quickly to secure supply chain obligations and financing. Many turned to advanced technologies such as machine learning and advanced analytics to help lower the data analysis/management burden and allow for more accurate decisions regarding financial management at speed. Cloud is leading the way. The most obvious takeaway is that organizations are planning on spending more on SaaS versus traditional (on-premises, single-tenant, and managed hosted) software. IDC research shows that organizations are already seeing a shift toward the public cloud for treasury, FP&A, and accounting software, but the survey results also suggest that this trend is accelerating considering recent disruptions. Aim to bridge the gap between finance and IT: For finance leaders, the top hurdle to digital transformation is the friction between often restrictive IT/security policies and the desire of the finance department to move quickly and be more agile. In IDC’s December 2020 Worldwide C-Suite (CXO) Survey, the most common hurdle for finance leaders to effective digital transformation agenda was the IT and security leaders slowing them down. The data reveals that financial leaders feel hampered by an inability to gather and disseminate that business-critical information to the necessary stakeholders at speed. As a result, financial leaders need more tools and features geared toward agility so that they can more quickly respond to rapid market shifts. Rapid payment technologies / initiatives see growth: For liquidity management professionals, time is of the essence when it comes to making payments. As a result, there has been growing momentum around faster payment programs. Recently, several payment initiatives were introduced/expanded, including SWIFT gpi, SEPA instant payment, and same-day ACH. Enterprisewide Liquidity Key Aspect of New Normal In the past, much of the financial leader’s role was to manage rear-facing details like closing the period, reconciling GL transactions, invoice matching, or cash application. While these will always be important, the uncertainty of 2020 put more of a focus on forward-looking activities like forecast, budgeting, and planning. With the pace of change in overdrive post-2020, financial leaders are investing a large amount of time trying to anticipate and plan for the next major change in business dynamics. A larger amount of the CFO’s time must be devoted to trying to develop a financial strategy to anticipate future shifts in market dynamics. For example, prior to the event of 2020, many CFOs and financial leaders would update their cash flow and liquidity plans quarterly or on a halfyearly basis. However, the financial and regulatory landscape is shifting so quickly, due to the shock of the pandemic, that many CFOs and their teams are now updating their cash flow and liquidity plans weekly or even, in some cases, daily. This new normal requires/demands a more unified approach to financial operations to cope with the new hyperspeed pace of economic change. It is more important than ever that financial data flow freely and quickly between key departments and key financial applications. Businesses on the leading edge have heard the call and are already making the necessary changes to thrive within this new normal. In fact, the survey shows that 15% of survey leaders are already operationalizing the enterprisewide management of liquidity as a practice area cross-functionally. Prior to the event of 2020, many CFOs and financial leaders would update their cash flow and liquidity plans quarterly or on a half-yearly basis. Emerging Need of a Chief Liquidity Officer As stated previously, the importance of liquidity has increased dramatically, and the need for an enterprise liquidity management approach has grown in importance as well. When taken together, they reveal the growing need for a dedicated chief liquidity officer. This position will act as a central point of authority and accountability for a unified liquidity management approach. This position would develop, manage, and optimize a holistic liquidity management strategy to ensure alignment with overall business objectives — especially as those objectives change/evolve/shift over time. However, a business looking to add this position must also invest in the tools, skills, and resources to manage liquidity at an enterprise level including forecasting/simulation, data visualization, and dashboarding tools as well as an API-driven platform that leverages automation and artificial intelligence to quickly gather and disseminate business-critical financial data. As the demand for business resiliency and proactive liquidity management continues to grow, so too will the demand for a dedicated chief liquidity officer. As the demand for business resiliency and proactive liquidity management continues to grow, so too will the demand for a dedicated chief liquidity officer. Challenges / Opportunities Ecosystems that must be curated: Liquidity management operations require data flows from many internal and external data sources. These data sources must be constantly curated to make sure that the financial leadership has access to the latest information and cutting-edge technology advancements. Curating ecosystems around the liquidity management solution takes effort and resources from a department that is often lacking in resources. Getting buy-in: Data shows that many line-of-business financial managers (e.g., controllers, accounting managers, and treasurers) don’t have support for liquidity management operation transformation. While this was the case for line-of-business financial managers prior to the pandemic, according to the survey data, this phenomenon is still a reality for many line-of-business financial managers. Data security risks: While APIs have tremendous promise for data integration, they also have the potential to expose sensitive data when not managed properly. API keys, for example, must be handled with great care or risk giving unlimited read/write access to financial information. Conclusion The CFO’s role has evolved into a strategic business partner for the rest of the organization, and the capability that’s required to deliver actionable intelligence downstream to the decision makers at the edge of the business or the lines-of-business leaders is evolving as well. For context, IDC believes the total available market for an enterprise liquidity management software (e.g., treasury, B2B payments, corporate payments, supply chain, and receivables financing) approached $30 billion in 2020. This is a massive opportunity for vendors to step in and help the CFO as their role changes. To access data is just the beginning of the journey to enterprise liquidity management. The ever-evolving remit of the office of the CFO is to be the lightning rod for data within the business and users of that data to power coordinated, data-driven financial business decisions throughout all facets of the organization. This demands a system that is built to aggregate, analyze, and disseminate data. This need is driving the emergence of centralized intelligent financial data platforms built upon APIs and strong data management principles. This new liquidity management platform may also necessitate the emergence of a chief liquidity officer to sit at its helm. In any case, the world of liquidity management is changing rapidly, and a unified enterprisewide liquidity management approach is no longer a luxury — it is a must for today’s business environment. References n = 440 European organizations, $100mil+ revenue. Enterprise Liquidity Management Is a Focus Area for Senior Execs Among Leader Organizations: CFO, CEO, Board of Directors. In 23% of the most advanced corporates, Liquidity Management is a focus area for CEOs, whereas it mainly remains a in the hands of the treasurers for the laggards (23%) Leaders Are Focused More on Integrating Working Capital Data, While Laggards Target Transitioning to Real-time Visibility And Improving Quality of Data Common Priority. They are more focused on integrating working capital data (43% against 27% of the less equipped companies). 80% of Leaders have adopted business intelligence techniques to make better decisions regarding liquidity. Survey Readout slide 40–48% of Leaders Encounter Greater Disconnected Priorities Between Finance and IT Departments. Most Leaders (75%) have transparent and well-connected corporate finance and treasury teams compared to ~30% of Laggards. This is visibly reflected in the adoption rates across APIs for different purposes: To integrate and optimize their internal system infrastructure – 80% Leaders vs 10% Laggards. To leverage internal data for reporting – 90% Leaders vs 15% Laggards To send data to partners and others – 80% Leaders vs 27% Laggards To receive data from partners and third-party members – 85% Leaders vs 10% Laggards >90% of Corporate finance and treasury teams of Leaders can effectively leverage real-time insights compared to only 33% of Laggards. 39% of Leaders Have a Wider Set of Fintech Partners to Support Enterprise Liquidity Management Initiatives Compared to just 7% of Laggards. Source: IDC Enterprise Liquidity Management Study, sponsored by Kyriba, August 2021. Want to learn more about Enterprise Liquidity Management? You are welcome to join Kyriba's upcoming monthly live demo sessions to see the Kyriba ELM platform in action. An on-demand demo session is available here.

APIs offer a lifeline for CFOs and treasurers who are looking for both innovation and cost improvements. Although many CFOs think of APIs for finance as an expedited pathway for bank connectivity, bank connections...

APIs offer a lifeline for CFOs and treasurers who are looking for both innovation and cost improvements. Although many CFOs think of APIs for finance as an expedited pathway for bank connectivity, bank connections are just the tip of the iceberg. APIs open integration to a variety of systems, including capabilities that vastly improve cash forecasting, liquidity management and payments. APIs offer an information and processing gateway to realizing digital transformation. Unlike FTP, APIs do not require files to be sent or downloaded. Data is exchanged point to point between systems immediately, allowing for instant data transmission and eliminating substantial risk. They enable the development and use of faster, pre-built connectors to reduce implementation times and facilitate real-time payments and security. In this whitepaper, we'll explore: What APIs are and how they work for finance The different types of APIs that are available How APIs can revolutionize ERP connectivity, cash management, liquidity management, payments and more. CFOs Are Investing Billions CFOs are investing more than ever on enterprise platforms, with organizations spending an estimated $675 billion in 2022, according to Statista. Much of this investment is for organizations to move their enterprise resource planning (ERP) systems to cloud platforms, such as SAP S/4 Hana Oracle Cloud, and Microsoft Dynamics 365 leading the large corporate market. For CIOs looking to effectively support their CFO business partners, connectivity from ERP to internal and external systems and data sets remains a costly challenge, often delaying go-live dates and driving significant cost overruns. APIs open integration to a variety of systems, introducing capabilities and process automation that had not previously been possible. APIs offer an information and processing gateway to realizing digital transformation. What Is an API? An API is a program that allows mulitple pieces of software to “talk” to each other. Applications on your phone and embedded widgets on a website all use APIs to request or deliver information. Why APIs for Finance Matter Gartner research revealed that nearly 50 percent of financial leaders will incorporate a “composable financial management system” by 2024 “to deliver capabilities and outcomes that keep up with the rapid pace of business change.” APIs are enabling that change. They are transforming the way finance leaders consume data and are allowing a coupling of multiple applications that was previously impractical to support, creating a gateway to real-time business intelligence and digital solutions. Unlike file transfer protocol (FTP), APIs do not require files to be sent or downloaded. Data is exchanged point to point between the systems immediately, allowing for instant data transmission and eliminating substantial risk. They enable the development and use of faster, pre-built connectors to reduce implementation times and facilitate real-time payments and security. "With APIs for finance, your platforms evolve from being systems of record to systems of engagement,” said Bob Stark, Global Head of Market Strategy at Kyriba. “Your platform is connected with any number of internal and external systems to be continuously up to date.” Open API Platforms APIs facilitate open networks. Using developer portals, technology providers can build applications on top of the API provider’s platform. Open banking is a perfect example. The Revised Payments Services Directive (PSD2) in 2018 helped to make APIs even more relevant for corporate treasury and finance. The EU Directive requires banks to open their platforms to payment technology providers – with APIs being a leading solution to manage this compliance. Although PSD2 only applies to the European Union, similar initiatives in other regions also quickly emerged as banks in the United States and throughout APAC have recognized the opportunity to offer real-time, data-driven services to corporate clients. "The PSD2 movement has really encouraged banks to start to open APIs for corporates.” —Felix Grevy, VP of Product, Open API and Connectivity for Kyriba A common frustration among treasury and finance leaders is a lack of centralized visibility across multiple departments, liquidity and payments. Open API platforms act as a conduit between disparate teams and systems, allowing for real-time connections to apps, data, and new products and services. Open API platforms reduce manual processes, and deliver composable technology solutions, enabling corporate and bank users to inject data-driven decision-making into every financial operation. APIs for Bank Connectivity It’s important to note that banks and technology solutions providers that are managing open platforms are not replacing legacy formats like FTP and SWIFT with APIs. Instead, they are offering APIs as a complement to these formats. Following the advent of PSD2, European banks have begun using “premium” APIs, which are APIs with greater functionality. "The difference between the PSD2 APIs and premium APIs is that premium APIs are more powerful,” Grevy said. “You can retrieve balances and do instant payments. And they are much more secure, and much more appropriate for integration with an ERP or treasury management system (TMS).” Banking services optimized via API vary, some examples include: Bank Groups Branch Reporting Bank Account Groups Cash and Cash Flow Reporting However, the rollout has been slow. Most banks are not using APIs in live production yet, and many of the ones that do use APIs only offer them for certain real-time services—meaning that multiple connectivity options are needed to fully support a treasury and finance team. Furthermore, most technology vendors only offer no functionality beyond bank connectivity and can only connect one ERP to a bank. Nevertheless, API connectivity brings key advantages over a file-based approach, such as immediate response from banks, and the ability to receive new data and notifications in real-time. So while adoption may be slow and gradual, the advantages to the end user are clear. ERP Connectors ERP platforms like SAP, Oracle and MS Dynamics have major efforts to develop and embed APIs into a wide array of functions and workflows. Luckily, for IT and Finance functions arent’ required to do the heavy lift; these APIs are plug-and-play and enabling more and more core integrations and reporting capabilities. Cash Management APIs offer organizations the ability to manage cash continuously and in real-time. Rather than relying on batch reporting that is constrained to pre-determined times throughout the day, treasury teams can now access reports as needed. Receiving un-batched, real-time liquidity information greatly improves cash reconciliations, cash application, and accuracy of liquidity overall. This will, in turn, change the mechanics for best-practice cash forecasting and lead to the production of intraday liquidity products, such as hourly investing. Allowing treasury professionals to access their cash outside of previously “normal” hours not only expands the scope in which organizations can leverage their liquidity, but also allows treasury to make greater strategic contributions. APIs also allow treasury and finance to track sufficient movements in and out of the accounts throughout the day. That visibility can help organizations to make significant intraday decisions instead of end of day or overnight. Payments APIs for finance can also streamline the entire payment journey. Instead of relying on batch processes that transmit at several pre-determined times each day, APIs allow payments to be initiated from treasury management systems and ERP systems as needed—even in real time. In fact, real-time payments sometimes require APIs. Simply put, if you want payments to settle instantly, file transfers may not be the best connectivity option to choose. Using File Transfer, bank files are extracted, reformatted, encrypted, and downloaded by the treasury platform—a process that takes five to ten minutes at least. Once balances are known, the process to send and confirm a payment is another five to ten minutes at minimum. APIs, in contrast, can query a bank balance and then send a real-time payment instantly without the transfer of any files. With the rapid increase of both domestic real-time payment systems (The Clearing House’s RTP and FedNow in the U.S.) and cross-border platforms (SEPA Instant, SWIFT Go, and Nexus) APIs are a necessity for businesses who want to deliver instant payments. Leveraging APIs to utilize real-time payments not only revolutionizes the initiation and acknowledgement process, but also the ability to mitigate fraud. While the 2022 AFP Payments Fraud & Control Survey found that business email compromise scams have decreased recently, they are nevertheless still a persistent threat. Since real-time payments don’t afford users the opportunity to identify fraudulent transactions after transmission, fraud mitigation strategies must now be included in the approval process. Building APIs into the payment platform allows users to fully automate bank account validation and payment policy screening, identifying exceptions. Outliers can be flagged and set aside for review, while all other payments travel seamlessly as intended. Creating Flexible Reporting and Information Systems APIs are far more than just connectors to banks and ERPs. APIs can revolutionize the ways in which treasury and finance operate both internally and holistically. APIs offer the ability to create a flexible, custom, data warehouse that could exist within your TMS, as some treasury systems can act as a single source of record. When other systems have limited functionality, your data warehouse can fill the gaps through provision of market data, financial transaction specifics such as portfolio, project or risk-related information to deliver a quick, flexible source of weekly treasury reporting. Regardless of where your data is stored, APIs establish the means to integrate various data sources within a single repository or warehouse. Second, APIs allow treasury and finance to automate beyond task automation, which streamlines the organization’s own capabilities. APIs enable process automation, which simplifies and entire workflow like the entire payment journey. Entire systems and processes can be brought together more easily via APIs. Both automation and the extent of the functional coverage facilitate composable financial management systems. When networks of personalized systems, reports, dashboards, and efficient workstreams are enabled and integrated by APIs, treasury and finance teams can then focus on accelerating innovation and cost-reduction projects. ERPs, while critical, are not the only system requiring strong integration and the exchange of information for stronger decision-making. APIs are the glue that holds all of these components together and APIs change the efficiency and real-time capabilities for treasury and finance leaders. "CFOs and CIOs, hand in hand, are recognizing that we need APIs to bring everything together to accelerate the innovation,” Stark said. “Before APIs, the way that you’re making a composable financial system is by using custom interfaces, manual clicking and logging into systems and, if you’re lucky, a little bit of RPA. APIs are perfectly suited to improve process automation, linking multiple systems and workflows together, because they allow finance teams to build a system of multiple components.” Figure 1. Progression of Hyberautomation Initiatives Source: Gartner 2021 References Information technology (IT) spending on enterprise software worldwide, from 2009 to 2023 2022 AFP Payments Fraud and Control Survey Gartner Identifies the Top Technology Trends That CFOs Should Address Today   Interested to learn more about how APIs for finance will change the way leaders consume and act on information? Check out this webinar where Alex Yang from Bank of America, David Miller from Hunt Companies and Bob Stark from Kyriba demystify APIs' value for payments, intra-day liquidity, ERP integration, fraud detection, cryptocurrencies and more.

Enterprise Liquidity Management (ELM) has emerged as a new practice area within the CFO’s and treasury professional’s remit to manage and execute the entire lifecycle of corporate liquidity—a specialized capability traditional Treasury Management Systems and ERPs are not able to deliver.

Enterprise Liquidity Management (ELM) has emerged as a new practice area within the CFO’s and treasury professional’s remit to manage and execute the entire lifecycle of corporate liquidity—a specialized capability traditional Treasury Management Systems and ERPs are not able to deliver. The ELM concept a purpose-built, dedicated Enterprise Liquidity Platform has emerged as the software solution suite required to do so. Key takeaways from the study include the following: From a corporate finance perspective, liquidity is the strategic resource necessary to deliver value and growth under any circumstance, including but not limited to maintaining solvency. Enterprise Liquidity Management provides diagnostic decision support intelligence on all liquidity transactions, then enables indispensable actionability and operational interconnectivity between internal and external systems. ELM is powered by the Enterprise Liquidity Platform, a fully integrated software suite (e.g., Treasury and Risk Management, a comprehensive Payments Hub, and Working Capital Finance solution sets) all of which are connected, integrated, and networked through Open APIs that provide indispensable, secure machine-to-machine automation between software applications. The result is that all cash and liquidity-related data and process workflows within the organization and its external finance ecosystem are unified into a “Golden Source” of intelligence and, then within the same system, made actionable as a strategic decision-making support system. Managing cash and liquidity across large enterprise ecosystems demands the support of a dedicated infrastructure engineered to overcome one of the most significant burdens to corporate finance: the proliferation of disjointed software applications. An ELM platform differentiates from traditional treasury management systems, extending visibility, security, and actionability across all of finance internally and externally beyond cash positioning and forecasting: the treasurer can understand multiple liquidity management scenarios and—directly from the platform—move and optimize liquidity to or from the right location at the right time. The goal of this paper is to inform the market that ELM has become a strategic practice area for CFOs, Treasurers, and other corporate finance leaders who understand the newfound urgency to leverage new technologies and techniques to capture opportunities and eliminate risks. Introduction Liquidity is the strategic resource necessary to deliver value and growth under any circumstance, including but not limited to maintaining solvency. The speed and complexities required of corporate finance leaders to manage cash and liquidity in realtime, however, and especially during market shocks such as the 2008 and Covid-19 crises, has surpassed the ability of humans to build better and better spreadsheets. Even the largest ERP and treasury management system providers struggle to deliver value in the new world where comprehensive, cross-functional liquidity management has become a board-level mandate. Aite-Novarica Group’s view is that emerging leaders in the space are thinking differently and developing new technologies to enable liquidity to be managed holistically as a new practice area within the CFOs purview. While from a conventional liquidity management standpoint almost every global and regional bank has the technology in place in the form of a web-banking portal, enterprise users expect to consume decision support data through transaction banking cockpits and portals developed according to standard business process flows and practices. These cockpits must be interoperable and interchangeable. Finance and treasury executives and managers don’t want any longer multiple web-banking user interfaces that require system experts to cut and paste highly-valuable financial data into “software soups”. Fintech players must develop and present technology solutions and software applications that support their corporate clients’ internal, strategic liquidity management objectives and, at the same time, allow the enterprise to meet external client needs. This thought leadership paper introduces the concept of enterprise liquidity management as a formalized practice area for corporate finance; it further analyzes the technological, process architecture, and execution workflow capabilities required to make it happen. Following, this paper develops the concept that corporations of all sizes and complexity aim to have all their subsidiaries on a central repository for cash and liquidity-related operations rather than on individual web-banking portals. The concept is similar to the idea of a self-contained infrastructure to manage liquidity, as if it were an “ERP for liquidity management”. The paper introduces Enterprise Liquidity Management as a new financial technology category. Methodology This thought leadership paper is based on desktop analysis and extensive examinations of various solutions used by treasurers to manage corporate liquidity. Using the life cycle steps of liquidity management operations as a benchmark, Aite-Novarica Group’s groundwork also included analyzing the limitations of currently available solutions. To validate the conclusions of the research, Aite-Novarica Group will refer to the findings of an analysis conducted on Kyriba’s Enterprise Liquidity Platform and on its impact on the corporate organization culture, business processes, IT performance, and its alignment with management’s goals1. The Liquidity Management Lifecycle and the Need to Unify Fragmented Systems Enterprise liquidity is the lifeblood of every business of any size. Considering the numerous definitions used to describe it, liquidity confirms to be a strategic resource for corporate chief finance officers (CFOs) to deliver value and growth under any circumstances including but not limited to insolvency. Enterprise executives know that information technology permeates business operations and is the most powerful tool for change. Corporate finance business units, however, appear not to be the most technically mature in the organization, so only enlightened corporate CFOs are at the forefront of corporate finance digitization to transform the way they leverage cash and liquidity to build resiliency, earn growth, and generate strategic value to customers, shareholders, and boards. If resiliency, growth, and value are the targets for corporate finance, the task is now for the CFO and his teams to practically meet such targets. To his/her rescue comes liquidity management: in times of crisis a proper management of the company sources and destinations of liquidity contributes to make the organization more resilient. At the same time the ability to manage corporate liquidity not only helps the company to survive but also sustains the value of the company through growth: value is generated when the company has proper funding to distribute dividends, buy back shares, and grow by investing in other avenues and controlling capital expenditures. Liquidity is the organization’s lifeblood, irrigating all internal functions and lines of business; as blood needs to be enriched with oxygen, liquidity needs to be enhanced by a complex external ecosystem, including banks, financial data suppliers and market places, and fintech players. Liquidity is also typically managed along different time dimensions. In long-term vision, CFOs grow and protect cash availability by operating financial transactions with multiple settlements. The most iconic of such transaction is drawing down a debt for cash. This triggers the long-term need to repay the debt at the end of maturity up until the final settlement. Another transaction with long-term financial repercussion is a hedge transaction that will take the company to enter in a swap with multiple settlements, maybe for the next two or three years. On the short-term execution, the corporate treasury office generates or consumes liquidity with cash transactions. Examples of cash transactions are one-off payments to a supplier, an employee, or an FX spot transaction. Between long-term financial transactions and short-term cash operations should stand strategic planning. Financial Planning and analysis (FP&A) that the CFO uses to understand what will be the budget for next rarely translates in terms of liquidity requirements and usually lacks critical data to ensure there is enough money: Should it be borrowed? How to hedge the risk? The budget fixed at the beginning of the year will inevitably move as time goes by. The necessary adjustments swing the pendulum from the very short-term treasury operations to the long-term forecasting of the outcoming liquidity. A bank that negotiates with a CFO will always ask the company’s liquidity plan for the next year, sometimes even several years ahead depending on the market segment the company operates in. This demands the treasury department and financial manager of each subsidiary to integrate their figures, usually on a monthly basis, into the centralized corporate FP&A view that gives the CFO the most updated and reliable liquidity profile of the company. Enterprise Liquidity Management - A New Practice Area in the CFO Suite Beyond closing accounts, the CFO’s constant focus is- hence- to know where liquidity comes from and where it can be allocated, and, with that intelligence, ensure its protection (from fraud and over-exposure) throughout. This requires more than a mindset shift towards prioritizing the strategic value of liquidity--it requires a purposebuilt layer of software to make it happen. We believe this combination constitutes the design and deployment of a new Practice Area. To start, Aite-Novarica Group suggests to measure the value of liquidity beyond the ordinary ‘cash and cash equivalents’ balance sheet item. This indicator may in fact be deceptive if not depurated from the component of the uncommitted drawn facilities. There is a possible risk that the lender may ask for the repayment anytime, and this scenario will vaporize the value of the borrower’s assets. On the other side, the value of cash and cash equivalents must be increased for the total value of the undrawn committed facilities the company can still access. These represent reliable and immediately accessible liquidity because the time to draw down such facilities in general is very fast, usually in the order of a couple of days. The example of the metric to gauge the real potential value of available liquidity is yet one of the many key capabilities a CFO should have available in the ELM Practice Area, a decision support system. At the back of these capabilities the CFO and the treasurer need a system that unifies the data scattered across a landscape of IT systems totally fragmented, the more disjointed the larger and complex the organization. Historically, the CFO suite has been an installed on-premise (almost monolithic) ERP sometimes combined with an equally monolithic treasury management system (TMS), now morphing into a composed set of a core solution (e.g., SAP, Oracle) and connected mission critical best-of-breed solutions such as payroll and benefits, budgeting and planning, order-to-cash, procure-to-pay, and risk management. The most recent trend sees companies shifting their IT infrastructure to the cloud with multiple objectives: constant innovation, business continuity for critical functions, or real-time flow of information while lowering the total cost of ownership of the underlying software and hardware infrastructure. A New Category: ELM Enterprise users expect to consume decision support data through interoperable and interchangeable cockpits and portals, developed according to standard business process flows and practices, typically provided by banks – or, through monolithic ERPs combined with an ever-increasing portfolio of specialized point solutions. Today, as we see the emergence of “composable” ERPs capable of providing value beyond simply recording transactions, there remains a major void in the marketplace. Corporations aim to have all their subsidiaries on a central repository for cash and liquidity-related operations rather than on individual and separated web-banking portals. The concept is similar to a self-contained infrastructure to manage liquidity and introduces to a new financial technology category: Enterprise Liquidity Management. Treasury has evolved from account management staff duties (e.g., reconciling cash every morning and putting cash in the right accounts) to a more strategic, cross-functional role, so corporate finance decision makers are receptive to ELM as the suite that enables companies with long-term vision to work with multiple liquidity structures and make autonomous and simultaneous decisions across use cases, particularly treasury. The next sections will provide detailed descriptions of the modules that constitute the ELM construct. At this point is important to capture the possible ELM use cases. As an example, the ELM construct allows the corporate user to drawdown from a credit line directly from their liquidity cockpit. Or, to recommend the corporate decision maker at what point does it make sense to go back to market and refinance. This makes it possible to look at external debt in a completely new way. Users don't want just to model cash, they want to make sure they can model all their cash flow deadlines. The ELM tools model and not just showcase. They are part of a set of open and scalable intelligent systems to come to decisions. From a conceptual standpoint, the ELM is a platform composed of three layers (Figure 1). FIGURE 1: THE THREE LAYERS OF THE ELM PLATFORM The first- the operations layer- groups the application modules to run treasury, payments, risk management, and working capital optimization. The connectivity layer is the second layer- and the raison d'être of ELM- that takes a standalone suite of rich software features to a system open to the world, thanks to the development and use of connectivity APIs. The composed infrastructure of two or three large ERPs that most large enterprises have today generates a portfolio of point solutions that can be best connected through an API architecture. This architecture enables not just the visibility of data, but the unification of that data, enabling the user to leverage AI for decision support. The third layer- the execution layer- makes it possible to analyze and understand the data exchanged between the connected systems, take the best decision using business intelligence capabilities, and leverage machine learning and artificial intelligence (AI) to turn information into decisions and- this is key- to execute directly from the corporate treasurer’s enterprise system.

Join 2021 AFP Pinnacle Award Winner HCSC to discuss how and why they transformed to become a data-driven treasury operation to support an overall business transformation.

Join 2021 AFP Pinnacle Award Winner HCSC to discuss how and why they transformed to become a data-driven treasury operation to support an overall business transformation.

Le moderne minacce di frode sono innovative e in continua evoluzione. Per affrontare queste minacce, le organizzazioni che vogliono sopravvivere devono implementare le soluzioni di rilevamento e prevenzione più aggiornate.

Le moderne minacce di frode sono innovative e in continua evoluzione. Per far fronte a queste minacce, le organizzazioni che vogliono sopravvivere devono implementare le più aggiornate soluzioni di rilevamento e prevenzione delle frodi nei pagamenti. In questo eBook esploreremo le minacce di frode più comuni per le aziende di oggi e descriveremo nel dettaglio gli strumenti leader basati sull'intelligenza artificiale che i CFO e i CIO possono utilizzare per bloccare gli attacchi prima che si verifichino. Esploreremo i modi in cui le soluzioni Kyriba proteggono i nostri clienti e vi trasmetteremo queste conoscenze. Analizzeremo anche strumenti come l'intelligenza artificiale e l'apprendimento automatico (AI/ML) e le interfacce di programmazione delle applicazioni (API) che cambiano le carte in tavola nella lotta contro le frodi. Noi comprendiamo e utilizziamo queste tecnologie ed è ora che lo facciate anche voi. Il volto mutevole della frode Le minacce di frode sono cresciute in modo esponenziale durante la pandemia COVID-19, poiché l'ambiente di lavoro remoto ha lasciato le aziende in difficoltà nel garantire che i dipendenti seguissero rigorosi protocolli di sicurezza. Secondo un'indagine KPMG del 2022 condotta su oltre 600 dirigenti, il passaggio al lavoro a distanza ha aumentato il rischio di frode e l'anno scorso la maggior parte delle aziende ha subito incidenti di frode. FRAUD OUTLOOK Fonte: 2022 KPMG Fraud Outlook Le perdite derivanti dalle frodi sono significative. Gli intervistati hanno riferito una perdita media di profitto dell'1% dovuta a frodi e violazioni della conformità nel 2021. E più l'azienda è grande, più i criminali la prenderanno di mira. Necessità di investimenti e attenzione da parte delle aziende Con la pandemia che continuerà nel prossimo futuro e che metterà a dura prova la capacità delle organizzazioni di operare e di impiegare il personale in modo efficace per contrastare la crescente minaccia di frode, è sorprendente che oltre la metà delle aziende intervistate dichiari che non ci saranno cambiamenti nei loro budget per investire in misure antifrode. Con meno della metà delle organizzazioni che oggi hanno un programma in atto per prevenire, rilevare e rispondere alle frodi, è evidente che è necessario concentrarsi su maggiori investimenti nelle loro protezioni. I CFO, i tesorieri e i CIO hanno chiaramente bisogno di una serie di difese più complete sotto forma di un nuovo sistema di rilevamento delle frodi automatizzato basato sull'intelligenza artificiale. Minacce di frode pervasive ed emergenti Le truffe via e-mail continuano ad affliggere i dipartimenti di tesoreria e finanza. Le truffe BEC iniziano tipicamente con un'e-mail urgente inviata a un dipendente che sembra provenire da un funzionario di alto livello, con la richiesta di un trasferimento di denaro. In realtà, un truffatore ha copiato un indirizzo e-mail legittimo, di solito dopo essersi infiltrato nel sistema di posta elettronica di un'azienda tramite phishing. Una variante di questa truffa consiste nell'invio di fatture via e-mail che sembrano provenire da un fornitore abituale e che contengono nuove istruzioni su dove inviare il pagamento. Secondo la Cyber Division dell'FBI, dal 2019 al 2020 si è registrato un aumento del 5% delle perdite di BEC, con oltre 1,7 miliardi di dollari di perdite registrate nel 2019 e oltre 1,8 miliardi di dollari nel 2020. Frode con assegni e bonifici rimane un problema significativo per i dipartimenti di tesoreria e finanza, in quanto questi sono i metodi di pagamento più suscettibili di frode. La ricerca AFP ha rilevato che il 66% e il 39% dei professionisti della finanza hanno segnalato attività di frode attraverso questi due tipi di pagamento nel 2020. Tuttavia, negli ultimi anni le frodi legate agli assegni sono diminuite, poiché un numero minore di organizzazioni utilizza gli assegni per i pagamenti B2B. Frode vocale deepfake è un metodo di attacco relativamente nuovo, ma che si è dimostrato molto efficace. Questo tipo di frode consiste nell'effettuare chiamate utilizzando la tecnologia deepfake voice, un software in grado di copiare con successo la voce di una persona attraverso un piccolo campione audio. VULNERABILITÀ COMUNI PER LE ORGANIZZAZIONI La frode vocale Deepfake ha attirato l'attenzione internazionale l'anno scorso, quando è stato rivelato che i truffatori l'hanno utilizzata per portare a termine una rapina in banca da 35 milioni di dollari. Attacchi ransomware, anche se non sono tecnicamente frodi, sono comunque minacce importanti per i sistemi e i conti bancari delle aziende e sono aumentate negli ultimi anni. In un attacco ransomware, il sistema interno di un'azienda viene compromesso (di solito tramite phishing) e preso in consegna. Agli utenti viene chiesto di pagare un riscatto o di perdere definitivamente l'accesso ai propri sistemi. Il ransomware come servizio (RaaS) è l'ultima innovazione di questa minaccia; consiste nella vendita o nell'affitto di exploit ransomware da parte degli sviluppatori ai clienti, che poi li scatenano contro le sfortunate vittime. Strumenti di protezione contro le frodi Per combattere le minacce di oggi, le vostre soluzioni di prevenzione e rilevamento delle frodi nei pagamenti dovrebbero includere queste funzionalità: Processi di pagamento automatizzati per standardizzare i controlli Screening in tempo reale di tutti i dati relativi ai pagamenti per identificare le transazioni sospette Regole di screening dei pagamenti definite dall'utente Flusso di lavoro di risoluzione per indagare sui pagamenti sospetti Un'opzione per evitare di avvisare gli utenti che hanno violato una regola sui pagamenti Monitoraggio dello stato e della priorità degli avvisi in un cruscotto KPI I moderni software di rilevamento delle frodi nei pagamenti, come il modulo Payments Fraud Detection di Kyriba, offrono queste e altre soluzioni. Screening, avvisi e notifiche in tempo reale L'aumento dei sistemi di pagamento in giornata e in tempo reale ha aumentato la necessità di risposte in tempo reale ai tentativi di frode. I moderni software di rilevamento delle frodi utilizzano l'intelligenza artificiale (AI) e l'apprendimento automatico per analizzare i pagamenti rispetto ai dati storici, individuando eventuali anomalie. Fornendo dati più completi, queste soluzioni consentono di prendere decisioni basate sui dati. Ad esempio, la soluzione Payment Fraud Detection di Kyriba determina la normalità di ogni pagamento, sia esso automatico o manuale, segnalando quelli con un basso grado di normalità. La soluzione fornisce informazioni sulle variabili che determinano la normalità dei pagamenti, consentendo agli utenti di capire perché uno o più pagamenti sono stati considerati anomali. L'aspetto forse più vantaggioso per l'utente è che i processi non vengono in alcun modo rallentati, anche con una maggiore visibilità sui dati dei pagamenti. I pagamenti possono essere segnalati come anomali per una serie di motivi, tra cui: Un numero elevato di pagamenti per la stessa terza parte Pagamenti con importi insolitamente elevati Pagamenti a paesi inseriti nella lista nera secondo la politica aziendale Modifiche sospette ai pagamenti importati da un ERP Pagamenti su un conto bancario utilizzato da più parti terze Pagamenti duplicati Dopo aver testato diversi modelli di apprendimento automatico, i data scientist di Kyriba hanno selezionato due soluzioni per identificare le irregolarità nei pagamenti. Isolation Forest Un modello di Isolation Forest è un algoritmo non supervisionato che funziona secondo il principio dell'isolamento delle anomalie; le istanze anomale in un set di dati tendono a essere più facili da separare dal resto del campione. Nell'esempio seguente, si può notare che le anomalie richiedono meno partizioni casuali per essere isolate, rispetto ai punti normali: Rete avversaria generativa Un problema in cui molti modelli di apprendimento automatico si imbattono quando cercano di identificare le frodi è la mancanza di dati sulle frodi. La maggior parte delle organizzazioni non ha sperimentato frodi significative nei pagamenti e quindi non ha una quantità di esempi da condividere. Altri che sono stati vittime di frodi possono essere riluttanti o incapaci di condividere i dettagli. L'addestramento di modelli di intelligenza artificiale può quindi essere impegnativo, perché gli algoritmi possono imparare solo dai pagamenti buoni e, al massimo, da una manciata di quelli cattivi. Le reti generative avversarie (GAN) possono risolvere questo problema. Una GAN è un modello di apprendimento profondo che mette due reti neurali separate l'una contro l'altra. Una rete (il generatore) mescola dati reali e dati sintetici e cerca di superare la rete avversaria (il discriminatore). Kyriba crea una rete "truffaldina" (il generatore), che nasconde frodi sintetiche tra le transazioni legittime basate sulla cronologia dei pagamenti di un cliente. Poi, una rete di "polizia" (il discriminatore) passa al setaccio i dati, separando le transazioni illecite da quelle buone. Addestrando il modello di rilevamento delle frodi su queste reti concorrenti, Kyriba può identificare meglio le transazioni fraudolente quando visualizza i dati reali. Modello di rete avversaria generativa (GAN) Dashboard I dashboard possono essere impostati per visualizzare tutti i pagamenti sospetti e dare priorità alla loro risoluzione, in base a fattori quali le regole di rilevamento, l'esposizione al rischio, il conteggio degli incidenti e una scorecard di rilevamento delle frodi. I dashboard forniscono agli utenti autorizzati una trasparenza completa su tutti gli screening dei pagamenti e possono risolvere le azioni in sospeso in modo efficiente. Flussi di lavoro per la prevenzione delle frodi nei pagamenti I moderni moduli di rilevamento delle frodi nei pagamenti supportano anche flussi di lavoro end-to-end completamente automatizzati per la risoluzione dei pagamenti sospetti in sospeso. Gli utenti possono anche stabilire come deve essere gestito ogni pagamento rilevato, applicando la separazione dei compiti tra chi inizia, chi approva e chi rivede un pagamento rilevato. I revisori possono anche essere determinati in base alle regole di pagamento e a uno scenario specifico (ad esempio, il responsabile della tesoreria esamina i pagamenti inferiori a 1 milione di dollari, mentre i pagamenti superiori a 1 milione di dollari vengono assegnati al tesoriere) e il personale non addetto alla tesoreria può essere incaricato di esaminare determinati pagamenti rilevati. Reporting e tracce di controllo Le soluzioni tecnologiche più avanzate possono garantire che i pagamenti sospetti rilevati siano permanentemente tracciati nel sistema per la rendicontazione giornaliera, mensile o annuale. La cronologia viene mantenuta a tempo indeterminato e tutti i dettagli della transazione sospetta, compreso l'audit trail delle azioni individuate e risolte, vengono conservati per i rapporti di audit interni ed esterni. Hub di pagamento Con un hub di pagamento, le organizzazioni hanno tutte le loro capacità di protezione dalle frodi in un unico luogo. Gli hub di pagamento consolidano i flussi di pagamento provenienti da ERP, finanza, tesoreria, ufficio legale, mercati dei capitali e team decentralizzati, trasformando processi disaggregati in un'unica fonte di registrazione per tutti i pagamenti in uscita. Un hub di pagamento trasforma inoltre i dati di pagamento in formati di file specifici per le banche e si connette direttamente con le banche globali tramite diversi protocolli, tra cui host-to-host, SWIFT e reti regionali. I pagamenti provenienti da ERP o da altri sistemi possono far rientrare l'intero panorama dei pagamenti aziendali in un quadro di rilevamento delle frodi sui pagamenti coerente e incentrato sul rischio. Grazie alle connessioni e all'integrazione basata su API e collegata a un flusso di lavoro per l'approvazione e il rilevamento e la prevenzione delle frodi nei pagamenti, i controlli e le frodi sono migliorati e facilmente governati. Hub di pagamento per il rilevamento delle frodi nei pagamenti Matrice di mitigazione delle frodi I professionisti della tesoreria e della finanza hanno a disposizione molti strumenti per il rilevamento delle frodi nei pagamenti. Il seguente elenco di soluzioni fornisce una panoramica di alcune delle funzionalità che gli strumenti odierni offrono per mitigare il rischio di frode. Matrice di mitigazione delle frodi Soluzione Protezioni chiave Capabilities Scenari di rilevamento delle frodi nei pagamenti Regole di rilevamento predefinite Segnala i pagamenti non convenzionali per un'ulteriore verifica Facile da personalizzare e da inventare con le proprie regole Screening in tempo reale Dashboard AI Esamina i pagamenti rispetto ai dati storici dei pagamenti Visualizza tutti i pagamenti sospetti e dà priorità alla loro risoluzione Flusso di lavoro per la prevenzione delle frodi nei pagamenti Flusso di lavoro completamente automatizzato Consente agli utenti di risolvere i pagamenti sospetti in sospeso Consente agli utenti di stabilire come gestire i pagamenti rilevati Impone la separazione dei compiti in relazione a un pagamento rilevato Designa i revisori in base alla regola di pagamento e allo scenario specifico Fornisce la possibilità di assegnare la revisione dei pagamenti a personale non appartenente alla Tesoreria. Offre la possibilità di nascondere gli avvisi ai promotori/approdatori di un pagamento Consente di bloccare i pagamenti in base allo scenario finché non vengono risolti Consente di bypassare i pagamenti di basso valore Impostazione di approvazioni a livelli Reporting e tracce di controllo Reportistica KPI completa I pagamenti rilevati sono tracciati in modo permanente nel sistema Lo storico viene mantenuto a tempo indeterminato API: Il futuro del rilevamento delle frodi nei pagamenti I pagamenti in tempo reale, che si stanno gradualmente diffondendo, offrono una visibilità e una trasparenza senza precedenti sia all'ordinante che al beneficiario. Tuttavia, una volta eseguita una transazione in tempo reale, non è possibile fermare il trasferimento di fondi. Pertanto, è necessario prevenire le frodi nel processo di approvazione prima che una richiesta di pagamento raggiunga la banca. La creazione di API nella piattaforma di pagamento consente agli utenti di automatizzare completamente la convalida del conto bancario e lo screening dei criteri di pagamento, identificando le eccezioni in tempo reale. Le API possono confrontare istantaneamente i pagamenti con i dati di terze parti; ad esempio, possono essere utilizzate per lo screening degli elenchi di sanzioni o per verificare la proprietà del conto bancario a cui l'azienda sta pagando. Utilizzando le API per l'integrazione di sistemi di terze parti con la vostra piattaforma di pagamento, la vostra organizzazione può garantire l'accesso in tempo reale a qualsiasi database necessario per la convalida del conto o della conformità. I pagamenti eccezionali possono essere immediatamente messi in quarantena per un'ulteriore verifica, mentre quelli non eccezionali vengono processati normalmente. Apprendimenti e risultati I CFO e i tesorieri hanno bisogno di una serie più completa di controlli sui pagamenti per mitigare le moderne minacce di frode, tra cui l'intelligenza artificiale/l'apprendimento automatico e le API. Le organizzazioni hanno tre aree comuni che le rendono vulnerabili alle frodi: sistemi tecnici, processi ed errori umani. Le minacce moderne includono le truffe con compromissione delle e-mail aziendali, le frodi con assegni, le frodi telematiche, le frodi vocali deepfake e i ransomware. Le tecnologie che possono essere utilizzate per combattere le frodi includono regole predefinite di rilevamento delle frodi; screening, avvisi e notifiche in tempo reale; flussi di lavoro per la prevenzione delle frodi nei pagamenti; reporting e audit trail; e hub di pagamento. Poiché le minacce continuano ad evolversi, i team di tesoreria e finanza devono aumentare la loro consapevolezza. Siete interessati a scoprire come costruire programmi di rilevamento delle frodi nei pagamenti e di risposta agli incidenti per massimizzare la protezione end-to-end? Date un'occhiata a questo webinar on-demand. Gli esperti di cybersecurity e frodi di Corelight e Kyriba illustrano le strategie di difesa dalle frodi.

Are you a treasury professional working in or planning to expand into the Asia-Pacific region? With 12 chapters on topics such as liquidity management, short-term borrowing and financial risk management, this handbook gives guidance...

Are you a treasury professional working in or planning to expand into the Asia-Pacific region? With 12 chapters on topics such as liquidity management, short-term borrowing and financial risk management, this handbook gives guidance on the core tasks of a regional treasury center and explores the topics and emerging trends that shape the Asia-Pacific region.

Based on ratings collected in IDC’s 2020 SaaSPath Survey (IDC #US46933620), Kyriba placed in the highest-scoring group of vendors serving the SaaS Treasury Management (TM) application market and has been awarded IDC’s 2020 SaaS...

Based on ratings collected in IDC’s 2020 SaaSPath Survey (IDC #US46933620), Kyriba placed in the highest-scoring group of vendors serving the SaaS Treasury Management (TM) application market and has been awarded IDC’s 2020 SaaS TM Customer Satisfaction Award.

A major shift is underway in the world of enterprise resource planning (ERP) software. With both customers and ERP software vendors driving a mass migration to the cloud, many companies have already completed their...

A major shift is underway in the world of enterprise resource planning (ERP) software. With both customers and ERP software vendors driving a mass migration to the cloud, many companies have already completed their ERP cloud migration projects—and thousands more are set to follow suit by the end of this decade. But ERP cloud migration is a costly and time-consuming undertaking, particularly where IT is concerned. For companies seeking to digitize their enterprise applications, it’s clear that corporate IT will be heavily taxed for the foreseeable future. Meanwhile, cloud ERP software vendors and system integrators are poised to reap the benefits of years of migration project work. The Challenges of Bank Integration For corporations,  ERP cloud migration projects are often global in nature — and many will need to tackle the complexity of a global banking integration project. This element of ERP migration is particularly challenging, significant coordination is needed with the company’s banks, and there is a considerable disparity between the payment formats required by different geographic regions and clearing systems. Indeed, bank integration is often cited as one of the riskiest and most challenging elements of ERP cloud migration. Simplify and Accelerate The good news is that companies can considerably simplify and accelerate a major component of cloud ERP migrations: bank integration for reporting and payments. Connectivity-as-a-service (CaaS) providers deliver pre-delivered, pre-tested capabilities for bank reporting and payments formats that shave months off the migration project, and reduce connectivity and format costs by up to 80 percent. In this Ebook You will learn about the key areas to look at during an ERP cloud migration payments project, including: Following banks’ schedules Navigating variations due to geography, banks, statutory reasons Connectivity with your specific cloud ERP software (SAP, Oracle, Microsoft Dynamics, etc.) Resourcing challenges You’ll also find out how you can significantly reduce the cost and time required to complete your ERP cloud migration project. Bank and ERP Cloud Integration: What’s Involved? Bank integration is unlike any other system integration. Today’s corporate IT teams are experienced in building interfaces between different back-office systems—but these are typically stagnated interfaces that do not require additional resources. In contrast, when working on a bank interface, the IT team will typically need many different resources to coordinate with each other, including IT, treasury, accounts payable (AP), the connectivity team, the bank’s tech team, and others. What’s more, the project timeline is usually at the mercy of the bank’s schedule. Bank ERP integration can similarly be time-consuming. IT first has to determine if the cloud solution is compatible with their ERP. Then, the data needs to be extracted out of the ERP and re-formated. IT departments are often stymied and reliant upon outside consultants to deliver integrations or core capabilities within the ERP. Furthermore, once the initial specifications for these connections are determined, they need to be tested - and they rarely pass on the first try. As a result, the development team will need to rebuild, re-test and work through the coordination effort all over again. In some cases, two to five rounds of testing may be needed. What are the Challenges in ERP Cloud Migration? For IT, the bank integration component of an ERP cloud migration brings a number of additional challenges. Working on the Banks’ Timelines Delays in the ERP migration project often arise due to delays by the company’s banks. If the company has a robust relationship with a core banking partner, it may be able to move up the project queue for that particular bank. But with many corporations needing to manage dozens of banks globally, the IT team will be forced to follow those banks’ schedules—which means working across different time zones and navigating banking holidays and seasonal moratoriums on testing. Navigating Geographical Variations No two banks are the same, and it’s a common misconception that SWIFT is a standard message type across banks. While SWIFT is moving from MT to XML, each bank will still have its own unique requirement in terms of how it will accept incoming files. For any payment type, companies will need to ensure that payments are formatted correctly for a specific bank’s requirements and that they contain the information the bank needs to complete the payment. Most corporations will need multiple formats per bank, which might include different formats for low value, high value and FX transactions. Given the complexities, it’s no surprise that IT firms routinely take two years or more to work through all these bank connections and payment format testing. Payments Integration and Fraud Prevention Payments integration is a challenge, given the ever-increasing threat of fraud. Even with effective tools like artificial intelligence (AI) and machine learning, the threat level is the highest it's been yet, according to Strategic Treasurer's 2021 Treasury Fraud & Controls Survey. In addition to financial loss, fraud events damage a company’s reputation and lead to the loss of essential data or assets. It is therefore essential to use ERP integration as a way to put technology in place to protect your organization. This should include digitizing payment workflows, standardizing controls and screening payments as part of an integrated payments hub. Complexities for IT Adding to these challenges, bank integration brings a number of complexities where IT is concerned. Limited IT bandwidth Corporate IT teams are already thinly spread across numerous projects and support requirements. As such, the time involved in undertaking a bank integration project can be particularly onerous. No Reusable Data When IT teams work on an ERP implementation, they have to develop their banking interfaces as a one-off exercise. While ERPs may be moving to the cloud, ERP solutions are still typically private cloud providers—and no ERP in the market has readily available, reusable banking formats that can be shared among users. Multiple Stagings Bank and payment format development is no different than for any other interface or application, as IT has to work through the same rigorous processes. If the business users need a new payment format, such as a new ACH for an existing bank, they will still need to go through the process of testing, QA, nonproduction and production. This process can take months, meaning there will be a considerable delay before the end user has access to the payment format. Resource Requirements Once formats are in production, the IT infrastructure team will need to manage those formats going forward. This involves activities such as troubleshooting bank issues, editing formats as required by the bank and working with the business to add new banks when the need arises. Depending on the company’s banking footprint, two to five people will likely need to be tasked with managing these connections on an ongoing basis. Integration Made Easy Standard ERP integration is a lengthy process that is incredibly taxing on IT. But there is an easier way. Leading technology providers should offer a pre-built, pre-tested connectivity solution that takes minimal time to get up and running and provides access to even greater functionality immediately. Leading ERP and Bank Connectivity Technology Considerations ERP integration brings many challenges to IT - but these can be overcome by adopting a technology solution that simplifies both bank and ERP connectivity. With 20 years experience in connectivity, Kyriba can integrate bank reporting and payments, while mitigating risk--all in record time thanks to our use of application programming interfaces (APIs). Accelerate your ERP Migration Project and Reduce Costs Our out-of-the-box, bolt-on bank connectivity can help you achieve exceptional time and cost savings on bank integration. While standard integrations might required months of testing, our connections are pre-tested and ready to go. Access a Payment Format Library As a multi-tenant application, Kyriba is unique in the marketplace as our entire 2,500-strong customer base uses the same predeveloped and tested payment formats. What’s more, we have full-time staff whose sole responsibility is to build and test payment formats. As a result of 20 years of development, we offer more than 45,000 pre-developed and bank-tested unique payment scenarios. Simplify Interfaces Minimal IT resources are needed when it comes to interfacing between the ERP software and Kyriba. Using both SFTP and API, we take all payment files into our prebuilt interfaces with no code specs needed from IT. Focus on the Wider Project Kyriba’s connectivity platform frees IT up from the daunting task of bank integration—so you can focus on keeping the ERP project on schedule and on budget. Avoid the Need for Swift Connectivity and Certifications When you use Kyriba for connectivity, IT won’t need to manage the Alliance Lite2 SWIFT connection— and there will be no need for annual testing and certifications. Manage Ongoing Maintenance and Support When the project is over, Kyriba will handle all ongoing maintenance and will act as the banking IT support arm for business users, meaning you won’t need dedicated IT resources to troubleshoot bank issues. Connectivity as a Service By offering Connectivity as a Service (CaaS), Kyriba can actively manage bank connections on your behalf. As a result, no IT support will be needed to manage your company’s bank connections or undertake file testing with banks—and with Kyriba's API capabilities, companies can also add new banks in a fraction of the time that would be needed for custom development within the ERP. Market-Leading Payment Fraud Protection With IT increasingly tasked with risk mitigation, Kyriba’s market-leading payment fraud solution adds considerable value. The solution uses machine learning to detect any anomalies or suspicious activity, and provides alerts to stop payments for investigation before they are sent to the bank. Payment Tracking Kyriba offers real-time payment tracking with four levels of acknowledgement. By harnessing SWIFT gpi, Kyriba is able to track the entire lifecycle of the transaction. Innovation and Agility Hub Payment technology is evolving rapidly. Kyriba’s innovation and agility hub can deliver Real Time Payments (RTP) and can connect with other clearing systems and payment solutions. Smart Assignment Kyriba’s machine learning will have visibility to your banking partners and costs associated with each payment. Smart assignment can intelligently route your payments through the lowest cost provider. Bank Monitoring Kyriba offers global bank monitoring of all incoming and outgoing files. Kyriba clients can rest assured that they have fully outsourced banking support. Established Partnerships As an Oracle GOLD partner, Kyriba's Payments Network supports over 1,000 Oracle customers. Our payments solutions have also achieved SAP-certified integration with the SAP NetWeaver® technology platform and SAP S/4HANA. APIs and Connectivity The future of connectivity lies in Application Programming Interface (API) technology. This is where Kyriba has a key advantage. As the leader in connectivity in treasury and finance, Kyriba understands how to maximize the power of APIs to help finance leaders drive digital transformation and more informed decision-making. Bank APIs APIs offer an expedited pathway for bank connectivity, as well as a gateway to real-time business intelligence and digital solutions. Unlike file transfer protocol (FTP), APIs do not require files to be sent or downloaded. Data is exchanged point to point between the systems immediately, allowing for instant data transmission and eliminating substantial risk. Kyriba connects with over 600 global banks every day on behalf of our 2,500 clients using a variety of connection protocols, including APIs. Banking services available via API vary by bank, but can include real-time payments, domestic payments, cross-border payments, bank balance and transaction reporting, and SWIFT gpi payment tracking. Users receive immediate responses from banks, and the ability to access new data and notifications in real-time. ERP APIs Kyriba also works with ERP system providers to embed other systems via API integration into their workflows so that the user doesn’t need to take any action outside their ERP. These add-ons perform the initial formatting so that files can be exported from the ERP, translated to the API provider’s format and pushed out to the connectors. Corporate end-users can also integrate APIs into their ERPs on their own. These plug-and-play solutions are facilitated through our Open API platform, which provides users with common ERP integrations that connect to their own applications. Kyriba users can browse our online catalog, which lists all our available APIs and their prospective use cases. Here are a few examples: Bank Account Groups: This API allows for the creation of new account groups to filter and/or group accounts in processing and reporting. Users can modify the set of accounts that belongs to a specific group, and retrieve or update the pooling account of the group. Companies: This API allows for the setup of companies. Users can get a list of the companies located in a country, receive a list of companies whose name contains specific characters, and obtain all the setup fields of a specific company. Third Parties: With this API, users can manage and set up third parties who represent the companies they manage. Users can retrieve and update third-party details, and create or delete third parties via API. Optimized Bank Connectivity Conclusion There are many challenges for IT when deploying an ERP project, from working around banks’ schedules and specifications, to navigating the complexities of geographical variations - all while juggling an already heavy workload. Fortunately, Kyriba’s in-house developed, complete CaaS solution encompasses all ERP software vendors, internal financial systems, third party providers, and over 600+ pre-configured, pre-tested connections with banks across the globe - allowing for fast and simplified ERP migration. Payment and connectivity costs can be reduced dramatically, while the time spent on bank integration can be streamlined by as much as 80%. What’s more, freeing up the IT team from having to work within the constraints of the banks will help you keep the wider ERP project on time and on budget. Check out this webinar to learn how Treasury and IT worked together at Hilton Grand Vacations with Kyriba to speed up connecting more than 10 banks and 300 bank accounts as part of their Oracle ERP cloud migration project. 

 A Strategic Treasury Focus Boosts Cash Flow and Minimizes Risks Treasury operations manage the lifeblood of their companies: cash liquidity. CFOs know that their treasury teams are critically important, handling everything from cash flow...

 A Strategic Treasury Focus Boosts Cash Flow and Minimizes Risks Treasury operations manage the lifeblood of their companies: cash liquidity. CFOs know that their treasury teams are critically important, handling everything from cash flow forecasts to optimizing working capital, along with foreign exchange currency risk and investing and borrowing. The team’s performance has a direct impact on the bottom line. Yet, 22% of CFOs and senior finance executives say they don’t see their treasury team as a profit center, according to a recent survey by CFO Research and Kyriba. And only a quarter of the executives say their treasury operations are operating at a high level with a strategic approach. This report examines what the survey says about the links between treasury and overall performance, the obstacles that treasury teams face and how CFOs can boost their treasury performance to improve overall profitability. Which of the Following Best Describes Your Role? KEY POINTS Senior finance executives expect treasury teams to manage critical tasks linked to cash flow and risk, according to a survey. That three-quarters of finance executives view their treasury operations as strategically lacking. Obstacles faced by treasury teams include complex financial structures and siloed systems, and a lack of technology investments, real-time business intelligence, expertise and process automation. A lack of spending on treasury and a focus on everyday tasks over strategic objectives block progress for treasury teams. Working capital optimization is the top treasury concern of financial executives moving forward. The surveyed finance executives also acknowledge that their treasury organizations need to make technology and process improvements to meet industry best practices. Predictive analytics, payments automation and cash management are the top three technology and process improvements that treasury teams need to make, according to the survey respondents. WHY TREASURY PERFORMANCE SHOULD DEMAND YOUR ATTENTION There is widespread agreement among CFOs and other senior finance executives: Treasury performance is critical to the health of their organizations, and they expect their treasury teams to manage a range of critical tasks. According to a 2020 CFO Research/Kyriba survey, senior finance executives give similar weighting to a range of treasury department priorities: accurately forecasting cash flow, operational efficiency, fraud prevention, compliance, optimizing working capital and FX risk management are somewhat evenly matched. Rather than singling out one or a few of the priorities, the 156 surveyed executives indicate that all are nearly equally important. The survey also reveals another theme: finance executives tie treasury performance directly to cash and liquidity management. The surveyed executives measure treasury performance based primarily on free cash flow, cash used for working capital, productivity and efficiency, investing and borrowing performance, and reduced risk exposure. These are all important, of course -- liquidity drives business performance, CEOs often give guidance to the investment community about meeting free cash flow targets and cash is needed for working capital. What Are Your Current Priorities Related to Treasury? But whether or not the finance executives formally track these factors as key performance indicators for their treasury teams, nearly all of the executives have the same expectations. They want better returns from cash, more optimized investment and borrowing, best practices executed for liquidity and cash management, and protection against fraud. On the topic of the best ways for treasury teams to optimize liquidity, the survey respondents again see almost-equal priorities rather than one or two favorites, giving nearly the same importance to reducing borrowing costs, increasing returns on excess cash, generating free cash flow, mobilizing global cash more efficiently and implementing supplier financing programs. They also give similar weights to each of eight areas where their treasury teams could make a better contribution to overall business performance. Increasing cash flow is the favorite at 41%, followed by increasing interest earned on excess cash, protecting against payments fraud, improving treasury team productivity, centralizing treasury data and processes, reducing currency volatility impacts, providing secure and efficient global payments, and providing business continuity planning for global treasury. Finance executives expect their treasury teams to meet all of these cgoals, and if they aren’t done right, it costs their organizations in financial losses or missed opportunities. CFOs recognize that cash is the lifeblood of their organizations. When treasury can manage cash and liquidity well—if it can provide visibility to cash and deploy it effectively, optimize investment and borrowing, and protect cash from fraud and currency risks—then it sets itself up to optimize how cash is made available and deployed, such as for cash operations, stock dividends or company growth in other parts of the world. THE CURRENT STATE OF TREASURY Despite the consensus that treasury operations are integral to company success, the survey also shows that treasury operations are lagging considerably behind the vision that the CFOs and other finance executives have for them. Surprisingly, 22% of the surveyed executives say they don’t see their treasury team as a profit center. On behalf of those who don’t share that view, 53% of the surveyed executives say their treasury teams contribute as a profit center by earning greater returns on cash and 34% say they contribute by unlocking supplier discounts for early payments. Rounding out the profit-center views, 28% see contributions from treasury’s FX intercompany management and 24% from viewing treasury as an in-house bank. On the bright side, 78% of the CFOs and other senior finance executives in the survey view the role of treasury as actively contributing to the bottom line. And most are earning greater returns on cash from areas such as investment income on the large cash balances that companies frequently hold in today’s economy. They also value cash management and see cash as something that can help create profitability and improve margins. The glass-half-empty view? The executives in the 22% contingent probably are not aware of the potential links of treasury to value creation, and are likely not investing in things like cash forecasting or technology that will help their treasury teams contribute in strategic roles, viewing cash merely as a means to pay bills, and not much more. How Do You See Your Treasury Team Contributing as a Profit Center? When asked about their current state, only one quarter of surveyed finance executives describe their treasury operations as “strategic,” the highest level, meaning that treasury “creates value through enterprise-level insight and intelligence.” Three out of every 20 finance executives surveyed say treasury is operating at an “ad-hoc” level, or the lowest level, which is primarily reactive. Anything below strategic is suboptimal. But why are treasury teams being placed in the not-strategic category? The surveyed finance executives report several internal obstacles that restrict the CFO’s ability to support organizational growth and bottom-line value, with a fairly even distribution between those obstacles: complex financial structures, siloed or disparate financial systems, lack of resources, insufficient technology investments, lack of real-time business intelligence, lack of expertise and lack of process automation. All of these obstacles point to a mindset that the company hasn’t invested the time and money necessary to improve treasury processes and the systems that support them. They also signal a lack of collaboration and coordination in the way the financial structure is set up. A lack of spending on treasury and a tactical focus, where time is spent on completing everyday tasks at the expense of forward-looking achievements, translates to lower productivity for treasury teams, especially for the range of critical tasks and high expectations that CFOs have set out for them. Companies are getting in their own way when they fail to prioritize treasury operations and don’t invest in the capabilities and tools that treaury needs. HOW TO GET BETTER CFOs value the importance of treasury operations, and most of them recognize that their treasury teams haven’t reached a strategic level yet. So how do they set up treasury to achieve its full potential? The key barrier is that treasury teams often get so bogged down in reactive tasks that they don’t create opportunities to work on strategic tasks. If treasury can get around its mountain of tactical work, it can be more proactive with insights and analysis. One way that CFOs appear to be attacking this issue is through technology. The survey shows that more than one-third of the respondents use connectivity middleware/payment hub software, data visualization/business intelligence software and mobile devices for multifactor authentication with their finance teams. A slightly lower percentage of the surveyed finance executives employ application programming interfaces to banks and trading partners, as well as machine learning and robotic process automation. All of these technologies help harness data and can make treasury teams more effective and analytical, which helps them make better decisions about managing cash and liquidity. Fostering more analysis of data and information creates an opportunity for treasury and finance to become more strategic. TREASURY ORGANIZATIONS NEED TO MAKE TECHNOLOGY AND PROCESS IMPROVEMENTS TO MEET INDUSTRY BEST PRACTICES. PREDICTIVE ANALYTICS ARE AT THE TOP OF THE LIST, CITED BY 45% OF THE RESPONDENTS AS AN AREA OF INTEREST, FOLLOWED BY PAYMENTS AUTOMATION AT 32% AND CASH MANAGEMENT AT 31%. In Which of the Following Areas Does the Treasury Organization Need to Imporve Its Technology and/or Process to Match Industry Best Practices? The surveyed finance executives also acknowledge that their treasury organizations need to make technology and process improvements to meet industry best practices. Predictive analytics are at the top of the list, cited by 45% of the respondents as an area of interest, followed by payments automation at 32% and cash management at 31%. The number of organizations utilizing technology that still acknowledge the need for improvement show a level of aspiration. CFOs and their organizations are recognizing they need to make changes to achieve the performance standards they’ve set for their treasury teams based on free cash flow and other factors. What Are Your Top Three Treasury Concerns for 2020 and Beyond? Looking ahead, the top three treasury concerns for 2020 and beyond are working capital optimization, according to 41% of the surveyed executives, followed by payments fraud for 29% and low interest rates for 28%. The other items on the treasury concerns list include treasury operating costs, treasury productivity, currency volatility and business continuity. The diverse pattern of responses indicate that other than with working capital optimization, every organization will have its own individual set of priorities for fortifying its treasury operations. Also, with no consensus about treasury deficiencies, each organization will have to carefully examine and gain a better understanding of its own treasury team, which could lead to visibility that hasn’t previously existed. The bottom line is that CFOs and other finance executives value their treasury teams, and they have a good understanding of all the vital benefits that their teams can deliver—a point made repeatedly through the survey results. Although there may not be a simple fix, they’ve identified a list of internal obstacles that they must overcome to improve treasury. They also recognize the opportunity at hand: to bring their treasury operations up to a strategic level where they can fulfill their potential. To make that happen, they need to arm their treasury teams with the right tools to understand and analyze data, and to make better decisions. Starting with some simple investments in technology, CFOs can improve the efficiency and effectiveness of treasury. And as that efficiency and effectiveness grows, it increases the probability of good outcomes like increased profitability. CONCLUSION Treasury performance is tied directly to cash and liquidity management. CFOs know that accurately forecasting cash flow, operational efficiency, fraud prevention, compliance, optimizing working capital and FX risk management are all critical tasks that their treasury teams must manage to sustain the health of their companies. Most of them also recognize that their treasury teams need work. Most treasury operations fail to achieve their full potential because they get bogged down in tactical, reactive work. Treasury teams need investments in predictive analytics, payments automation and cash management. As technology and process improvements help treasury teams to harness more data and employ more analytics, those teams will become more strategic and capable of meeting their CFOs’ expectations. And companies will enjoy improvements in free cash flow, cash usage for working capital, productivity and efficiency, investing and borrowing performance, and reduced risk exposure.     Check out this on-demand webinar and learn how 2021 AFP Pinnacle Award Winner HCSC transformed into a data-driven treasury with 1000+ hours of productivity improvement and 90% reduction in working capital requirements.

Please see the Appendix for detailed methodology, market definition, and scoring criteria. In This Excerpt The content for this excerpt was taken directly from IDC MarketScape: Worldwide SaaS and Cloud-Enabled Enterprise Treasury and Risk...

Please see the Appendix for detailed methodology, market definition, and scoring criteria. In This Excerpt The content for this excerpt was taken directly from IDC MarketScape: Worldwide SaaS and Cloud-Enabled Enterprise Treasury and Risk Management Applications 2019–2020 Vendor Assessment (Doc # US45685819). All or parts of the following sections are included in this excerpt: IDC Opinion, IDC MarketScape Vendor Inclusion Criteria, Essential Guidance, Vendor Summary Profile, Appendix and Learn More. Also included is Figure 1. IDC Opinion The role of today's treasury professional is rapidly changing and expanding. While cash management and cash forecasting continue to be strategic priorities, treasurers are also increasing their focus on supply chain finance, insurance, and commodities. However, many treasurers find themselves working with the same amount of resources. Today's treasury professionals require more advanced and innovative technology to keep up with the challenge. This is driving the digital transformation that culminates in the intelligent treasury. What Are Some of the Benefits to the Intelligent Treasury? Cash visibility: Treasurers are asked to cope with the expanding complexities related to increasingly global business environments. Dealing with globalization demands that treasurers can manage and track far-flung operations and fund flows. Scalability: Treasury professionals must be able to efficiently manage complex financial transactions at pace and at scale. Analytics are quickly moving from a nice to have to a must-have for today's treasury professional. Treasury professionals are turning to advanced analytics and intelligence to assist in the process of remittance advice, cash forecasting, and monitoring cyberfraud-like account takeovers and check fraud. Streamlined financial controls: Organizations are reviewing procedures across business units and geographic boundaries and must work to find a way to streamline their regulatory compliance and mitigate compliance risks. Treasury departments must devote resources to understand the impact of these regulations and adjust their processes/systems to comply with them. Intelligence allows for tighter, real-time financial controls. Digital Tools Supporting the Intelligent Treasury As organizations move into the digital economy, focused on digital transformation initiatives, the functions of finance and treasury are turning to advanced technologies to enable the evolution. Fueled by the enormous amount of waste and inefficiency within the treasury workstreams, the CFO requires more advanced and innovative technology. Vendors are supporting digital transformation with new use cases that treasury applications can leverage with technologies such as big data and analytics and machine learning (ML) to perform efficiently. Software-as-a-service (SaaS) cloud: Treasury and risk management is one of the slower-moving application groups to the cloud. Customers making new purchase decisions for treasury solutions are overwhelmingly choosing public cloud offerings over on-premises/other software offerings. The ability to configure, upgrade, and add more functionality from the 3rd Platform and innovation accelerators is driving organizations to purchase cloud-based solutions. Artificial intelligence (AI)/machine learning: Machine learning has the potential to deeply transform the daily activities of treasury managers. The impact of this technology will be felt first in the areas of cash forecasting, cash positioning, and netting, where the technologies' ability to analyze data and make recommendations will be essential. Rise of APIs: Treasurers interact with many different external entities (e.g., banks, suppliers, and agencies) to manage company treasury assets. The answer to this issue is to allow treasury application software to connect directly with banking systems, so that information flows seamlessly between end users and their banking partners. The potential of APIs within treasury is significant. Predictive analytics: Businesses are interested in analytics as part of their travel and expense applications. Business intelligence and analytics improve visibility into liquidity patterns. The Enterprise Difference IDC defines the enterprise treasury market as any customer with 1,000+ employees. Among the largest businesses, treasury becomes less about the basics of treasury accounting, bank relationship management, and cash management and much more about moving money efficiently into and out of the financial markets. Financial risks management becomes highlighted among treasury departments within very large businesses. As a result, data management becomes critically important among enterprise treasury departments. Further: Finding business insights: Treasury professionals must be able to accurately account for and provide detailed information on millions of transactions. Treasury professionals need to both verify and analyze these transactions for relevant reporting metrics, business insights, and compliance. This information may come in a variety of formats and sources, and the amount of this type of information is increasing daily, rapidly making finding relevant business insights an extremely daunting task. Preserving treasury data security: Security has become a multifaceted issue because of the rise of cybersecurity threats and cyberfraud. Treasury professionals must now be vigilant against cases of traditional fraud (e.g., suspicious accounting records or corporate account misuse) and more modern cyberthreats. Treasury resources are now devoted to monitoring potential weak points in banking structure, supplier management, treasury systems, and payment files. Enhancing foreign exchange (FX): Today's treasurer is swimming in data and is finding FX with all its moving parts to be particularly difficult. Speed is another area of concern for treasurers, who desire the ability to move money around the clock and in real time into and out of the currency markets. However, with increased speed comes the need for more powerful real-time risk management capabilities. Complying and reporting: Treasury compliance is a rule-based process, often manual, that is handled on an exception basis from a historical transactional perspective. Without real-time treasury compliance, organizations are at risk for noncompliant employees and have an increased opportunity of fraud. IDC Marketscape Vendor Inclusion Criteria The vendor inclusion list for this document was selected to accurately depict the vendors that are representative of any given treasury management functional buyer's selection list. Vendors were further investigated to ensure that their offerings qualified as "SaaS or cloud enabled" and the vendor had won recent deals. Also, the treasury software must be available for purchase and implementation separate from other associated financial/ERP software. Advice for Technology Buyers The process of transitioning treasury management from a manual model to an intelligent model can be a challenging one. It is important to structure your treasury department to be more efficient and agile to cope with the ever-changing compliance/regulatory/liquidity demands. Here are a few key steps in the journey toward optimizing your treasury management department through the addition of an advanced software package like the ones listed in this document: Begin by looking inward: Before you choose your treasury management software (TMS) vendor or even whether dedicated TMS is a good investment for your organization, first you should take the opportunity to do some self-reflection. Here are some key questions to ask regarding the internal resources and processes: What are some of the issues I would like to resolve with this new system? Are the issues technology related? What are my internal support resources and capabilities? How should we define success for this implementation? Which internal stakeholders should we include in the evaluations processes? Select the right partners (internal and external): The first step in the journey to TMS is developing a strategy and plan for the implementation. This includes doing the due diligence in finding the right TMS vendor. Here are a few key questions to ask regarding the TMS vendor: Does the vendor have experience with my type of product, service, and company size? Can the vendor show me a hands-on demo with our organization's "live/real" data to show the benefit to the business? Does the vendor understand the regulations that will impact my business? How are these regulations reflected in my current product, and how will it change in the future? What is the vendor's strategic investment outlook for the next three to five years? Why? How will that change and enhance my business? Take ownership of the implementation: For the best results, organizations must take a very active role in the actual implementation of the software. TMS touches upon a lot of other back-office systems (e.g., ERP, finance, accounts receivable, supply chain, and inventory). As a result, extreme attention must be given to how the TMS system is set up and how it interacts with other systems within your organization. Here are some key questions to ask regarding a TMS implementation: What levels of support are available, and are they geographically available for my business? How should I set up the service-level agreement (SLA) before signing any contracts? Can the TMS integrate with my company's other IT systems and those of my partners? Which IT system needs to be integrated and to what degree? How are we set up to deal with frequent product updates? Realize that post-implementation is critical: In many ways, the success of any SaaS implementation hinges on what happens after the implementation is up and running. This is where change management takes center stage and the people side of treasury management becomes essential. Here are a few key questions to ask regarding the post-go-live phase of TMS implementations: Do we have a strategy to encourage rapid adoption among treasury employees? Do we have the right amount of training for employees to master the new features within the TMS system? Are we communicating the purpose and benefits of the system change to the treasury employees? Have we aligned existing policies and procedures to enable the adoption of the new workflows? This IDC MarketScape assists in answering the aforementioned questions and others. The goal of this document is to provide potential software customers with a list of treasury software companies that have taken great strides to incorporate the previously listed capabilities. We have profiled and assessed their capabilities to support the complicated area of treasury management software. Vendor Summary Profiles This section briefly explains IDC's key observations resulting in a vendor's position in the IDC MarketScape. While every vendor is evaluated against each of the criteria outlined in the Appendix, the description here provides a summary of each vendor's strengths and challenges. Kyriba After a thorough evaluation of Kyriba's strategies and capabilities, IDC has positioned the company in the Leaders category in the 2019 IDC MarketScape for worldwide SaaS and cloud-enabled enterprise treasury and risk management applications. Kyriba is a provider of cloud treasury and financial management solutions. Kyriba's product portfolio includes solutions for treasury and finance management, payments, supply chain finance, and FX risk management. Kyriba provides secure connectivity, real-time payments fraud detection, and end-to-end currency risk management in one platform. Kyriba is headquartered in New York, with offices in San Diego, Paris, London, Dubai, and Tokyo. Quick facts about Kyriba are: Employees: 750+ Total number of clients: 2,000+ Globalization: 12 global offices; supports 15 languages in 100+ countries Industry focus: Retail, telecom, consumer packaged goods, and manufacturing Ideal customer size: Upper midmarket and above SaaS: Multitenant SaaS platform Pricing model: Subscription based on number of active users Partner ecosystem: 100+ partners including Accenture, Deloitte, Infor, and Oracle NetSuite Strengths Connectivity: Kyriba offers "connectivity as a service" featuring seven different connectivity options to financial institutions, including APIs, MT Concentrator, and multiple SWIFTNet options. Kyriba connects to an extensive set of banks. Focus on cash forecasting: Kyriba offers a large array of modeling capabilities to drive predictive forecasting, including complex extrapolation algorithms and more recently artificial intelligence to project transaction clear dates. Kyriba's business intelligence forecast versioning enables more detailed forecast variance analysis and confidence in forecast performance Payments capabilities: Kyriba offers a complete payment hub to support complex treasury payments, ERP-to-bank connectivity, a library for 40,000 payment format scenarios, sanctions list screening, and real-time payment fraud detection. These are critical for customers seeking resilience and control against fraud and cybercrime. FX risk management capabilities: Kyriba offers an end-to-end FX risk management allowing users to identify, extract, and analyze balance sheet and cash flow exposures to understand the impact of currency volatility on earnings and mitigate FX risk through natural and intentional risk management. Challenges Changing perception of SaaS: Kyriba targets midmarket and large enterprise companies. Although the SaaS model offers more price elasticity for less complex organizations, some CFOs are still opening their minds to SaaS for treasury and, as result, may still be reluctant to deploy SaaS treasury. Small, inexpensive niche providers: There are several providers that provide partial functionality (e.g., only cash management) but offer inexpensive offerings and the promise of interfacing with other best-of-breed providers to deliver a complete solution Consider Kyriba When If you are an upper midmarket or large enterprise company looking for a suite of treasury or FX risk management capabilities, consider Kyriba. Appendix Reading an IDC MarketScape Graph For the purposes of this analysis, IDC divided potential key measures for success into two primary categories: capabilities and strategies. Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well aligned the vendor is to customer needs. The capabilities category focuses on the capabilities of the company and product today, here and now. Under this category, IDC analysts will look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the vendor's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level decisions and underlying assumptions about offerings, customer segments, and business and go-to-market plans for the next three to five years. The size of the individual vendor markers in this IDC MarketScape represents the market share of each individual vendor within the specific market segment being assessed. IDC MarketScape Methodology IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capability. Market Definition Treasury and risk management applications support corporate treasury operations (including the treasuries of financial services enterprises) with the corresponding financial institution functionality and optimize related cash management, deal management, and risk management functions, as follows: Cash management automation includes several treasury processes involving electronic payment authorization, bank relationship management, and cash forecasting. Deal management automation includes processes for the implementation of trading controls, the creation of new instruments, and market data interface from manual or third-party sources. Risk management automation includes performance analysis, Financial Accounting Standards (FAS) 133 compliance, calculation of various metrics used in fixed-income portfolio analysis, and market-to-market valuations. Learn More Related Research Worldwide Treasury and Risk Management Applications Forecast, 2018-2022: Combating Fraud Through Advanced Technology (IDC #US43267118, June 2018) Worldwide Treasury and Risk Management Applications Market Shares, 2017: Treasury Manager Emerging as Trusted Advisor (IDC #US43267218, June 2018) IDC TechScape: Worldwide Intelligent Treasury and Cash Management, 2019 (IDC #US45024119, May 2019) IDC Market Glance: Treasury and Risk, 1Q19 (IDC #US44646619, March 2019) Synopsis This IDC study provides an assessment of the leading SaaS and cloud-enabled treasury and risk management applications and discusses the criteria that are most important for companies to consider when selecting a system. "The world of treasury and risk management is rapidly evolving and becoming more and more complex. So, too, has the role of treasurer manager evolved from simply being a steward of cash to a trusted advisor to the executive board," says Kevin M. Permenter, research manager, Enterprise Applications.

Corporate treasurers are aware that the personal computing systems used for handling administrative and repetitive tasks are quickly becoming unfit to deal with frequent market changes and to manage complex data transactions between multiple parties and institutions.

Introduction Corporate treasurers are aware that the personal computing systems used for handling administrative and repetitive tasks are quickly becoming unfit to deal with frequent market changes and to manage complex data transactions between multiple parties and institutions. Therefore, corporate treasurers (especially in small and midsize enterprises [SMEs]) are replacing their basic personal accounting system with a more robust TMS and are in the process of learning how to select the right solution. It is not so infrequent that corporate treasury officers are put in front of myriad alternative solutions that only confound their selection process, as treasurers remain entangled in product demos and features-and-functions “fireworks” that make the short-listing decision harder. Aite Group is fully aware of this and proposes an evaluation approach that factors in all the key elements for a successful selection and, more important, an ongoing positive business relationship with the chosen vendor. This Aite Matrix evaluation report explores some of the key trends within the TMS market and discusses the ways in which technology is evolving to address new market needs and challenges. This report compares and contrasts the leading vendors’ offerings and strategies, and it highlights their primary strengths and challenges. In particular, it assesses each vendor’s readiness to offer product functionalities that Aite Group expects will become mainstream in the next two years. Finally, to help corporate executives make more informed decisions as they select new technology partners, this report recognizes specific vendors for their strengths in critical areas. Methodology Leveraging the Aite Matrix, a proprietary Aite Group vendor assessment framework, this report evaluates the overall competitive position of each vendor, focusing on vendor stability, client strength, product features, and client services. The following criteria were applied to develop a list of vendors for participation: International presence Functional coverage for corporate treasuries, assessing the vendors’ capabilities to offer a portfolio beyond the “basic” functionalities of a TMS: cash and liquidity management, payments initiation, bank account management, and cash forecasting Focus on companies with annual revenue over US$500 million Participating vendors were required to complete a detailed product RFI composed of both qualitative and quantitative questions, conduct a minimum 60-minute product demo, and provide active client references. The Players This section presents comparative data and profiles for the individual vendors that participated in the Aite Matrix evaluation. This is by no means an exhaustive list of vendors, and firms looking to undergo a vendor selection process should conduct initial due diligence prior to assembling a list of vendors appropriate for their own unique needs. Table A presents basic vendor information for the participating solutions. The Market The following market trends are shaping the present and future of the TMS market (Table B). Key Statistics This section provides information and analysis on key market statistics as well as projected IT spending related to the vendor market. Annual Revenue Estimates Analysis The market presence of TMS vendors is evenly distributed among various revenue tranches (Figure 1). The consolidation of the largest players has opened space for lower-tier vendors that have improved their international presence and enlarged the scope of their product portfolio. Profitability Analysis Although TMS vendors still find some resistance to change by corporate treasurers who prefer to remain loyal to their proprietary electronic spreadsheet tables, the demand for robust treasury software applications is strong. TMS vendors that are capable of corresponding to purchasing requirements (i.e., features and service) of their corporate prospects enjoy healthy returns (Figure 2). Growth Rate Analysis The positive results of vendor profitability are reflected in the breakdown of the assessed vendors’ growth (Figure 3). A consistent majority (63%) experienced a double-digit growth over 15%. Only a relative minority (12%) had limited—yet still positive—business success. The results were lower than expected in only one case. Client Breakdown by Type An analysis of the distribution of number of clients among TMS vendors (Figure 4) suggests a form of correlation with the vendors’ business profitability (Figure 2); the more clients served (a client is a registered company—multiple installations at same registered company count as one), the higher the profitability. As soon as the client base diminishes, the profitability drops significantly, only to increase again when there are fewer than 100 clients. The explanation may reside in the fact that profitable clients are large or very large corporations with budgets that recognize the value of the software and services combination and are ready to pay for it. With such a group of clients, TMS vendors are ready to expand their sales campaigns and are confident of two important elements: They have a good set of client references to leverage, and the profitable returns can subsidize the costs for extended sales programs that conclude with an increase in the market share and new client acquisitions. As soon as the resources to invest diminish, however, the client base is reduced, and this may create a vicious circle. Only by focusing on a limited—yet more controllable—pool of clients, the TMS vendors can generate efficiencies and offer standardized solutions that allow them to see their returns increase again. Aite Matrix Evaluation This section will break down the individual Aite Matrix components, drawing out the vendors that are strong in each area and how they are differentiated in the market. The Aite Matrix Components Analysis Figure 5 overviews how each vendor scored in the various areas of importance. Each vendor is rated, in part, based on its own data provided when responding to the RFI distributed by Aite Group as well as on product demos and follow-up discussions as part of the Aite Matrix process. Ratings are also driven by the reference customers of the examined vendors to support a multidimensional rating. VENDOR STABILITY Kyriba leverages its long-lasting presence in the market and global geographical presence. It also has a robust workforce with significant treasury management experience. Client Strength All vendors serve clients in multiple geographies and in a diversity of industry segments. Kyriba, in particular, received high scores from client reference checks for vendor reputation. Client Service Kyriba stands out from the competition. This must not induce in error believing that the other vendors are not careful to their clients. They all offer global and localized support as a standard service with no additional fees. They also measure their performance by contractualizing service-level agreements. The elements that differentiate Kyriba are relative to client reference feedback for service and support, as well as the low implementation costs relative to its pure Software-as-a-Service (SaaS) offering. Product Features All analyzed vendors deliver fundamental treasury management features of cash and liquidity management, cash forecasting, risk management, payments, investments, funds trading, and debt and equity deal management. The analysis for this report has gone deeper in assessing the vendors’ capabilities to deliver product features closer to the needs of the evolving role of the corporate treasurer: artificial intelligence (AI)-based application that suggests course of action based on the standards being followed in the country of reference, alerts from supply chain events that impact treasury operations (e.g., large purchase order will require funding, delivery delay to client requires cash inflows rescheduling, peak in production requires liquidity to pay extra working hours and temporary staff), and direct integration with major supply chain finance (SCF) platforms via APIs. The above are the specific features that Kyriba displays alongside an already robust TMS applications portfolio. The Aite Matrix Recognition To recap, the final results of the Aite Matrix recognition are driven by three major factors: Vendor-provided information based on Aite Group’s detailed Aite Matrix RFI document Participating vendors’ client reference feedback and/or feedback sourced independently by Aite Group Analysis based on market knowledge and product demos provided by participating vendors Figure 6 represents the final Aite Matrix evaluation. Best-in-Class Vendor: Kyriba Kyriba emerges as the clear winner among the examined contenders. Aite group appreciates the vendor’s extended product footprint to cover a large portion of a treasurers’ daily routine operations—namely, supply chain, trade finance, and bank account operations management from the corporate ERP or TMS. Kyriba excelled in the following: Vendor strength: Kyriba has a clear vision of corporate treasury’s needs and expectations. Its out-of-the-box thinking led the vendor to anticipate the benefits of integrating a supply chain finance engine as part of its core product’s stack. Its attention to leveraging APIs to create ERP and bank plug-ins is a further testament of this continuous attention. Product performance: Of particular relevance are cash forecasting tools, bank connectivity interfaces, and ease of use and implementation due to its native SaaS construct.   Best in Class: Kyriba Kyriba began operations in France in 2000 as a spin-off from Sage XRT (now part of Aritmos). The headquarters was relocated to the U.S. in 2004. Private equity firm Bridgepoint Capital became a majority shareholder in April 2019 and added a US$160 million growth investment to help Kyriba continue its product innovation and growth strategy. Kyriba delivers an in-house-developed pure SaaS finance software platform with integrated bank connectivity. Through its fully virtualized, multitenant treasury cloud, Kyriba offers a suite of solutions for corporate treasury and finance: treasury, payments, risk management, and working capital. The SaaS nature of the solution allows the firm to keep implementation time typically between six and nine months. Smaller, less complex projects can be rolled out in weeks. Kyriba is a SWIFT-certified application for cash management and an authorized reseller of SWIFT Alliance Lite2 for business applications. Kyriba’s SWIFT Service Bureau offers clients their own SWIFT BIC, fully managed by Kyriba, alongside an outsourced MT Concentrator model that allows organizations to utilize a SWIFT BIC specifically provisioned for Kyriba clients, instead of becoming a SWIFT member. The bank or corporate subsidiary data is consolidated, normalized, and integrated into a portal that provides liquidity dashboards, cash flow forecasting, daily cash positioning, and zero-balance account structure, as well as intercompany loan balance and transaction data, FX capture, tracking, and revaluation. After the injection of fresh funds from Bridgepoint Capital, Kyriba is focused on product development and continued customer support while expanding its partnership ecosystem. While the full list of implementation partners cannot be disclosed, the vendor employs an extensive partner program spread across regions, ranging from large partners such as Accenture to smaller domestic treasury-specific associates. Kyriba’s SaaS cloud-based solutions automate an “on-demand” collection of data from multiple banks and company subsidiaries, leveraging connectivity channels for both treasury and ERP that reach over 100 international banks with a prebuilt inventory of bank formats. Kyriba supports over 125 payment formats with over 45,000 different payment scenarios (e.g., by type, geography, bank). Relevant attention and investment are dedicated to APIs. The API integration builds upon Kyriba’s leading connectivity options, considering that recently published figures tell that the vendor processes more than 83 million bank transactions, 30 million payments, and 530 million ERP transactions on behalf of its clients each month through its global connectivity hub. Kyriba’s main target is to be recognized as the treasury management and payments hub solution provider that offers real-time payments to its bank partners’ corporate customers. In February 2019, Kyriba announced an API-based integration with Citi.1 Later in May, it announced a real-time payments feature using JP Morgan’s API that will enable joint Kyriba and JP Morgan clients to send real-time corporate payments in the U.S. through The Clearing House’s RTP network.2 Commenting on how the competitive environment will evolve over the next two years, Kyriba representatives believe that there is a possibility for further consolidation, as some competitors are challenged financially. It is unlikely that more competition will emerge, as recent entrants have struggled. As new technologies such as RPA and AI become mainstay requirements for treasury, the vendor expects a divergence between platforms that can evolve their technology and those that cannot. Another variable is the broadening of treasury responsibilities into areas such as risk management and procure to pay. Competitors that cannot extend their functionality to meet these additional requirements will find themselves uncompetitive. Kyriba is predicting growth across all sizes of organizations, including smaller midmarket businesses, with the Americas and the Asia-Pacific representing the highest growth markets. Aite Group's Take Kyriba’s strong tradition of long-term partnerships and its one platform that blends typical treasury and risk management functionalities, with additional features for payments and working capital optimization, create unique selling points that set a benchmark in the TMS market. Reference clients told Aite Group that the deciding factors to select Kyriba were the vendor’s company viability, its history of long-term well-established partnerships, the richness of treasury functionalities, and Kyriba’s value engineering support during the final evaluation process that provided the corporate decision-makers with the right elements to build the business case. An element that still creates a barrier to further adoption by prospective clients is the price of the TMS that may discourage companies with smaller treasury budgets than those traditionally served by Kyriba. Other business challenges are represented by the continuous demand from corporate treasurers to have immediate TMS solutions to manage unexpected FX volatility, adapt to innovative cash optimization techniques (e.g., dynamic discounting, real-time invoice discounting), and apply data intelligence algorithms to unstructured data sources (e.g., website transactions, social media data flows). Aite Group finds that Kyriba is well poised to exert and maintain competitive leadership by further investing monetary and intellectual resources to leverage the top technology trends that impact its corporate clients’ business: APIs, open banking, data visualization, real-time data analysis, RPA, and AI. Basic Firm and Product Information Headquarters: San Diego, California Founded: 2000 Number of employees: 700 Key financial information: Annual revenue US$110 million (estimated 2018) Key products and services: Kyriba (with modules that can be sold separately: Treasury, Payments, Risk Management, and Working Capital) Target customer base: Large and midsize corporations Number of clients: 2,000 Average client tenure: 10 years Global footprint: Global Implementation options: Pure SaaS Pricing structure: Based on module use, complexity, and number of users Key Features and Functionality Based on Product Demo AI-based application that pops up relevant KPIs based on business event triggers (e.g., bank change of price conditions, change in insurance premium) Cost accounting structure for treasury managed costs (e.g., staff, bank accounts, commissions) Alerts from supply chain events that impact treasury operations Alerts relative to political events in countries in which the client company does business—these alerts pop up any time the treasury office is executing operations related to that country What-if scenario planning triggered by financial event Integrate directly with major SCF platforms (e.g., Premium technology, Taulia, C2FO) via APIs Top Three Strategic Product Initiatives Over Last Three Years Real-time fraud detection for treasury and supplier payments End-to-end risk management from exposure identification and analysis to hedge accounting and compliance Data warehousing, business intelligence, and data visualization Top Three Strategic Product Initiatives in the Next 12 to 18 Months Standardize API development across the entire banking and ERP community Further introduction of AI and machine learning throughout the platform Working capital management and analysis Client Feedback Interviewed clients appreciate Kyriba's commitment to security and risk prevention. By improving efficiency and automation with the TMS, clients recognize they have made substantial time and resource savings. TMS-enabled cash pools and in-house banks have enabled corporate treasury departments to reduce bank charges, lower borrowing costs, and achieve tax efficiencies. Clients like Kyriba’s SaaS architecture, as it gives them access to a mission-critical platform from any location, without any hardware investment and without the headache of upgrades. Alongside the cloud-based structure, corporate users enjoy more basic, yet important for the daily routine, gained efficiencies of their cash operations. The TMS provides the tools to forecast cash more accurately and effectively, especially when accompanied by efficient implementation and support teams. Totally cloud-based software may be seen by customers in different ways. Large multinational treasury departments prefer a standardized set of modules that do not require (nor are designed for) customization. Smaller firm clients may expect the possibility to change the software features to adapt to their preferences. Over time, though, these users appreciate the opportunity to use software modules continuously adapted and upgraded based on the input of thousands of users that run the same software. The requests to change and adapt the software to every specific requirement significantly diminish, although some form of parametrization (i.e., configuration) is expected for functionalities that have natively high levels of personalization, such as FX exposure management, business intelligence, data visualization, and connectivity APIs. Table C displays the vendor’s strengths and challenges. Conclusion Buyers: Evaluate the overall competitive position of each TMS vendor by focusing on multiple selection criteria: vendor stability, client strength, product features, and client services. Don’t ask for continual customizations; rather, rely on the vendor’s acquired experience of working with numerous corporate clients and leverage the offered solutions that bear the fruits of industry best practices and techniques. Look for TMS vendors that don’t require a total transformation of your treasury operations but that allow for a smooth transition that blends your current information systems with the newly introduced treasury software. About the Aite Group Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn. AUTHOR INFORMATION Enrico Camerinelli +39.039.21.00.137 [email protected] CONTACT For more information on research and consulting services, please contact: Aite Group Sales +1.617.338.6050 [email protected] For all press and conference inquiries, please contact: Aite Group PR +1.617.398.5048 [email protected] For all other inquiries, please contact: [email protected] 1. “Kyriba Unveils API Integration With Citi,” Finextra, February 26, 2019, accessed July 18, 2019, https://www.finextra.com/pressarticle/77412/kyriba-unveils-api-integration-with-citi. 2. David Heun, “JPMorgan, Kyriba Turn to Open Development for Real-Time Corporate Payments,” Kyriba, May 23, 2019, accessed July 24, 2019, https://www.kyriba.com/company/media-coverage/jpmorgan-kyriba-turn-open-development-real-time-corporate-payments.

The ever-shifting regulatory landscape and growing geopolitical uncertainty have forced companies to look inward more than ever to fund business growth. The treasurer must take the lead in finding and mobilizing internal sources of...

The ever-shifting regulatory landscape and growing geopolitical uncertainty have forced companies to look inward more than ever to fund business growth. The treasurer must take the lead in finding and mobilizing internal sources of funding. However, treasurers, especially those in multinational companies, often run into the problem of “trapped” liquidity.

Who are the biggest players in treasury and risk management, and how are cloud-based solutions driving transformation? IDC, one of the largest technology analyst firms in the world, tackles these questions and more in...

Who are the biggest players in treasury and risk management, and how are cloud-based solutions driving transformation? IDC, one of the largest technology analyst firms in the world, tackles these questions and more in its new MarketScape report: “Worldwide SaaS and Cloud-Enabled Treasury and Risk Management Applications 2017–2018 Vendor Assessment.”

It seems counterintuitive. Even as businesses spend more time and money than ever combatting payments fraud, the crime itself becomes more ubiquitous. In a new study by CFO Research, 40 percent of senior finance...

It seems counterintuitive. Even as businesses spend more time and money than ever combatting payments fraud, the crime itself becomes more ubiquitous. In a new study by CFO Research, 40 percent of senior finance executives report that organizations in their industries are experiencing a much higher incidence of payments fraud than they did two years ago. Payments fraud is any fraud that involves falsely creating or diverting payments. Check fraud, credit card fraud, access fraud, and “spear-phishing” are common varieties seen by CFOs. Some finance chiefs report that the risk associated with payments fraud now approaches the materiality of foreign exchange risk and other high-value uncertainties. Indeed, beyond the sometimes substantial hard-dollar costs, payments fraud can result in lower productivity among employees tasked with dealing with the fallout, adverse customer experiences, the actual loss of customers, a stained corporate reputation, and, for publicly traded companies, losses in stock market valuation. For CFOs charged with safeguarding corporate coffers, there is no silver bullet that can stop payments fraud in its tracks. Managing and minimizing the problem is a discipline unto itself. Done well, it is a holistic, proactive undertaking that combines best-practice processes with dedicated detection and monitoring programs built on the latest advanced technologies. Done well, it also allows CFOs to do a better job of keeping corporate directors apprised of the risks their companies face in this area, and the safeguards in place to mitigate them. Figure 1. The Biggest Challenges My Finance Team Faces in Trying to Combat Payments Fraud Identifying—and Resolving—The Challenges to Success The biggest challenge that CFOs face in combatting payments fraud is finding and implementing the right technology. Technology was cited as a key challenge by nearly one-in-two (45 percent) of survey respondents in the recent CFO Research survey. Conducted in collaboration with Kyriba, the survey polled 167 U.S. finance executives at companies with more than $100 million in annual revenues across a wide range of industries. (See Figure 1). Other commonly cited obstacles include securing the budget for anti-fraud initiatives (38 percent), and finding the time to pursue them (37 percent). Rounding out the top five challenges, finance executives say it’s a challenge to assemble a team with the skill sets (29 percent) and knowledge base (25 percent) needed to fight payments fraud effectively. And, anecdotally, some respondents also suggest that companies aren’t doing enough on the front lines to fight fraud. “Work with the clerks and managers that are likely to be the first people to be contacted or become aware of a fraud attempt,” one survey respondent advises. “They can stop attempts before they get to the payment phase.” Another finance executive suggests it is simply time to buckle down to the task at hand and do a better job of it. “Set aside sufficient budget, do the proper research, then employ the right specialists to get this in place,” the respondent admonishes. “Invest in strong technology and air-tight workflow,” writes another. “Allocate the people and resources to combat and reduce fraud—(the) benefits fall to the bottom line,” writes still another. Report from the Front: Fraud Is on the Rise Payments fraud is on the rise. Four in ten (40 percent) of survey respondents say organizations in their industries are experiencing a much higher incidence of payments fraud than they did just two years ago. Another 15 percent say they can’t confirm or rebut the idea, leaving open the possibility that increases in payments fraud are broader still. These findings are directionally consistent with other studies, including the 2017 AFP Payments Fraud and Control Survey conducted by the Association for Financial Professionals. It found that 74 percent of organizations had experienced attempted or actual payments fraud in 2016, up from 62 percent in 2014 and the highest level recorded since the AFP began tracking the problem in 2006. Contrary to what one might expect, it isn’t always smaller, less sophisticated enterprises that are being impacted by payments fraud. In 2016, the AFP survey found, organizations with at least $1 billion in annual revenue were actually more likely than their smaller counterparts to have been hit by the crime. And while the majority of the respondents to that survey reported that their company’s direct payments-fraud losses were relatively small—less than $100,000—32 percent of financial professionals at companies with at least $1 billion in revenue and more than 100 payment accounts reported losses exceeding $500,000. Within that group, 16 percent said their losses exceeded $2 million. The reason behind the growing incidence of payments fraud isn’t hard to fathom. Throughout history, criminals have demonstrated a remarkable dedication to trying to outsmart their victims, and the advent of new technologies such as social media and mobile shopping and mobile banking have simply widened the field of opportunity. While check fraud remains the most common type of payments fraud, for example, criminals today are increasingly exploiting the digital technologies that make it faster and easier for companies and consumers to interact with each other. Last June, the Federal Bureau of Investigation felt compelled to issue an alert warning about the growing problem of “business email compromise,” in which fraudsters target businesses working with foreign suppliers, or businesses that regularly make wire transfer payments. The relentless enthusiasm exhibited by criminals searching for new ways to defraud businesses means that businesses must combat their efforts with equally relentless countermeasures. Elevating Payments Fraud Detection to a First-Order Priority Only 10 percent of the executives in the CFO Research survey feel strongly that most finance teams in their industry have strong processes and technologies in place to capably and efficiently detect fraud or ensure fraud-related compliance. It is a weak endorsement of current strategies for managing payments fraud. And where companies do seek to battle back, the tactics they use often are aimed at historical threats rather than evolving fraud strategies. Asked which are the most important tactics used by their companies, 45 percent of survey respondents cite auditing (audit trails). That’s followed by expanded use of electronic payments (41 percent) and daily reconciliations (35 percent). All three are valuable tools, to be sure. By contrast, consider that only about one-third of survey respondents (34 percent) say they employ dedicated fraud detection and monitoring systems that can proactively ferret out fraud attempts. The CFO too often appears to be checking the rear-view mirror instead of scanning the road ahead for trouble. Many finance executives also admit that they need to be doing more to support their boards of directors in this area. Asked where their boards most often fail to receive critical information and decision-support data from the CFO, 43 percent list fraud monitoring and mitigation—more than any other area. Thirty-seven percent also say their organizations lack the tools or technology to enable the board to make good decisions on this issue. Figure 2. Tactics for Managing Payments Fraud That My Finance Team Should Substantially Improve The Way Forward: Fraud Detection Where to begin? Dedicated fraud detection and monitoring systems top that list of tactics that the finance team should substantially improve. Cited by 36 percent of survey respondents, fraud detection and monitoring handily outpaces other tools and practices that include limiting the use of paper payments (26 percent), automated approval workflows (24 percent), audit trails (22 percent) and daily reconciliations (22 percent). (See Figure 2). Several survey respondents noted that the ever-shifting and expanding payments-fraud landscape is sufficiently daunting that they advise turning over the work—particularly fraud detection and monitoring activities—to third-party providers for whom it is a core capability. As one survey respondent puts it, “Outsource much of the fraud function to companies that have strong controls. Third parties may be better at this than your team.” Ten Best Practices for Combatting Payments Fraud Understand your vulnerabilities. With so many types of payments fraud, it’s impossible to do a good job of combatting them without understanding what they are. Examples include external threats such as hacking of treasury systems by third parties, as well as a raft of internal threats. The latter include fraudulent payments sent by employees to a company’s bank, either willfully or as an unknowing consequence of a spear-phishing attack; and fraudulent purchase orders and invoices created by employees that are then paid out to related third parties. Erect roadblocks to unauthorized access to corporate information systems. Deploy robust login and user authentication procedures, including dual-factor and in some cases multi-factor authentication. Move finance data to the cloud. While data security has long been cited as a reason for not moving data to the cloud, the growing consensus today is that cloud providers, for whom security is a core competency, offer greater, not weaker, security systems and protocols than most companies can deliver on their own. Because a significant percentage of payments fraud originates internally, moving corporate finance data to the cloud can reduce the opportunity for it to occur. Boost control over global bank accounts. Maintaining a handle on bank accounts becomes more difficult as companies grow and expand globally, but it’s a task that can’t be ignored. Companies need to make sure they have systems that can provide transparency into accounts, authorized signers and account documentation; track all bank activity; and efficiently reconcile accounts with banking partners. Make use of digital signatures. All commerce and banking today is electronic at some point in the payments cycle. Digital signatures, which can help authenticate transmitted payment files, can minimize opportunities for payments fraud. Centralize payments activity in a single system. Coupled with multiple, standardized and electronic approvals, an integrated payments system allows for a complete and detailed electronic paper trail for all payments, minimizing opportunities for fraud. Standardize settlement instructions for financial trades. For any kind of investment transaction, including foreign exchange and derivatives transactions, embedding standardized settlement instructions in corporate financial systems can not only improve efficiency but also help block any redirection of funds to unauthorized accounts. Educate employees. Even the best anti-fraud program will spot fraud only after it’s occurred. That’s still extraordinarily valuable, especially when the system is able to spot the fraud quickly. But one of the best ways to prevent payments fraud is to educate employees about the various types of fraudulent schemes they may encounter, so that they can avoid being duped by them and prevent fraud from occurring in the first place. Update and test your fraud-detection capabilities. Corporations should review their payments-fraud detection/monitoring systems and protocols to make sure they’re working. Some companies may have the resources to do this internally, but many will find it makes sense to engage a third-party expert to both create defense systems and to test them regularly. Regularly participate in opportunities to share with and learn from other organizations. Few “industries” adapt and evolve faster than the payments-fraud industry. A company can no more allow its fraud detection and prevention program to remain static than it could allow its products or services to remain unchanged. Companies should make sure the finance function, and any others that touch on the payments process, participate in conferences and workshops where they can share with and learn from other organizations combatting the same challenges. Conclusion Focusing on the five core challenges to addressing payments fraud is a strong way to get started. Technology, Budget, Time, Skills, and Knowledge are all critical components to developing and implementing an effective strategy. The sidebar, “Ten Best Practices for Combatting Payments Fraud” adds some tactical specificity to the CFO’s search for an answer to payments fraud. No matter which route CFOs take, it’s clear that getting going sooner rather than later makes sense—especially if they count their own organizations among those that are only modestly effective at managing payments-fraud risk today. CFOs increasingly feel that fraud detection and monitoring must become one of their core responsibilities, because it is the only chance they have of staying at least even with an evolving threat. And that threat is not only about the money; it is about the customer, and the brand, and the business. “You need to start already,” concludes one survey respondent. “The criminals are adapting faster than we are.” You Need to Start Already. The Criminals Are Adapting Faster Than We Are.” Check out this on-demand webinar and learn from cybersecurity experts from Corelight and Kyriba on how to build B2B payment fraud defense programs to maximize end-to-end protection.