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Making Real-Time Payments a Reality for Finance and Treasury Real-time payments initiatives are proliferating all over the globe and while many countries have jumped on the bandwagon with various real-time payments use cases, corporate...

Making Real-Time Payments a Reality for Finance and Treasury Real-time payments initiatives are proliferating all over the globe and while many countries have jumped on the bandwagon with various real-time payments use cases, corporate adoption has lagged. But to build the business case for implementing real- time, treasury and finance departments need to identify more business relevant use cases. How Do Real-Time Payments Work? Real-time payments can be transferred using the domestic or regional real-time payment network. For example, use an application programming interface (API) for unitary payments like one-time supplier payments, or use file transfer protocol (FTP) for bulk payments like payroll. While legacy file transfer protocols do not offer the same level of immediacy as APIs, corporates can still benefit from using real-time payment rails in some scenarios. Moreover, because APIs enable broader system-to- system interactions to be real-time, clients can use them for activities beyond real-time payments, such as connecting to ERPs, automating workflows, and facilitating data exchange in real-time. Real-Time Systems on the Rise Real-time or instant payments are not new. Many major economies have either launched real-time initiatives already or are in the process of doing so. For instance, Japan launched the Zengin real-time gross settlement system in 1973, which eventually became a real-time payments network. The Unified Payment Interface (UPI) in India, launched in 2016, is among the largest and fastest growing real-time payment system globally. As of 2021, real-time payments represent a 31% share by transaction volume and an 8% share by value. Zelle, a real-time payments network owned by seven of the largest banks in the United States, was initially launched in 2017 for peer-to-peer (P2P) payments to compete with payment apps, such as Venmo. Since its launch, this multi-rail network has expanded into business payments and is increasingly preferred by industry use cases, such as real-time disbursements to their customers. In 2021, Zelle added TCH’s RTP® network to its existing list of payment networks, i.e., ACH, Visa Direct, and Mastercard MoneySend. SEPA Instant Credit Transfer (SCT Inst), a pan-European payment solution launched in 2017, is used by consumers and businesses for euro-dominated instant domestic and cross-border payments. As of 2022, the payment scheme is supported by 61% of European PSPs and available in 29 countries. The adoption of this payment scheme has stagnated, accounting for just over 1 in 10 credit transfers in the region. A draft EU law is expected to address issues with ubiquity and fees to drive adoption. The New Payments Platform There have been ongoing efforts to expand the reach of real-time payments from domestic to cross- border payments. Asia has been leading the way, with India and Singapore linking their real-time payment systems (i.e., UPI and PayNow). Other developed countries are following their lead, with TCH, EBA Clearing, and SWIFT planning to commercialize their successful cross-border pilot connecting TCH’s RTP network with EBA Clearing’s RT1 network. U.S. Faster Payments Initiative Unlike many other economies whose central banks have issued mandates for real-time systems, the U.S. Federal Reserve instead opted to let the private sector take the reins while acting in an advisory capacity. Thus, in 2015, the Fed formed a task force of market participants, from banks to corporates to fintechs, with the goal of steering the nation’s payments system toward allowing payments to clear and settle faster. The task force’s work produced a two-part final report that determined ubiquitous receipt to be the key to making any real-time system truly successful. The task force recognized several key challenges to achieving ubiquity, including: Federal Reserve enablement of a 24/7/365 settlement Technical and business process issues Disparate rules and functionality for competing services Security Real-Time Payments Network (RTP®) In 2017, The Clearing House (TCH) launched the Real-Time Payments (RTP®) network. Running on a new payments rail, Real-Time Payments transactions clear and settle in seconds, and immediate confirmation notices are sent to payers. In March 2021, TCH announced that real-time payments had reached a milestone by connecting its 100th bank. As of November 2022, there are 280+ participants, plus the key technology providers. However, real-time payments still reach only 65 percent of demand deposit accounts (DDAs). MAKING HISTORY The Real-Time Payments (RTP®) network is the first new payment rail in the United States since the ACH. FedNow The FedNow Service is a real-time payments platform developed by the Federal Reserve as a public sector alternative to The Clearing House’s (TCH) RTP®. The service is a 24/7/365 instant payments network expected to launch in mid-2023. FedNow will use ISO 20022 messaging standards to enable instant account-to-account payments and be accessible through the upgraded FedLine network, which will enable sending and receiving messages for customer transfers, liquidity management transfers, transaction-level reporting and fraud mitigation tools. The standard is highly appealing to corporate treasury and finance, because messages carry substantial information and are based on a common data dictionary that supports payment message flows. INFORMATION > SPEED? The most appealing feature of both Real-Time Payments and FedNow for treasury and finance might not be speed, but information capabilities. Not only can payers send extended remittance information with payments, but these systems also feature Request for Pay (RFP) services that allow payees to send specific transaction details prior to payments. Corporate Pain Points and Building Real-time Payments Use Cases For mass corporate adoption to occur, real-time payment systems will need to address certain pain points that treasury and finance departments are looking to eliminate. PAIN POINT HOW REAL-TIME HELPS Emergency/Last-Minute Payments Particularly in times of crisis like the COVID-19 pandemic, companies may need to make emergency payouts for payroll and other demands. Last-minute bill payments may also be needed. Lack of Cash Visibility Clearing payments in real-time reduces settlement risk and provides a clear liquidity picture. Need for Cash Conversion Incoming payments can be immediately turned into accessible cash. Paper Check Usage Checks continue to be the payment method most susceptible to fraud. Businesses can eliminate this slow and risky method with real-time. Batch Payments Real-time can “un-batch” payments for corporates. Rather than relying on batch payments that are locked in at key times each day, real-time payments can be sent at any time. Missing Out on Early Payment Discounts Real-time can ensure that businesses can obtain early payment discounts on the last day of discount availability. Lack of Extended Remittance Information Modern real-time systems contain extended remittance information that travels with the payment. Looking to the future, the U.S. Faster Payments Council identified some real-time payments use cases that could soon make such payments even more appealing: Intercompany payments are low risk and a common use case. Many companies have enabled efficient deployment of working capital across their subsidiaries using the domestic/ regional instant payment option. Just-in-time invoice payments benefit both the business payer and the business recipient. Since this type of payment gives the payer additional time to pay a bill, it lets the payer hold their funds longer to avoid paying a bill late due to current timing of business day clearing. The business recipient also benefits by ensuring funds are collected within their timeframe, and they receive immediate credit for funds when being paid. Payments to suppliers can occur immediately and facilitate faster release and shipment of supplies from suppliers that require payment beforehand. Faster payments involve many moving parts related to treasury functions, remittances, corporate banking, and/or company-to-company payments. All of these real-time payments use cases involve the movement of large amounts of funds and any reduction in latency will lead to more efficient capital management and reduction of risk. These use cases need standardization and interoperability, such as the efforts of the Business Payments Coalition standardized semantic data model which is being designed to enable comprehensive use case integration in corporate ERP systems. At ION, there were times when we needed a payment to come in and it was 4:31 and the Fedwire closed at 4:30. We would have to wait until the next day and it would really impact payroll and liquidity. So, the opportunity to have that cash in the bank, and then being able to make your payroll or anything that’s urgent, is where the benefits come in.” — Lee-Ann Perkins, CTP, Assistant Treasurer, Specialized Bicycle Components and former VP and Treasurer for Ion Geophysical Key Considerations for Starting your Real-Time Payments Journey While instant payments have been available for corporates for several years now, uptake has been slow. One reason for that is real-time payments co-exist with wires and ACH. There is still a place for wires, which will continue to be used for larger value payments. As well, the benefits of real- time payments may not justify the cost of shifting to new payment rails. Key reasons for the slow adoption of real-time payments are further discussed below. Having a small delay when making B2B payments is not necessarily bad. “There are advantages to it, in trying to plan my cash,” said Jeff Johnson, CTP, chief financial officer of commercial kitchen repair service Smart Care Equipment Solutions. “There are advantages to it if people make mistakes. And there are advantages to not having things rushed.” Real-time can be costly. While Real-Time Payments can be relatively costly compared to ACH, they are still cheaper than wires for qualifying volumes. Still, CFOs and treasurers may focus on the premiums banks charge for Real- Time Payments and not see the value in spending extra cash to ensure a payment arrives faster than a normal ACH, noted Jim Gilligan, former assistant treasurer for Kansas City, and currently senior vice president of MFR Securities. Real-time may not be exactly real-time on the receiving side. If the process leading up to the payment execution is slow and manual, then real- time payments won’t have much impact. “Many companies still use batch systems to process receivables, so payments are not captured real-time,” said Gilligan. “It’s still going to take them the same amount of time to process the payment. Customers will likely be unsatisfied when they realize payments sent in real-time aren’t processed in real-time.” Fintech payment platforms can help bridge the gap by digitizing and automating payment workflows. Faster payments can mean faster fraud. Despite awareness of modern fraud activity, treasury and AP departments still fall prey to payments fraud scams even when they have adequate time to claw back a payment. Removing that aspect means that once a payment is out the door, it is gone for good. Bank account verification is key to preventing fraud, and confirmation of the payee is becoming the norm in the context of real-time payments, e.g, in the U.K., 90% of faster payments are subject to confirmation of payee (CoP) checks. It’s clear businesses need to be more thorough in vetting payments before they are executed. While it’s unrealistic for an organization that remits hundreds of payments in a single payment run to manually check every single one, technology can help to eliminate the threat. Payment policies can be digitized, ensuring that rules and limits are automatically applied during the payment journey. Artificial intelligence (AI) and machine learning (ML) algorithms can compare outgoing payment requests to historical payment patterns, identifying and isolating any anomalies. APIs built into your payments platform allow real-time connection to apps that can match payments against third-party data. This data allows you to verify ownership of the account you’re paying and that you’re not paying an entity on the Office of Foreign Assets Control (OFAC) sanctions list. Data visualization can identify and manage exceptions so that payments can easily be reviewed and cleared to minimize delays. Technology has really come a long way. Number one, there’s a lot more data to pull from that makes the software that much smarter. Number two, there’s a lot more threat intelligence available, and an increasing element of collaboration and sharing that threat intelligence. Today, you can run a transaction through an enormous number of tests in less than the time it takes to blink an eye. It adds a real element of credibility to a transaction.” — Brad Deflin, Founder and President of Total Digital Security How to Start Building Your Real-Time Payments Use Cases For U.S. corporate treasury departments that are interested in real-time payments, they will first need to develop their own adoption strategy: Determine some key uses cases for your business. Your bank and/or provider can offer live examples to help you narrow down use cases, understand the benefits, and calculate the business case. Assess the risks that using a new, real-time payments rail could pose, such as the need to update payment governance procedures to prevent fraud. Engage banks and vendors to ensure that they have invested in the appropriate infrastructure to facilitate real-time payments. Real Opportunity Real-time payments present an opportunity for corporate treasury and finance departments. Corporates that manage their own bank connectivity may need more work to identify use cases and build a business case for investment. For corporates that rely on third-party providers to aggregate connectivity, common real-time payments use cases such as sending intercompany transfers or replacing wires at or under the current transaction limit can drive tangible value while the corporates explore broader use cases. Watch this on-demand webinar to learn more about how you can build compelling real-time payments use cases in 2023 to benefit from this payment type.

Companies that can identify and use cash with confidence can now leverage liquidity as an asset for strategic value creation. It’s a competitive advantage that has often been overlooked, or not available, but which...

Companies that can identify and use cash with confidence can now leverage liquidity as an asset for strategic value creation. It’s a competitive advantage that has often been overlooked, or not available, but which due to advances in digitized bank connectivity is now becoming a reality. How an organization moves, manages, stores and protects cash has costs, benefits and risks, as with any other asset. As Ruth Porat, CFO of Alphabet, has said, “There’s no question that liquidity is sacrosanct.” Today, many leading firms realize they can now treat liquidity as an asset and use it as a market weapon. Corporate liquidity management practices are today faced with many “new normals”, shaped by increasingly frequent liquidity disruptions, given recent financial, geopolitical, trade and public health crises. These factors are compounded by demands for access to new financial and payment channels; more sophisticated fraud tactics and demands from business to scale to new regions and currencies better, faster and cheaper. Not being able to actively manage liquidity is to lose sight of a key asset: cash on hand, as PwC estimates that 25% of cash held by companies is not visible to finance. Compelling Solutions The legacy approach of creating unique and individual links between an enterprise’s internal ERP systems, trading platforms and banks made it impossible to generate the holistic view required to support the optimization of cash. This disconnected approach resulted in isolated liquidity pools and limited business success. Worse, the creation of unique deployments for every bank or payment system was costly and time consuming. But innovative and compelling liquidity management solutions now address those challenges and meet changing business needs. It is therefore now time to reimagine the bank connectivity approach as one that can simplify daily operations and enable next-generation enterprise liquidity management. The solution now exists that integrates all aspects of the process using consistent interfaces and APIs, and delivers not only new thinking, but a new approach to technology services to support it. The Next Generation for Optimizing Liquidity: Bank Connectivity as a Service The limitations of legacy approaches are so severe that a new digital service for delivering enterprise liquidity management must be a high-priority project. Organizations that stick to the old ways will be compromised. For example, the ability to stop fraud and implement payment control would be greatly curtailed, given that a recent survey by the Association for Financial Professionals found that 81% of organizations had been targets of payment fraud. Furthermore, business agility is impossible when it takes three to nine months to connect the organization to a bank. The most promising way forward is to enable a connectivity-as-a-service approach for all aspects of providing consistent, holistic, documented and secure liquidity management. This allows the enterprise to connect all its liquidity partners quickly and robustly and more easily adapt liquidity providers as needs change. Cloud Resilience & API’s To optimize liquidity, organizations need to deploy a service that has been designed with a modern technology foundation. The use of cloud platforms for this as-a-service model is at the heart of the approach, because it allows the enterprise to match usage and spending. In addition, many IT infrastructure tasks, such as resiliency, backup, security and system management, are done by the service provider. This allows the internal IT team to focus on delivering the highest possible value. Next-generation solutions also use APIs and prebuilt integrations to greatly simplify linking different aspects of the overall system. In this case, it could mean linking enterprise resource planning (ERP) systems and trading platforms much more quickly and accurately. The use of consistent and documented APIs and integrations not only saves a great deal of setup time, but also makes future changes simple to implement and eliminate manual errors. Connectivity as a service is enabled by simplified integration and interactions. Figure 1. A multitude of payment channels available to corporate – with more launch in 2021 Unified Data Another key feature of modern as-a-service solutions is that data is unified and stored in one place, making it possible to derive much more useful intelligence from it using analytic tools such as artificial intelligence. As banking platforms change and banks roll out new requirements for how they will receive formatted files, a central depository of up-to-date bank specs relieves corporate IT from needing to follow, build and test these ever-changing bank formats. Finally, a modern platform includes all necessary applications or solutions in one platform. For liquidity optimization, this includes treasury, risk, payments and working capital management. The benefits of using a best-in-class offering that delivers liquidity connectivity as a service are compelling. For one, there are significant shortterm cost savings, starting with a reduction in the cost of onboarding a bank. Based on its experience working with customers and partners, Kyriba has found that the cost typically ranges from $50,000 to $150,000. But this can be reduced by well over 50% using Kyriba’s established and proven banks links and its modern as-a-service solution. Speed and the attendant agility to modify or create net new integrations also improve. With this type of platform, enterprises’ time to production is also two to three times faster. Figure 2. Payment volumes increasing with increased digitization of transactions Fraud Controls A significant reduction in fraud and misdirected payments is now possible, since a cohesive view and comprehensive reporting make it much easier to identify potential problems and remediate them. Further, with a documented set of integrations and stronger process, the chance for mistakes that lead to fraud is nearly eliminated. With a comprehensive data set, enterprises can easily analyze liquidity flows to optimize them. Gone are the days of manually integrating disparate spreadsheets. Such information will also deliver the insights organizations need to make changes that improve liquidity and allow them to use it more effectively. The value of a single source of truth about liquidity provided by this type of service is impossible to ignore. From a business operations perspective, having connectivity as a service as the digital foundation enables enterprises to: Make strategic plans for the use of cash enterprise-wide Provide businesses with an agile banking platform to efficiently add and remove new banking partners, while minimizing the burden on IT resources Optimize the cost of bank fees Determine the best payment channels to use, based on specific scenarios Centralize fraud management Provide a foundation for meeting regulatory and compliance issues However, without a comprehensive solution that tracks all liquidity, benefits are much more limited. Resultant blind spots don’t just impact the liquidity not tracked by the system; they impact all liquidity as well. With only a partial implementation, treasurers are still flying blind. Enterprise Liquidity Management As successful, modern enterprises implement new services and technologies to optimize every element of their business, attention is now increasingly focused on liquidity management. Legacy processes for doing this worked well in the last millennium, but every organization looking for an edge is now taking the next steps to achieve enterprise liquidity management. New services, such as Kyriba’s Active Liquidity Network, provide those capabilities and insights that were not possible using legacy practices. With an underlying service that brings a consistent and holistic view to all aspects of liquidity, organizations are empowered to optimize it as never before. This comprehensive perspective allows them to maximize liquidity across all banks, payment processors and the treasury. And using this data, organizations can make better long-term decisions, positioning themselves for the future. What’s more, these new capabilities reduce the time needed to add new banks or processors and dramatically reduce the costs of doing so. IT teams can now be much more responsive and better able to help the CFO have confidence in getting things done.   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 to improve cash and liquidity management.

While treasury departments are typically aware of the advantages that a treasury management system (TMS) provides for cash and liquidity management, they are often less clear on what is required to achieve the full...

While treasury departments are typically aware of the advantages that a treasury management system (TMS) provides for cash and liquidity management, they are often less clear on what is required to achieve the full benefits. In this ebook, you will learn the steps needed to design and plan for a TMS, including best practices for how to: Define future state processes Build a prioritized roadmap Design a system. Download this ebook to learn how you can prepare your team for a successful implementation and achieve the most value from your TMS. Holistic System Design Methodology While treasury departments are typically aware of the advantages of using a treasury management system (TMS), they are often less clear on the steps required to achieve the full benefits. It is difficult to get where you’re going if you do not have detailed directions on how to get there, so planning well in advance and establishing measurable objectives better positions organizations to reap rewards when implementing or enhancing a TMS. Not only will clients minimize additional costs and project delays but most importantly, they will also achieve the full set of benefits sought from a TMS in the first place. The first step in positioning a TMS project for success is to follow what is referred to as a holistic system design methodology: confirming the scope and objectives of the project, defining the future state processes of your TMS, creating a roadmap and planning the system design. Confirm the Scope and Objectives of the Project When defining the scope and objectives of a TMS project, treasury professionals should focus on four specific areas: Out of Box API Integration Faster time-to-market No upfront costs to enable real-time payments Improved certainty in cash flows Obtain Clarity on Current State It is difficult to clearly define your scope if you do not have a solid understanding of your point of departure. Depending on whether the treasury function is more centralized, decentralized or if certain functions have been outsourced, you may have a better grasp on how all the daily processes function and who is responsible for which activities. Having a strong foundational knowledge and understanding of the current processes is critical when designing any new solution. To help lay this groundwork, detailed process flow diagrams should be created that include all areas being considered for TMS implementation. The focus should be on: How data flows between people and systems Roles and responsibilities of various constituent groups throughout the process Hand-offs between groups Defining whether the process is systematic or manual Systems and reports beings utilized Key controls needed In gathering all the elements noted above, you will not only help establish a clear point of departure for the implementation, but will also capture a number of data points that are critical for future steps of the implementation. Define Scope and Priorities In order to determine an accurate budget, resource needs and a timeline of a clear scope are required. This includes analyzing all requirements, including those in scope, out of scope or deferred to a future phase of the project. Additionally, throughout implementation, decisions will need to be made regarding where to focus resources and how to sequence tasks. As such, it is extremely beneficial to have clearly defined and prioritized requirements and project scope that have been agreed upon by all constituents. This will assist in providing direction to the project team and help ward off any deviation from the key priorities. The requirements must be at a fairly granular level of detail in order to facilitate these decisions. For example, it is best practice to list out all the reports and determine which functions are a “must have” and what is simply “nice to have” to ensure resources are spent wisely. Set Measurable Objectives The best way to determine the project’s success is by measuring it against a set of predefined objectives. These can be categorized by type including improved financial performance, risk mitigation or enhanced operational efficiencies. Some examples for each category include: Improved financial performance – Reduce bank fees by 20 percent through validating fees charged and renegotiating agreements based on cross bank fee analyses Risk mitigation – Centralize 95 percent of payment approval workflow, release and confirmations Enhanced operational efficiencies – Reduce time required to compile daily liquidity across all accounts by one hour per day The objectives should be incorporated into the project status reporting to ensure the team does not lose sight of them and to ensure that they are achieved as part of the implementation. Ensure Leadership Support and Alignment In a project as significant as a TMS implementation, it is critical to obtain leadership support and ensure alignment and commitment from all key stakeholders. Reach out not only to internal stakeholders but also to external ones including vendors and implementation partners. The project will impact and require involvement across multiple departments, including accounting, accounts payable, FP&A, tax, information technology and treasury. However, prior to engaging these teams you must be prepared to clearly communicate the following: Project vision and importance to the company Specific benefits achievable by each function Anticipated level of effort and resources required Timeline and roll-out strategy Impact to existing processes and potential changes in roles and responsibilities There will be a number of project dependencies on these groups, so ensuring they are committed and have allocated sufficient resources to meet the project timelines is vital to its success. Aligning the project team’s incentive compensation structure with achieving the defined objectives is another effective method to ensure commitment across all levels. Define Future State Processes As part of a TMS implementation, existing processes, roles and responsibilities should be analyzed with a goal to optimize, as well as take advantage of best practices delivered with the system. It is worth noting that taking existing processes and lifting and shifting them to a new TMS is often not the best approach. Legacy processes and roles transform over time. As organizations evolve and grow, the circumstances change, but usually the processes do not. The future state should be designed to improve processes to make the organization more efficient, productive and strategic. Therefore, it’s critical to define what that future state will look like. In order to achieve the ideal future state, a defined set of steps should be followed to optimize the design of the system, realize new efficiencies and to fully benefit from the TMS’ capabilities. Once the scope of the project is defined, the next order of business is to identify the future state processes: Document functional and technical requirements to drive implementation decisions. Draft process flow diagrams of the future state that reflect ownership and hand-offs, and define ideal processes and data workflows. Create a system architecture diagram and identify opportunities to redesign and streamline processes. The architecture might include multiple versions to coincide with roadmap phases. Refine roles and responsibilities to take advantage of treasury’s ideal future state, including defining staffing skill requirements and determining which processes and resources need to be realigned. Analyze the impact of change management on the organization and assess the organization’s ability to absorb this level of change. Developing a Process Flow Diagram Creating a future state process flow diagram lets organizations identify opportunities to redesign and streamline processes and determine how functions will be performed in the TMS. This diagram will help treasury define: Processes or data flows that are manual versus those that facilitate straight-through processing Systems utilized and how data flows between them as well as manual movements Interdependencies between groups, data flow and processes Cross-functional responsibilities and flow of data between internal and external groups Key controls (both systematic and manual) to ensure they are being maintained, if not strengthened Below is an example of a payment process flow diagram showing task cross-departmental ownership: Creating a System Architecture Design In addition to defining the functional process flows, a system architecture diagram should also be created. It will serve as a high-level view of all the integration points coming into and out of the TMS, detail the TMS functionality in scope and identify any third-party dependencies. If the plan is to deploy the functionality in phases, the items can be color-coded to identify which items will be implemented in each phase. When discussing the project with management, key stakeholders or third-party vendors, this illustration is very helpful to convey the desired end state. The Importance of Documenting Change Management As part of the future state definition, it is important to identify changes in processes and how they impact individuals’ daily functions, as well as any potential changes in ownership. The proposed changes must be well documented, and include the rational and perceived benefits, and it must be approved by the heads of each department. If at any point the groups cannot reach a consensus, any open items should be escalated to the steering committee or additional members of senior management if applicable. It is important to confirm and communicate the changes to everyone as early as possible to avoid confusion and disruption when the change is enacted. Build a Prioritized Roadmap The implementation or enhancement process will likely go through many phases before reaching completion. Therefore, it is critical to create a well-defined roadmap that includes a realistic project plan, outlines budgetary and personnel needs, and measures progress. To develop the roadmap, treasury will want to: Clearly outline objectives and designate tasks and priorities for action in the short-, medium- and long-term. Create an impact assessment to weigh the benefits against the cost and time required to achieve the desired outcome. Indicate the timeline, resources and budget required to achieve the stated objectives and prepare a business case. Define metrics and milestones to allow regular tracking of progress. Developing a Process Flow Diagram The project roadmap should be driven by a combination of factors including: Level of effort to accomplish Prioritization of requirement Impact to the organization Key dependencies Centrally managed functions versus decentralized functions Global nature of the business and level of involvement and impact to each region Ability to address significant control deficiencies or risks Expiration of software licenses or sunsetting of existing products Budgetary or resource constraints Treasury will also need to weigh the impact of the roadmap on the organization. Typical approaches to phase the implementation involve either deploying the system by grouping modules, such as cash management and forecasting, bank account management, payments, etc., or deploying by region. For more global organizations, the deployment may be phased by both a set of modules and by region. The roadmap and resource requirements of other groups must be discussed and their feedback incorporated into the plan. The plan should be realistic and, ideally, also build in some opportunities for early wins to gain momentum and confidence in the project. Identifying these opportunities for early wins will avoid having a project that fails to live up to the state objectives or exceeds the budget. Why You Should Assess Project Impact To create a realistic timeline, treasury will want to weigh the benefits of the project against the cost and time required to achieve the desired outcome. The best way to do that is to rate each impact as low, medium or high. Then, plot the impacts on the y-axis of a graph and the time and resource commitment (or level of effort) on the x-axis. This practice can help identify low impact, low effort commitments that are good to start with as a first step to achieve a quick win. Defining Metrics and Milestones Defining metrics and key milestones allows treasury to monitor progress and keep everyone on track. Each time the organization achieves a milestone, share the news and related metrics at stakeholder meetings and in key management conversations. Always communicate positive wins. This will help build confidence in the TMS initiative and demonstrate immediate value to the organization. Designing a System Once there is a solid foundation and clear plan, it’s time to design the system. The focus should be on determining how to best configure the TMS to meet the defined requirements and processes while taking into account industry best practices. The most successful system design projects occur when there is a holistic understanding of both the business requirements and TMS capabilities by all participants in the project, including business and technology stakeholders, as well as third-party vendors involved in the implementation. When designing the system, be sure to: Conduct knowledge transfer sessions with third-party vendors to ensure they fully comprehend the business requirements and objectives. Conduct TMS training sessions to educate stakeholders on the TMS functionality. Confirm with all stakeholders impacted by the implementation that they understand and agree with how the system will accommodate their requirements. Define how the TMS will integrate with other systems, including: • Connection method • Frequency of data transmission • Volume of data being transmitted • Whether data transformation is required • If it is an automated or manual integration • The project phase and priority for each systems integration Incorporate industry best practices into the overall design. Conduct proof of concept scenarios where the implementation team models client-specific examples in the system and provides output for review and validation. Structure a plan to validate output early on to help identify potential system limitations at the outset. Garnering Different Perspectives It is important to understand the perspective, areas of expertise and objectives of all internal and external stakeholders. Most businesses are intimately familiar with their current way of conducting business and the desired future state; however, they typically have limited experience with system implementations or knowing how treasury management systems function. While the vendors are experts on the capabilities of the TMS, they do not have the intimate knowledge of a business’ specific operational treasury activities. In order to increase the knowledge of both parties, time must be allocated at the outset of the project to conduct knowledge sharing sessions. Too often, teams dive directly into the implementation activity without ensuring proper alignment and understanding. The most common cause is due to a failure of both parties to fully appreciate the others’ needs and capabilities before proceeding with the system configuration. In order to help avoid this disconnect, utilize the checklist below and confirm each is adequately addressed prior to the system configuration. Design Requirements (Client) Have I documented my requirements at a level of detail that is granular enough? Have I provided tangible examples of offline processes and reports? How malleable is my future state vision? How well does the system accommodate our vision? What are the limitations that will require workarounds or development? Does the vendor truly grasp my business and desired end state? Has the vendor formulated and clearly communicated the system design to me? System Capabilities (Vendor) How well does the system accommodate the client’s future state vision? • Is it meeting all the high-priority items? • Are stated objectives going to be met? Have I provided tangible examples of offline processes and reports? • Is the workaround acceptable or is system development required to address the gap? Do I fully understand the client’s requirements and have I performed a proof of concept to validate my understanding? Has the vendor formulated and clearly communicated the system design to me? Capturing Data Elements An important aspect of every TMS implementation is determining what data elements must be captured in the system to best achieve the desired output. This can be challenging as you are typically compiling this information at the inception of the project, prior to having a true appreciation for how the data will be used and displayed throughout the system. It is important to ask sufficient questions to understand the downstream implications of how static data, reference data and user-defined fields will be utilized in the user interface and reports. One way to achieve this is through a proof of concept. Treasury should keep these high-level best practices in mind with regard to data elements: Key elements: Ensure crucial data elements are included and captured in the appropriate location to facilitate the required system displays or output. Integration: Consider how data elements will interact and integrate with upstream and downstream systems. Be sure to address requirements for ERP(s), market data, trading portals, etc. Terminology: Determine a standardized, global naming convention that’s consistent, recognizable and understood across the organization. Treasury may want to consider terminology that users are familiar with, such as leveraging the same naming conventions as their ERP system. ERP structure: Look at the ERP structure by region or business unit. Each one provides data elements that treasury can capture at the entity level and facilitate utilization, grouping and reporting of the data downstream. Determining Essential Reports Treasury must confirm which reports and specific data elements are required, which ones are still in use and what their limitations are in order to produce the reporting output. It’s also important to understand the system’s out-of-the-box reporting views and capabilities. It is recommended to perform a reporting rationalization to validate and consolidate the reporting requirements and determine a list of must-have reports. To ensure they have access to the reports they need from the new system while reducing the effort to develop these reports, treasury will need to: Identify opportunities to consolidate like reports with numerous overlapping data elements. Often, report requests are added over time without evaluating already available alternatives. Compare the consolidated set of reports needed with vendor capabilities. Utilizing existing, out-of-the-box reporting from the system generally minimizes costs and project risk. There will likely be some level of custom report development, but fight the urge to try to replicate the existing report package and instead only customize views where they are absolutely necessary. The data element design may need to be supplemented to address areas where limitations are identified. Sometimes there are free form or user-defined fields available that can be utilized to meet unique requirements not addressed by out of the box functionality, so these should be considered when limitations are discovered. Communicating Unique Requirements Some requirements don’t fit neatly into a box or align with the typical system utilization but still need to be included. To decide whether to add them to the list of requirements, treasury should fully examine their merits, communicate clearly so that everyone understands why they are necessary and provide tangible examples. The treasury team and the vendor should work together to identify solutions that can leverage existing capabilities and be open to alternatives that may not exactly mirror the current process. You want to avoid falling into the trap of spending excessive time on an isolated area to the detriment of the overall project timeline or budget. Setting Up System Controls Another key element in the design is analyzing how the system manages controls, assigns user permissions and administers these controls on a go-forward basis. A good starting point is pulling the existing SOX controls in place for each department involved in the project and highlighting which of them are applicable to the TMS. While this will provide a starting point to the level of system access granularity in the TMS, applying these controls can be daunting. Obtaining assistance from both internal resources and the vendor is advisable. To identify key control considerations and figure out how those are addressed in the system, be sure to consider the following: System security: Understand how to manage user access and regional access rights, and dual-review controls in the system. Sometimes the set-up exists in multiple locations, so be sure to obtain a holistic understanding of where security is managed in the application. Existing controls and SOX key controls: Identify how existing controls can be strengthened and how they will change as the process migrates to the TMS. Systematic-based controls: Find opportunities to switch to more automated and systematic controls. For clients migrating from offline processes, hard copies are often utilized as evidence that the control step was taken. However, as you migrate to a TMS, evidence of the control step can often be captured systematically via report or system audit log. Seek to design the system to take advantage of these controls and audit evidence. Additionally, ensure it is clear where to access the audit logs and that they are deemed sufficient by your internal audit group. One example of this is transitioning from paper copy sign-off on payments based on defined dollar limits to a system audit log for which user-approved payments and security rights limit access to individuals based on dollar thresholds. User groups: Determine how to build user groups to achieve control objectives. For example, payment approvers that have the same approval rights can be grouped together. Grouping users will minimize future system administration. Leveraging Proofs of Concept Leveraging proof of concept (PoC) scenarios to validate the system design early in the implementation process is an effective method to minimize project risks and ensure alignment between all stakeholders. A proof of concept also helps identify system limitations at the onset of the project and enables treasury and the vendor to factor them into the overall project plan from the very beginning. A PoC utilizes a specific set of data from a defined period, attempts to flow it through the end-to-end system design and produces an output demonstrating the operational steps, specific calculations and reporting views. It provides the users an opportunity to visualize the system processes and validate the output while there is still time to modify it with minimal rework or impact to the project. The following steps should be taken to create a robust set of PoC scenarios: Key stakeholders should identify proof of concept scenarios (client responsible) Develop input data required to produce scenarios (client responsible) Model scenarios in the system and provide results including screen shots, calculations and reporting views (vendor responsible) Review and provide feedback on output provided by the vendor (client responsible) Identify design changes or potential system limitations (vendor responsible) Validate task priorities, workaround options and development needs (both parties responsible)? The Recipe for a Successful TMS Implementation Depending on the scope and stakeholder groups involved, TMS implementations can be complex projects with multiple moving parts. The organizations that have the most successful implementations and achieve the most value tend to: Perform proper planning and alignment from the onset Spend sufficient time ensuring all stakeholders have a deep understanding of both the business needs and TMS capabilities prior to diving into the implementation Validate the system design leveraging proof of concept scenarios before building out the system holistically Proactively track and measure project objectives against accomplishments and ensure clear communication is provided across all stakeholder groups These items focus on two key points—active engagement with all parties and regular communication. Additionally, planning and system design validation play an important role in every successful TMS implementation. By keeping this recipe in mind throughout the implementation process, treasury is well positioned to deliver on its objectives and ensure the company it supports is better positioned to realize its goals.   Want to learn more about how to prepare for remote treasury management system implementations and avoid project risk? Check out this webinar.

Delivering on-demand interactivity with Oracle applications, Kyriba for Oracle is a cloud-based solution that reduces the risk of foreign currency volatility to earnings per share and corporate value. The Cloud-based Business Model Advantage: Quick...

Delivering on-demand interactivity with Oracle applications, Kyriba for Oracle is a cloud-based solution that reduces the risk of foreign currency volatility to earnings per share and corporate value. The Cloud-based Business Model Advantage: Quick ROI and Low TCO By leveraging the Cloud-based business model, Kyriba creates two advantages: speed and low cost, without sacrificing the safety and security of your data. Kyriba is committed to keeping your confidential data safe and secure, and our processes and controls are audited annually. The Cloud-based model frees your IT personnel from the need to manage and maintain the product and updates typically associated with installed and licensed software products, and enables Kyriba to rapidly and continually add product innovations to the market. Kyriba customers experience quick returns on their investment. Up and running quickly, Kyriba provides almost immediate visibility to exposure and risk data, and access to analytics and decision support capability. Confidence in your decisions allows you to take actions to manage risk, reduce costs and gain operational efficiency. Kyriba’ Cloud-based application also provides low Total Cost of Ownership. Because Kyriba is hosted, it requires little or no redeployment during upgrades, and no IT development. You know the subscription-based outlay at the time of purchase; you also know that the cost of ownership will not spike due to upgrades, redeployment, or support during the subscription term. The Kyriba Oracle Extract Toolkit: Facilitating Set-up and Ongoing Data Aggregation Using proprietary technologies, Kyriba aggregates raw G/L data from Oracle, as well as other ERP systems, databases and spreadsheet data sources. To facilitate the process of data collection for initial enrollment and ongoing exposure management, Kyriba has created an Oracle Extract Toolkit. The Kyriba Oracle Extract Toolkit consists of software queries that capture Oracle account/entity configuration and revaluation rules and generate FX exposure data. The Kyriba Oracle Extract Toolkit gathers information about the account definitions and company information. On an on-going basis, the Kyriba Oracle Extract Toolkit provides a query used to extract summary monetary asset and liability or revenue and expense balance data from your Oracle general ledger. The Kyriba queries for Oracle are reports written in SQL*Plus, designed to be run from either the SQL*Plus command line or installed to the Oracle Applications Suite and run as concurrent programs. The programs do not create any database objects nor do they write or update any database tables or objects. The programs require read-only access to several tables and objects located in the APPS schema. If one does not already exist, Kyriba can provide scripts to create a read-only schema to access these objects. From the SQL*Plus command line, output is generated using DBMS_OUTPUT and spooled to a local pipe-delimited file. The extracted files can be manually and securely uploaded to Kyriba by any authorized user. To further maximize efficiency, frequency, time savings, error reduction, and security, while minimizing support required from IT, the extract process (both the execution of the extract query and the encryption and upload of the resulting files) can be automated. For a fully automated solution, queries can be set up within the Oracle Applications Concurrent Manager and executed ad-hoc as needed, or scheduled to run periodically. Subsequent scripts can encrypt and transport the file directly to Kyriba. An automated extraction, encryption and upload process is particularly beneficial if you have multiple data source instances or systems. For each instance of Oracle, your IT team will deploy and maintain the Kyriba Oracle Extract Toolkit queries. The query programs are the only software deployed and maintained in your environment. Kyriba Application Security Kyriba understands and appreciates the importance of keeping your highly-confidential financial data safe and secure, and simultaneously available to your authorized users on demand. We have passed the scrutiny of our discriminating customers and ensure that our standards for security and confidentiality are the maximum possible. Here are some of the elements that built confidence for our customers: Strong encryption to protect sensitive G/L data both in motion and at rest Annual SSAE 18 Type 2 audits for the Kyriba application and company processes and controls ISO 27001 certification Internet firewalls and an additional level of access protection around the production databases Application layer separation from data with application-only access Role-level access and idle disconnect IP Whitelisting, guaranteeing client access from only specific Internet addresses Continual monitoring through port scans and network intrusion detection systems Complete audit trail in application and data back-up Application hosting with AWS and Microsoft Azure Full redundancy in daily operations for Internet connectivity, failover, and load balancing Disaster recovery plan & capabilities provide for full redundancy & a production system recovery objective of 6 hours Annual third-party penetration testing and security audits Employee, contractor and data center personnel background checks Enrollment: A Simple Process The Kyriba Professional Services team will lead your IT and Treasury staff through three simple, well-defined steps including query set-up, resulting data validation, and an exposure presentation, to achieve ongoing, on-demand Oracle data aggregation and Kyriba FX exposure management. A final step automates the file extraction, encryption and upload process. On average, it takes 8-10 hours of an IT generalist’s time per ERP system enrolled in the Kyriba service. Typical enrollment resources include: A developer or resource with APPS schema access or access to a read-only schema to execute the programs to retrieve the setup information and the general ledger balances A developer or functional person (usually Treasury) who can verify Kyriba balances using native Oracle general ledger reports (Optional) A DBA or Systems Administrator, if installing the program to the Oracle Applications Suite as a concurrent program. Kyriba provides instructions for concurrent program installation During Enrollment, your IT personnel will install and execute the Kyriba Oracle Extract Toolkit. The toolkit installs in minutes and provides two components: configuration queries and a general ledger (G/L)extract query. The configuration queries derive a chart of accounts table, revaluation rules and entity structure. Next, IT, or other personnel with access rights, execute the Kyriba G/L extract query to produce a test exposure data set. Once the data is validated, you may be asked to re-run the G/L query to produce a final data set. Your IT team will spend three to six hours on this step, including runtime. During Query Result Validation, your treasury and/or accounting team members will use the sample data generated by the Kyriba G/L extract to verify monetary asset and liability or revenue and expense account information. The Kyriba Professional Services team will produce a sample data set for your review to ensure a complete data set consistent with G/L balances in Oracle. You may also provide data on outstanding hedges, and the validated balance and hedge data is uploaded to Kyriba to calculate FX exposure and support timely, data- driven risk mitigation and cost reduction decisions. This step requires approximately two hours of time/effort. During Exposure Presentation, Treasury and Kyriba Professional Services review your current workflow and systems landscape, progress to date, the future vision for the end state of rollout, and workflow and process improvements. A demonstration of the Kyriba software with your live exposure data and a discussion of how exposure visibility can help you optimize your risk management decisions complete the review. This process requires at least two hours of treasury time/effort. Automated File Extraction, Encryption and Upload Automated File Extraction, Encryption & Upload is supported through standard protocols HTTPS (e.g. via cURL) and SFTP (Secure FTP) for automating the transfer of files to a secure staging area within the Kyriba application. Kyriba has customized these protocols with syntax to enable users to transfer files to, and trigger processing within, the Kyriba application. You can deploy scripts (samples provided by Kyriba) based on the needs of your environment, which retrieve the output generated by the Kyriba G/L Extract Program, and encrypt the file(s), before transferring them over 128-bit HTTPS or SFTP to Kyriba. During your Kyriba enrollment, our Professional Services team will supply scripts as part of the toolkit and work with you to configure them for your environment. The level of effort required to automate the file transfer is subject to the complexities of your environment but is typically measured in hours, not days. The process requires a Systems Administrator, Developer and/or DBA with privileges to create or modify shell scripts to automate the process or integrate with existing processes. Benefits of Automated File Encryption and Transmission Data encrypted at rest and in motion Creation of a straight-through process from business systems/ERP to Kyriba Automates transfer of the extracted data files directly to Kyriba increasing efficiency and time savings, and reducing errors Enables more frequent processing and analysis cycles Allows coordinated transfer of files from multiple business systems Additional security through PGP encryption and IP Whitelisting Uses industry standard utilities and protocols: HTTPS file transfer and SFTP Less operational and IT overhead   Supported Versions Oracle 11i Oracle R12 Oracle and Oracle E-Business are the trademarks or registered trademarks of Oracle Corporation and/or its affiliates.   Want to learn more about how to automate seamlessly across your FX management process? Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.  

In this ebook, we reveal the most common types of accounting errors, breakdowns in accounting controls, system configuration issues, and process deficiencies leading to unnecessary FX risks. Hidden Accounting Impacts We hear time and...

In this ebook, we reveal the most common types of accounting errors, breakdowns in accounting controls, system configuration issues, and process deficiencies leading to unnecessary FX risks. Hidden Accounting Impacts We hear time and time again that CFOs and Treasurers alike “don’t know what they don’t know” about their foreign currency exposure data. All too often, the first symptom of a problem shows up as a material misstatement of FX gain/loss. Usually, this is a result of what Kyriba has coined as “accounting volatility.” We use this term to describe the phenomenon of systematic, recurring inaccuracies that exist in most multicurrency ERP systems, that obscure the true magnitude of a company’s foreign currency exposure in ways that make the problem difficult to detect. In many cases, accounting volatility is reflected in the delta between hedging actions and actual FX gain/loss resulting from the underlying exposure. Background and Purpose In this ebook, Kyriba will hightlight critical issues facing treasury and accounting teams and cover shortcomings in the way companies today account for multi-currency transactions and manage the resulting foreign currency exposures. Time and again, our analysis of foreign currency exposure management processes within organizations uncovers a ticking time bomb that could (and eventually does) have material impact on a company’s financial performance and its ability to accurately reflect FX gain/loss within financial statements. Frequently, this time bomb is an undetected exposure hidden within the ERP that is masked by a variety of data integrity issues. Without adequate visibility into the source data, Treasury can only cope with/or try to manage around the problem. As a result, their decisions (even when based on sound strategies) are ineffective and even potentially counterproductive. All too often, this time bomb is detected once it’s too late. The problem ultimately surfaces in the FX gain/loss line of the income statement and the CFO is faced with foreign currency exposures that have serious economic and compliance consequences. In every case we have witnessed, the question isn’t if companies are misstating FX gains/losses, but whether how large the material impact is. Getting to the heart of the matter and preventing a disaster begins with a close examination of the ERP system(s), controls and related processes that undermine the accuracy and completeness of foreign currency exposure data. The first section of this ebook will deal specifically with the issue of accounting volatility -- a result of pervasive, self-reinforcing inaccuracies that exist in most ERP systems with regards to foreign currency -- that obscures the true magnitude of a company’s exposure in ways that make the problem difficult to detect. An examination of the processes that contribute to foreign currency exposure identification often reveals uncoordinated activities and the lack of a true process owner who has the oversight to adequately manage and drive actions throughout the entire process. In the second part of this ebook, we’ll discuss why foreign currency exposure management goes beyond Treasury and is ultimately an enterprise-wide issue. Companies that approach foreign currency exposure management from an enterprise perspective (assigning the proper ownership, authority and resources to the process) can focus their attention and energies on strategic, value-based decision making that will protect and strengthen the value of the organization. The third part of this ebook will discuss how companies can begin to transform their foreign currency management practices into enterprise-level, standard processes. The FX Exposure Management Process Owner: Starting Where the Buck Stops In almost every conversation we conduct with CFOs, Treasurers, and Accounting, a common theme emerges: an overall lack of crossfunctional coordination and collaboration within organizations with regard to activities that impact FX exposure quantification and measurement. While Treasury may be regarded as the process owner, in reality they maintain control of, and have authority over, only one piece of the puzzle. Different functional groups within an organization contribute to foreign currency exposures and their management process. The FX gain/loss line on the corporate income statement is the ultimate product for these efforts. Responsibility and accountability for that number resides with the CFO. As such, it is the CFO who assumes responsibility and accountability for the process and must ensure coordination among the contributing functional groups to ensure that this result is both accurate and acceptable within company policies. The only way to ensure the kind of cross-functional coordination required to properly manage the foreign currency exposure management process is to elevate awareness and priority of the issues throughout the enterprise. Acknowledging foreign currency exposure as an enterprise risk means assigning the proper level of oversight, accountability, and resources to the entire management process. At a strategic level, the FX business process owner must have the strategic responsibility for addressing and maintaining currency risk management decisions, processes, and policies. The FX business process owner must be able to coordinate tactical activities across multiple disciplines, and communicate effectively with Finance, Accounting, Tax, and Operations representatives from around the globe. Ultimately, they’re the stakeholder with visibility into the foreign currency exposures and management process, from data to exposure, across the enterprise. The Data Dilemma: Getting to the Source of FX Related Accounting Volatility The Challenge of Defining Exposures In most organizations, the Treasury department is accountable for managing foreign currency exposure and the related FX gain/loss. While Treasury often maintains control over the process to select hedging instruments and dictate internal risk management tactics, their ability to mitigate the effects of FX volatility depends on accurate and complete exposure data. If the data is inaccurate or incomplete, companies may execute risk mitigating actions within policy but still sustain significant FX gain/loss volatility. The real problem with foreign currency exposure data integrity issues is that they are extremely difficult to detect until a major problem has surfaced. In our experience, we frequently find off-setting errors and omissions that distort foreign currency data, falsely masking the true exposure in ways that make it difficult to isolate an anomaly and determine the source of an error. We’ve come to refer to this phenomenon as accounting volatility - a pervasive, self-reinforcing sequence of data integrity issues that become increasingly complex and intractable over time. Treasury is a customer of the accounting organization when it comes to foreign currency exposure data. Assuming that a multi-currency accounting system is in place for the enterprise, valid foreign currency exposure data is dependent upon two key premises: Multi-currency transactions have been properly recorded in the transaction currency. Accounts that are required to be revalued in accordance with ASC 830 / IAS 21 are being revalued on a periodic basis. Accounting volatility can result if multi-currency accounting entries have not been recorded appropriately, or if the revaluation process is not properly identifying accounts that should be revalued. The result in either case is a misstatement of the foreign currency gain/loss in the income statement for the organization. Either foreign currency gain/loss remains embedded within the monetary asset and liability accounts in the balance sheet, or it has been improperly recognized prematurely in the income statement. In the following section of this ebook, we will discuss these issues and provide questions that CFOs and Treasurers can ask to determine the future likelihood, and historical magnitude, of accounting volatility within their organization. Recording the Transaction One difficult-to-detect issue that has serious impact on foreign currency exposure management is the entry of the foreign currency transaction in the functional currency instead of the transaction currency. As a result, the exposure is not detectable and cannot be managed by Treasury. In addition, the foreign currency gain/loss associated with this transaction exposure is not realized incrementally with the process of account revaluation. Rather, it is realized all at once, when the transaction is cleared or settled. Another prevalent issue is the clearing and reconciliation of multi-currency account balances in functional currency instead of transaction currency. This results in invalid transaction currency balances and mismatched relationships between the transaction currency and functional currency within the ERP system. Because revaluation processes are based upon transaction currency balances, invalid balances can lead to unrealized FX gain/loss calculations and inaccurate, posted results during period-end processing. These accounting issues are evidence of a process breakdown usually attributed to employee training in the area of transaction entry. Detecting these issues requires a disciplined analytic review of the monthly foreign currency FX gain/loss for entities within the enterprise, given the foreign currency exposure relationships within each entity and changes in foreign currency rates. Intercompany Mismatches Intercompany mismatches have a significant impact on the nature, level, and complexity of a company’s foreign currency exposure. Generally, intercompany transactions are recorded in one of the functional currencies of the entities that comprise the intercompany relationship. As a rule, the intercompany account balances recorded within two entities of an intercompany relationship should net to zero on a currency-bycurrency basis. Despite this, one common source of accounting volatility is mismatched intercompany balances in which one entity has recorded an intercompany payable or receivable, while the other has either neglected to record the corresponding transaction or has recorded it inaccurately. This too is a symptom of a multi-faceted process breakdown - one in the recording of the transaction and another associated with the reconciliation process. Intercompany transactions that take place in a currency other than the functional currency of either entity creates additional exposure for the enterprise and further complicates the FX exposure management process. As described in the table at the bottom, when a third currency enters this relationship, each entity has an exposure to the transaction. There are two ways to resolve this issue and eliminate the exposure. One way is to execute two currency conversions: one entity purchases the currency, and the other entity sells the currency. Alternatively, a process must be developed to convert the third currency balance into one of the entity’s functional currencies based upon a pre-determined rate convention, followed by a single currency conversion to settle the balance. In many cases, creating an intercompany transaction in a third currency is not an acceptable business practice. Unfortunately, due to the complexity around intercompany balances, lack of visibility in transaction currency across multiple systems, multi-department responsibilities, and inadequate reporting infrastructure, it’s often unknown that this is an unacceptable business practice. ERP and Systems Configuration ERP Configuration of FX Postings Specific FX-related configuration, administration and maintenance issues in most major ERP systems add to the complexity and potential for problems with multi-currency accounting. Oracle Oracle does not define a functional currency at the company level. It is defined for a set of books. The ability to support multiple functional currencies for a company is often overlooked or misconfigured. Revaluation rules apply only in the context of a company in a set of books. If a company transacts in multiple sets of books, multiple rules may be required for the same accounts and/or currencies -- this is often overlooked or misunderstood. Revaluation processing looks at functional currency of the set of books, not the company. A non-functional transaction in a set of books with the same currency will be ignored for revaluation. SAP SAP does not define a functional currency but rather a local currency. Often times, the revaluation processes is run multiple times whenever the functional currency is different from the local currency, effectively reapplying FX adjustments. Revaluation criteria are usually managed through the use of variants (i.e. predefined parameter definitions) that are static, requiring constant manual updates to reflect current accounts and entity relationships; these updates are often overlooked. Institutions where the Controller organization is decentralized, account setup and changes in entity relationships contribute to uncoordinated revaluation criteria and the potential to either:a. Revalue some accounts b. Revalue accounts multiple times c. Revalue accounts that should not be revalued System Configuration & Maintenance Issues: Revaluation Under ASC 830 / IAS 21 Framwork As detailed previously, accounting and process issues related to transaction data quality may not be the only source of accounting volatility. In many cases, problems related to monetary asset and liability account revaluation in accordance with ASC 830 / IAS 21 guidelines contribute to unreliable FX gain/loss statements. In working with clients to set up end-to-end processes for identifying foreign currency exposure, we routinely uncover and help to resolve issues related to revaluation validity that hamper customers’ ability to properly reflect the impact of currency revaluation on their financial statements. We commonly encounter inaccurate results from improper revaluation of accounts across the enterprise, typically finding a combination of accounts that are being revalued properly, as well as accounts that are being revalued, but shouldn’t be. In most cases, companies are unaware of the problem. In either scenario, the underlying root causes of these inconsistencies can be grounded in the following factors: 1. Maintenance of the systems and processes comprising revaluation processes become inaccurate over time. SCENARIO #1 An account that should be revalued is not being revalued 1. Treasury has no visibility into this account for their exposure management process Thus, they cannot mitigate risk with regards to the underlying currency exposure 2. There is no unrealized FX gain/loss being recorded on a monthly basis The total FX gain/loss that exists within the account is sitting in the balance sheet, waiting to be realized all at once when transaction(s) making up the account balances are cleared and/or adjusted **You may encounter compliance issues as a result of this scenario 2. Initial setup of the revaluation environment within a multi-national company is complicated. SCENARIO #2 Accounts that should not be remeasured are identified for remeasurement 1. Treasury takes risks mitigating actions for these inaccurate balances (in the accounts) as part of the exposure management process An associated FX gain/loss in addition to currency conversions, hedge valuations/settlements, and the inherent cost (bank fees, forward points, and/or option premiums) associated with currency hedge transactions are recorded for the account 2. The effects of the risk mitigating currency actions have been realized with no off-setting amount that would have resulted from an underlying exposure The company will eventually discover that the account should not have been revalued and records the adjustment to reverse the recorded unrealized FX gain/loss Initial Revaluation and Process Design Setup of the revaluation environment within a multi-national organization is complicated. Initial setup requires: An understanding of the requirement to revalue monetary asset and liability accounts as prescribed by ASC 830 / IAS 21. Configuring a combination of systematic and manual processes across the accounting enterprise to accomplish the requirement. The initial configuration can be very complex, as is evident in the many different variables which must be assessed when configuration is done: Multi-system accounting environment Revaluation processes provided within each of the accounting systems that comprise the enterprise accounting framework. Each system can approach revaluation differently Revaluation dependencies on specific account setup parameters Manual processes to address accounting system deficiencies or desired business practices Centralized vs. de-centralized processes Period-end close processes Our analysis and work with companies has shown that finding the one person in the organization that understands every revaluation parameter, setting, and process is nearly impossible. The fragmentation of responsibility around this area will continue to complicate the overall revaluation framework, leading to a consistent misstatement of the FX gain/loss and an inherent ability of Treasury to successfully manage the foreign currency exposure. Maintenance of Revaluation Process Maintenance of the systems and processes comprising revaluation can often become inaccurate. Does your process include any of the following common reasons? Rapid merger and acquisition activity with lagging system integration Growth in the chart of accounts with no process for determining if accounts should be added to the revaluation list Complicated revaluation rule maintenance environment within accounting systems No common oversight, responsibility or ownership of the process – fragmentation of responsibility No periodic account review process to test effectiveness of systematic and manual revaluation processes Consistent turnover within the accounting staff, who has revaluation responsibility as part of the close process Lack of ongoing education and training Lack of consistent visibility to revaluation results and context to interpret the results Inconsistent review of FX gain/loss and not establishing a process for resolution of results outside of tolerance The Assessment of FX Risks Diagnosing Accounting Volatility: Symptoms, Questions and the Self-Assessment So far, we have discussed common foreign currency exposure data integrity issues, the role of the ERP and accounting systems administered by IT and/or Accounting, and accounting and organizational issues that contribute to the problem of accounting volatility. Next, we’ll consider the symptoms of these problems in the form of key questions that CFOs or Treasurers can pose to indicate the degree of accounting volatility within their organization. How confident is Accounting that multi-currency transactions are being recorded properly, including initial entry and clearing of the transactions? If multi-currency transactions are not being recorded or cleared properly, they can create unexpected FX gain/loss volatility. As discussed previously, if a Regional Accounting Manager records a multi-currency invoice in the local currency of the entity instead of the transaction currency, the Treasurer will have no visibility to the exposure. When the payment is cleared, the gain/loss on the transaction will unexpectedly impact the income statement. When was the last time Accounting reviewed enterprise-wide revaluation to determine if the system(s) configuration and related processes produced a result that compiled with ASC 830 / IAS 21? In the vast majority of companies that we have worked with, we have uncovered multiple ERP/accounting system setup/configuration problems and process issues which not only raise compliance concerns, but also create embedded FX gain/loss volatility that is very difficult to detect and manage. How confident is Accounting that intercompany transactions are being reconciled on a timely basis and are in balance? We commonly witness intercompany transactions that demonstrate the significant balance discrepancies discussed previously. Intercompany issues we often encounter that can cloud foreign currency exposures include: Intercompany transactions where only one side of the transaction is recorded in the GL Intercompany transactions that do not have matching balances Intercompany transactions that are not posted in the same transaction currency Intercompany transactions that are recorded in a third currency (functional currency of entity) Does Accounting perform foreign currency gain/loss analysis on a regular, monthly basis and maintain a proactive process for the resolution of exceptions? If yes, how often do they encounter unexpected results, and what is the process for investigation and resolution? If not, do they verify that the gain/loss on currency exposures is as expected and within corporate tolerance? Assessing Your Organization’s Foreign Currency Exposure Management Situation Upon addressing these key questions, you should be able to assess your company’s ability to quantify and manage foreign currency exposures. The FX Exposure Management Capability Model represented by the excerpt below, can help you determine your company’s current capabilities and define concrete goals to improve your ability to quantify and manage foreign currency exposure. We’ve developed this assessment with selections to help you identify the most applicable attributes of your FX Exposure identification and management. Once you take the assessment, the category with the most items checked will be an indicator of your company’s ability to manage foreign currency exposure. Representative extract from the Kyriba FX Exposure Assessment Foreign Currency Exposure Management: An Enterprise Issue Additional Resources Savvy corporates are adopting a roundtable approach to currency risk management. Currency has become an issue outside the halls of treasury. Modern currency aware organizations understand that currency impacts many areas of the business and that all of those areas are represented at the company’s currency roundtable. Everyone at the currency roundtable has access to accurate, complete, and timely exposure data, as well as the analytics to understand how those exposures impact their functional area -- and conversely, how decisions they make affect foreign currency exposures and the company’s overall financial performance. Currency surprises impact in obvious (and not-so-obvious ways). When a company’s revenue is regularly eroded by currency surprises it has less cash available for productive activity. That loss has ripple effects, including credit rating downgrades that raise the firm’s cost of capital and debt covenant breaches that limit its access to liquidity. Both reduce available cash and limit the organization’s ability to deliver maximum profit to shareholders. For more detail on the deeper impacts of currency surprises, check out the latest Currency Impact Report from Kyriba: Kyriba Currency Report Recommended Next Steps CFOs, Treasurers, and Accounting can turn to Kyriba FX to provide an unparalleled ability to access accurate and complete exposure data, on demand. Our platform is backed by a team of experts who continually support the currency risk management process at some of the largest organizations in the world. Put simply, teams that have identified FX related accounting to exposure management issues can rely on Kyriba to provide a solution to remediate any sources of accounting volatility and inaccuracy. In many cases, organizations choose to leverage Kyriba’s industry leading software platform to measure, monitor, and manage their currency risk management programs on an ongoing basis. About Kyriba FX Risk Management Kyriba FX Advisory Services helps treasury and finance professionals understand and manage currency impact to financial results. Organizations ranging from Amazon to Google use Kyriba FX analytics to monitor and manage the impact of currency on their business. Kyriba FX was developed as the first solution to automate foreign exchange exposure management for multinational companies, delivering unparalleled expertise and driving measurable results. To this day, Kyriba FX is focused on helping organizations quantify their foreign exchange exposure and cost-effectively insulate their company from the uncertainty of currency volatility. Whether we’re working with a Fortune 50 organization or a growing U.S. company poised to go global, we take the same approach to understanding our customer’s foreign exchange policies, processes, and objectives. Kyriba FX is a cloud based software suite that customers can deploy to cost-effectively manage their own foreign exchange exposure management process.   Want to learn more about how to automate seamlessly across your FX management process? Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

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 forecasts 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.

Nearly every company doing business beyond its own borders faces the challenge of developing cost-effective FX risk management programs, and each year corporations incur billions of dollars in currency related losses due to global...

Nearly every company doing business beyond its own borders faces the challenge of developing cost-effective FX risk management programs, and each year corporations incur billions of dollars in currency related losses due to global currency volatility. Even small organizations with modest international operations can be impacted by currency exposures if treasury fails to effectively manage foreign exchange (FX). In this eBook you will be introduced to three common manual foreign exchange profiles and examine anonymous case studies of how a company from each profile type was able to gain greater insight into currency data and exposure, improve workflows, increase overall efficiencies and withstand currency headwinds — all by modernizing and automating their FX processes. In many cases, these losses are attributable to manual, spreadsheet-based currency risk management programs and processes, which are vulnerable to human error and faulty hedging strategies — strategies that hinge on inadequate or incomplete data. Ongoing FX volatility, lack of access to accurate and timely data, and real time responsiveness to exposure and market risk changes put demands on organizations to embrace fully-automated FX risk management programs. Regardless of the sophistication or complexity of an organization, every corporation can benefit from automated FX risk management. This is true even for larger or more sophisticated companies already utilizing general treasury software or trading platforms. In fact, automated FX risk management programs can enhance the value of a trading platform, ERP(s) and other technologies. What Does Automating FX Mean? Automation involves modernizing procedures by systematizing each step of a process, eliminating the need for manual intervention along the way. Within the FX risk management programs, this may include automating processes for the data collection exposure consolidation, calculation and analysis, as well as hedge recommendation. Automation also involves seamlessly integrating multiple systems, including ERPs, trading platforms and market data providers to ensure exposures are aggregated easily and automatically with the latest technology, like APIs. At Kyrbia, we advise corporations to consider three types of FX automation when looking to enhance their FX risk management programs Data Transfer Automation to optimize the data gathering portion of FX risk management, which ensures human “touch-points” are minimized and the potential for error is reduced. Workflow Automation to identify and establish exposure benchmarks across the enterprise, ensuring consistency and eliminating currency surprises. Process Automation to introduce complete, end-to-end modernization to ensure errors are mitigated, efficiencies are maximized and risk is eliminated. The Benefits of Automated FX Risk Management Programs Although automating FX may sound intimidating, by working with the right technology and fintech provider, it can often be completed easily and quickly with quick-strike benefits. Automation eliminates the need for manual intervention, reducing the potential for costly human errors. Diminishing the need for manual involvement frees treasury professionals from having to gather data from multiple sources, giving them more time to analyze information, track exposure trends and proactively seek out other opportunities to eliminate risk. Automation transforms how treasury professionals are perceived within an organization, allowing them to be seen as resources in strategic planning. By using automated FX risk management programs, organizations also gain: Improved efficiency Significant time savings Increased FX controls Greater insights into FX exposures Reduced currency impacts to earnings Optimized FX risk management costs Managed impacts from FX risk Leveraging technology allows organizations to perform risk analytics on command, becoming less dependent on financial institutions or outsourced service providers. This provides the most flexibility, visibility, and control over an FX program while not losing time on external dependencies. By dividing the automation of foreign exchange management into three distinct profiles, we can better examine where companies stand with their current FX programs and determine what steps they need to take to achieve full automation. These three profiles are broken out by companies looking to expedite processes, create flexible & adaptable workflows, and enrich data intelligence to optimize FX risk management programs. Expedite: The “expedite” category describes corporations that are interested in incrementally improving their existing FX management programs through efficient data processing. Generally, companies that fit this profile type rely on manual processes that are vulnerable to errors. The CFO may be interested in transitioning away from a spreadsheet-reliant program and looking to automate data aggregation and facilitate in-depth exposure analyses. Adapt: Global organizations have dynamically changing exposure & risk profiles within a continuously changing foreign currency market. Organic growth, acquisitions, and restructurings can leave hedge programs frequently chasing down issues if the FX risk management program is not designed to quickly “adapt” to evolving conditions. When it comes to FX, chasing down issues ultimately puts the organization at higher risk of ineffective risk mitigation decision and negative P&L impacts. Enrich: The “enrich” category describes highly-complex organizations seeking to take advantage of efficient processes by shifting efforts to more strategic analysis. Companies in this category have optimized the blocking and tackling of operating an FX risk management program, and are now ready to leverage automation to improve data inputs and risk forecast assumptions. Hedge programs will maximize effectiveness the more hedge decisions accurately align with actual business activity. Editor’s Note Companies in each one of these profile types have distinctly different challenges and operate at varying levels of sophistication, but they all share a common trait: the need to automate their FX programs. Three Corporate Profiles, Three Automation Success Stories Every corporate environment offers unique challenges, and the following anonymous case studies illustrate how automated workflows can enhance a company’s FX risk management programs — regardless of the inherent complexities. The specifics for each company in this eBook vary— some used FX trading platforms or had previously established in-house banks. Regardless of the specifics, after modernizing their programs, each organization saw near immediate quantifiable results, including improved operational efficiencies, time savings, reduced expenses and reductions in currency-related risks. 1. Expedite: A $6 Billion Global Electronics Manufacturer Why They Automated The company relied on a manual, forecast-based, legacy balance sheet FX program requiring treasury specialists to gather spreadsheets every month from 30 entities around the globe. They consolidated the forecasts, uploading and executing the appropriate trades manually. This process took four days in total (two days for data consolidation; two for currency hedging), requiring additional steps, touch-points and manual calculations along the way – all of which amplified the potential for human error. Solution The company looked for a solution to help them design an automated program. Kyriba’s Balance Sheet FX solution offered the cutting-edge SaaS technology and back-end support needed to complement their existing forecasting processes. With Kyriba, their new FX solution enabled a streamlined data aggregation process and initial exposure analysis. This, in turn, supported the development of an end-to-end, automated workflow, which helped the FX team improve their analysis and adjustment process. The team aggregated data for all entities at a corporate level and then executed trades and hedge accounting with a seamless integrated trade execution portal. By using Kyriba's FX risk management solution, treasury could select what to trade and the trades would immediately be processed. This eliminated unnecessary steps while adding more rigid controls, reducing the likelihood of human error causing something to go wrong during the trade process. The time savings and assurances that processing errors are reduced allow the company to spend more energy on strategic analysis. Outcome Kyriba significantly improved the data aggregation and exposure calculation processes, but seeing the trend analytics and having the ability to compare datasets in the system were also vital. With their new FX risk management solution, treasurers could quickly break down exposures – by entity –and identify what drove the changes while drilling into specific accounts. This was a monumental change compared to their manual processes which did not allow for this advanced degree of reporting; nor did it offer the granular details they needed. Automation saved time and reduced the potential for error. With the click of a button, trades were moved from one system to the next. Treasury no longer needed to open different files, copy, paste and upload separately. This saved significant transaction time, which amounted to many hours saved each month due to the frequency of trades. Additional Benefits The modernized process gave the FX team more time to analyze data and identify trends. Better still, the entire process could be completed in less than a day compared to the manual process, which took about four days to complete. FX professionals could make daily adjustments in exposures, enabling them to immediately identify if – and where – the forecast was off and how to best align currency hedges. The treasury team could also lower the exposure hedge threshold while expanding the number of currency pairs tracked and traded. This helped improve the data collection to hedge execution process by 60 percent. The treasury team lowered corporate hedge thresholds to less than $200,000. 2. Adapt: A $15 Billion Consumer Goods Company Why They Automated With most of the treasury department’s efforts spent manually collecting error-prone data, company decision-makers realized they needed to upgrade their treasury infrastructure. Gathering balance sheet data alone required tapping into 38 different systems in a legacy ERP environment. This antiquated process limited opportunities for the team to focus on data analysis and risk mitigation. These issues were compounded because the company was acquiring another, smaller company at the same time. Executives tasked the FX team from the smaller company – which was already resource-challenged – with managing the post acquisition currency program. The post-acquisition balance sheet program was only hedging one-off inter-company loans and FX trades were executed over the phone. Rolling and settling hedges required constant manual intervention. Additionally, FX hedges in spreadsheets (managed by multiple employees) were an ongoing headache because the cost of wrong-way trades or over/under hedging was high. Cohesive, end-to-end automation was needed to improve efficiencies. Solution Executives recognized the need for an automated program, eliminating the risk of manual errors. The company introduced a customized backbone treasury infrastructure that drew on best practices and offered various treasury technology solutions, including a currency analytics solution, a TMS and a trading platform. For its balance sheet program, the entire hedging process was automated – including weekly collections of exposure data from local business units, ERP systems, spreadsheet uploads and user inputs. Once balances were collected, the team analyzed exposures to determine the external hedging needs. These were executed using an automated trading platform and housed in the new treasury workstation. Kyriba was chosen not only as their TMS, but the company chose its Balance Sheet FX solution to be used as a centralized FX risk center, facilitating automated data collection, exposure calculations and hedge recommendations through technology-enabled automation with the ERP systems, Kyriba TMS and trade executive portal. Within Balance Sheet FX, the team had visibility into individual entities and profit center details. Data was sourced from 38 legacy ERP systems via a weekly template (from 25 local business units) and SAP automatically pushed the data to Kyriba. Outstanding hedges were automatically transferred and uploaded to display net exposure. Kyriba then created recommended hedge actions based on the corporate policy and generated trades netted at the corporate level for all exposure balances. Trades were sent (via direct automation) for execution. Confirms were sent back to Kyriba for automated entity-hedge allocation and reconciliation.When the companies acquisition closed, Kyriba provided a strong FX risk management solution framework that made it easy to integrate the new entities. Rather than taking months to work with new entities to gather exposure data and educate new employees, the company could quickly guide entities in how to adopt FX processes and follow policies. Outcome By automating, the company revented its treasury infrastructure from the ground up. The transformation took place at the same time the small treasury team managed its day-to-day responsibilities – while the company executed six acquisitions and four divestitures. Additional Benefits The new workflow significantly reduced cumulative FX transaction net losses from$88 million to less than $2 million. The notional size of the balance sheet hedging program increased from $800 million to $2 billion. Hedge accounting documentation now saves the company $120,000 per year thanks to consolidating technology platforms. Trading fees have been reduced by more than $1.3 million in 12 months. 3. Enrich: An $8 Billion Specialty Food Company Why They Automated The company originally relied on a non-formalized, manual cash flow exposure forecasting process – one that was completed ad hoc, using numerous spreadsheets and a variety of touch-points. Data collection was inconsistent, calculations were completed manually and the potential for error was high. Across the business and reporting structures, many currency pairings were complex and represented significant risk. Reviewing spreadsheets and formulas for each forecast period was resource-intensive, requiring the treasury team to manually review each submission. Additionally, comprehensive management reporting was limited, despite the amount of time devoted to the task. Solution Prior to evaluating FX technology to address their needs, the company conducted an inventory of necessary data required to support a more formalized process and quarterly hedging cycle. The goal was to ensure – when an opportunity to hedge was identified, or the business required a hedge – the team had all the necessary data to act quickly. Once the inventory was finalized, they sought out technology that would further enhance their workflow. The company’s cash flow forecasts were integrated with Kyriba’s Balance Sheet FX reporting reflecting existing hedges, creating an initial view of net exposure by entity. After reviewing the exposure and making desired adjustments and edits, the team executed a decision process in Kyriba to recommend hedges at an entity level (applying the company’s policy-defined threshold, target ratios and level of materiality, creating a report that allocates decisions by entity, currency pair and account group). Kyriba then created trade recommendations for the company’s in-house bank, including internal and external trades, displayed within the application for review. Once recommended trades were approved, the system generated a report of external trades which are sent automatically to an integrated trade execution portal. Kyriba then received the trade confirms, allocating them back to individual entities. Outcome The new workflow empowered the company to standardize a process with currency pairs, exposure types, geographical details and entity information. With corporate-mandated standardization in place, the implementation facilitated improved reporting with complete flexibility supporting individual user-defined views. This proved to be a significant time-saver, enabling the treasury team to focus on analyzing the accuracy of the forecasts, which helped eliminate nearly all calculation errors. Additional Benefits The ability to segregate and analyze specific data sets significantly reduces the time spent on reporting. Previously, it took at least three days (per quarter) to complete; now the process takes less than six hours (including collecting and uploading data and completing board presentations). The company has seen a 50 percent increase in participation in the forecasting process. Realized increased flexibility in the reporting. The company’s new workflow offers more details on all proposed actions. The increased collaboration and visibility allowed the team to add four new entity currency pair combinations to its existing hedge program. There has also been a 50 percent improvement in corporate target hedge ratios. Conclusion Before automating, each company profiled had the potential to endure significant losses (due to human error and faulty, incomplete data). After automating, each organization – regardless of its size and complexity – saw near-immediate benefits. Most importantly, each experienced a reduction in FX-related losses, managed impact from volatility and a substantial decrease in unmanaged FX currency risk. Kyriba is committed to helping organizations improve the impact currency exposure has on corporate financial results by offering best-in-class technology and services. With Kyriba, organizations can reduce risk, reduce costs and streamline processes. Kyriba facilitates end-to-end automation, which includes direct ERP data extraction and aggregation, forecast consolidation, exposure and risk analysis generation and automated risk transfer and trade execution connectivity to banking portals and trading platforms using state-of-the-art, highly-secure SaaS solutions. If your organization is dependent on a sluggish, error-prone manual FX program, you should know adopting an end-to-end, fully-automated currency risk management program can help you achieve the kind of benefits detailed in this eBook. Kyriba has helped leading multinationals and small and mid-size companies with FX exposure, to successfully transition from manual FX programs to modernized, cost-effective programs. Want to learn more about how to automate seamlessly across your FX risk management programs? Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

Is Your Business Ready for ISO 20022 Payments Migration? The lack of payment messaging standards around the globe has been a major issue for payment factory or payment hub modernization. The absence of standards...

Is Your Business Ready for ISO 20022 Payments Migration? The lack of payment messaging standards around the globe has been a major issue for payment factory or payment hub modernization. The absence of standards has resulted in expensive cross-border payments, insufficient transparency, increased fraud, and heightened security risks. Many companies have allocated extensive resources to develop local formats, yet still face a complexity that prevents them from harmonizing end-to-end processes, including payments validation and data reconciliation, for domestic and international transfers. Over the years, the adoption of the 2009 version of the ISO 20022 XML messaging standard has represented great progress. It is considered a mature format that is important for corporate payments globally. Nevertheless, companies and banks are still spending a lot of time and money supporting and maintaining local legacy formats–or even worse, proprietary formats–that pose maintenance challenges on a daily basis. Fortunately, under the joint effort of SWIFT, the European Policy Center (EPC), as well as many banks and corporations, the 2019 version of the ISO 20022 XML messaging standard could be the light at the end of the tunnel. What’s New in the Latest Version of the ISO 20022 XML? ISO 20022, first introduced in 2004, is a messaging standard that establishes a common digital language for financial data worldwide. While SWIFT has started the migration towards ISO 20022 XML messages, the standard is widely used beyond SWIFT services. Currently, most real-time payment systems are using ISO 20022, and the standard has been used for more than 10 years for SEPA Credit Transfer and Direct Debit. Additionally, ISO 20022 is used for invoicing, investment fund orders, and foreign exchange activities. ISO 20022 contains many messages and it also has yearly releases. For instance, ISO 20022 release 2009 contains the pain.001.001.03 message, the most commonly used messaging format for payment initiation. In ISO 20022 release 2019, which is the latest version, the same message has been upgraded to version 09, pain.001.001.09. When it gets adopted by a majority of organizations, the 2019 version of the ISO 20022 XML messaging standard will allow for speedy payment transactions, in part because it would eliminate complex layers of legacy payment codes. The new version provides more detailed, higher quality data, enabling better reporting, enhancing security procedures, and driving innovation by allowing financial institutions to analyze customer behaviors and design products that better fit their needs. By November 2025, SWIFT messages will be fully transitioned to ISO 20022 XML for interbank settlements. For this migration, most banks will change their infrastructure and therefore will push their corporate clients to adopt the 2019 version of the ISO 20022 XML over other local standards for payments, such as DTAZV in Germany and AFB320 in France. The process has already started in Switzerland, where SIX is promoting this format as the new Swiss standard and Credit Suisse and the Swiss National Bank are already making it available to their customers. In Europe, the EPC has announced that the new version will become the SEPA Credit Transfer format as soon as November 2023. Common Global Implementation (CGI), an initiative to simplify various payment related corporate-to-bank implementations by promoting the wider acceptance of ISO 20022 XML, has already released its specifications. Globally, this new standard will allow the transmission of rich data in a more structured manner. It will enable end-to-end tracking and reconciliation of payments, which has always been an issue with cross-border payments. Currently, over 70 countries are already in the process of adopting ISO 20022, including China, India, and Japan. Why is ISO 20022 Important to ERP-to-Bank Connectivity & Payments? With the imminent global adoption of the 2019 version of the ISO 20022 XML, organizations need to be aware of its benefits as well as its limitations, as they prepare to add it to their payment mix. For finance and IT leaders, the new standard offers a myriad of benefits in comparison to its predecessors. Adopting ISO 20022 standards helps to prevent fraud, avoid system failures, and expedite payment transactions, large and small. Use case highlights: Instant Payments: The standard enables frictionless, real-time payments by creating a global, open standard that anyone can implement on any network. Rich Data: The rich, consistent, well-structured data enabled by the new standard delivers faster transactions and helps drive innovation by allowing organizations to develop products based on customer needs. Improved Regulatory Reporting: Because the new standard requires identical formats and a higher level of detail, it creates more secure payment information that lends itself to better, faster regulatory reporting. Fraud Prevention: A standard payment format helps organizations identify fraud, including money laundering. The fact that the new format requires structured and complete addresses limits the fraud risks too. Compliance (Security Enhanced): The consistent payment format facilitates compliance with government regulatory requirements. Interoperability: The standard helps to promote interoperability for cross-border payments, improving the ability to easily exchange and make use of information. Payments Hub Upgrade: It meets the need for payment system renewal programs, ensuring alignment with global industry standardization such as SWIFT’s cross-border payments messaging migration where the MT messages will gradually be replaced by XML. Faster Reconciliation: It supports Unique End-to-end Transaction Reference (UETR) with a standardized tag, allowing the transmission of this unique id from any ERP system in a payment file to the bank and back in payment acknowledgement and bank statements. Tracking and Beneficiary Advice: The new standard improves the transmission of information through end-to-end tracking and the payment advice to the final recipients. On the flip side, while the new standard promises improved messaging interoperability between systems for the greatest number of participants, the actual experience is dependent on how individual banks set up the messaging standard internally. In other words, banks will deploy the new messaging standard differently and some workarounds will likely be necessary for seamless payment transactions. Banks* indicate time, resource, and technology constraints as major hurdles to their ISO 20022 migration. 73 percent of banks agree that technology constraints within the bank limit their ability to do more with their migration to ISO 20022.   63 percent of banks agree that budget or resource constraints limit their ability to do more with their ISO 20022 migration. Celent anticipates that the majority of banks will do just enough and be largely on time for the deadline. * Data from 51 banks surveyed across Europe Source: CELENT (2022). Survey & report: The race to ISO 20022. What Does it Mean for Your Organization? With so many tangible benefits the new standard can bring to the corporate payments, organizations should adopt it as soon as their banking partners offer it. However, according to a recent Celent survey, not all banks are equally prepared for ISO 20022 migration. As a result, Celent also found that many corporate clients have not been sufficiently informed by their banking partners on the forthcoming ISO 20022 changes and more importantly, what actions companies would need to take to plan for the changes. This lack of communication is unfortunate as corporations must also prepare their systems to send and receive the new payment format. If not, the opportunity to benefit from the richer data is lost because the extensive data in payment messages could be truncated by the end recipient due to system unreadiness and messaging incompatibility. Based on Kyriba’s experience, we foresee that it will require some effort for enterprises to get their internal systems ready for the new message format. A quick checklist includes: Cleaning up the ERP Database with More Structured Third-Party Information. As more and more countries will only allow structured addresses in cross border transfers, complete information for the beneficiaries (full names, complete addresses and even identification numbers) will become a must. SWIFT initiative, known as CBPR+ (Cross Border Payment and Reporting +), aims to provide structured addresses already in MT messages. Kyriba advised its clients to start completing the structured addresses, at least for city, zip code, and country (and for some countries, also state/province). Harmonizing the Payments Validation Workflow. As part of the workflow design, Kyriba’s recommendation to our clients is to consider implementing a fraud detection system. The rule-based and AI-powered fraud and compliance detection mechanism will remove a lot of time-consuming and error-prone manual steps to validate payments and let all stakeholders get better control over the payments processed. Creating Processes for ERP and TMS Integration and Automating End-to-end Reconciliation. By using a unique import interface, generating unique ids for each imported file, and initiating payments in formats containing these unique ids, the reconciliation process will be transformed. Acknowledgments will be integrated with a specific format (XML Pain.002.001.10) that will allow cash managers to be alerted almost immediately when a payment is rejected. With end-to-end integration, the information can be fed in real time back to ERP for quick action. How Can a Technology Partner Help? After years of working with dedication to create a vast library of proprietary formats, the Kyriba payments team sees the coming changes as a chance to get closer to global standardization. However, as a mission-critical process, any disturbance in payment processes could cause business disruption, supplier dissatisfaction, and late material deliveries. Understandably any major format change or update makes payments and IT teams apprehensive. Therefore, it pays off to understand the subject matter in advance, plan a progressive roadmap to adopt the new standard, and if needed, work with a specialist vendor to manage the whole transformation. Kyriba is always at the forefront of formats and payments innovation, with proven ability to quickly support the latest formats required by the market. Kyriba clients can already seamlessly exchange payment transaction data with Credit Suisse using the new standard. Kyriba also supports SEPA CT XML ISO 20022 version 2019, has developed the CGI standard version XML ISO 20022 version 2019 format, and is ready to support the SWIFT migration from MT to MX messages via SWIFT Interact. To illustrate the efforts it usually takes to develop payment templates, let’s deep dive into the process: All payment templates must be individually developed and tested with each bank Developers must coordinate all testing with each bank’s technical team Format typically fails first test, multiple rounds of testing are required with each format Companies must work on each bank’s timeline and time zone Average timeline from development to production is 3-6 months for a single payment format Kyriba offers its clients a pre-built and pre-tested payment format library with over 50,000 payment scenarios ready for use, covering all major banks across the globe. Based on Kyriba’s Value Engineering Projects with our clients, Kyriba clients are looking at an average saving of $100,000 from this time-consuming and labor-intensive process. If you are in the middle of the ISO 20022 XML migration or about to start the project, contact one of our payment experts today and we look forward to supporting you in your future payment journey. References Common Global Implementation (CGI) Initiative European Payments Council (2022): Guidance on the Migration to the 2019 Version of the ISO 20022-based XML Messaging Standard ISO (2020) Introduction to ISO 20022: Universal Financial Industry Message Scheme SWIFT (2022) UETR SWIFT (2022) What is ISO 20022? Sources CELENT (2022) Survey & Report: The Race to ISO 20022 The SWIFT Standards Team (2020): ISO 20022 for Dummies (5th) John Wiley & Sons, Ltd. Watch our on-demand webinar to learn more about Beam Suntory's treasury and payments transformation journey, including using the Kyriba Payment Hub for auto converting ISO 20022 XML format.

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.

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.

By any measure, 2023 is shaping up to be a challenging year for businesses both in the U.S. and across the world. As the FOMC raises interest rates another 50 basis points in December 2022, expectations on continued rate increases persist. FX rates and commodity prices continue to experience heightened volatility, driven by the threat of recession and ongoing supply chain problems. Beneath these headlines, the treasurer’s environment continues to evolve, with ongoing innovations across treasury offering opportunities to improve treasury's role and effect on overall financial management.

By any measure, 2023 is shaping up to be a challenging year for businesses both in the U.S. and across the world. As the FOMC raises interest rates another 50 basis points in December 2022, expectations on continued rate increases persist. FX rates and commodity prices continue to experience heightened volatility, driven by the threat of recession and ongoing supply chain problems. Beneath these headlines, the treasurer’s environment continues to evolve, with ongoing innovations across treasury offering opportunities to improve treasury's role and effect on overall financial management. For companies with a small number of key customer accounts, monitoring individual DSO levels will also highlight potential problems with key customers and allow early intervention to take place.

Kyriba delivers the industry’s most advanced currency risk management solutions with extensive business intelligence capabilities for easy identification and understanding of foreign exchange (FX) risk. We use extract toolkits to collect complete and accurate...

Kyriba delivers the industry’s most advanced currency risk management solutions with extensive business intelligence capabilities for easy identification and understanding of foreign exchange (FX) risk. We use extract toolkits to collect complete and accurate data from ERP systems and spreadsheets for in-depth visibility into exposures, reliable analysis and informed risk mitigation. The Cloud-Based Business Model Advantage: Quick ROI and Low TCO By leveraging the Cloud-based business model, Kyriba creates two advantages: speed and low cost, without sacrificing the safety and security of your data. Kyriba is committed to keeping your confidential data safe and secure, and our processes and controls are audited annually. The cloud-based model frees your IT personnel from the need to manage and maintain the product and updates typically associated with installed and licensed software products, and enables Kyriba to rapidly and continually add product innovations to the market. Kyriba customers experience quick returns on their investment. Up and running quickly, we provide almost immediate visibility to exposure and risk data, and access to analytics and decision support capability. Confidence in your decisions allows you to take actions to manage risk, reduce costs and gain operational efficiency. Kyriba’s cloud-based application also provides low total cost of ownership. Because Kyriba is hosted, it requires little or no redeployment during upgrades, and no IT development. You know the subscriptionbased outlay at the time of purchase; you also know that the cost of ownership will not spike due to upgrades, redeployment, or support during the subscription term. The Kyriba SAP Extract Toolkit: Facilitating Set-up and Ongoing Data Aggregation Using proprietary technologies, Kyriba aggregates raw General Ledger data from SAP, as well as other ERP systems, databases and spreadsheet data sources. To facilitate the process of data collection for initial enrollment and ongoing exposure management, Kyriba created an SAP Extract Toolkit, Kyriba Extract 3.0, which has been certified by the SAP® Integration and Certification Center (SAP ICC) as powered by the SAP NetWeaver® technology platform. The Kyriba SAP Extract Toolkit consists of instructions on how to run native SAP utilities to retrieve account/ entity configuration information and a program that captures summary monetary asset and liability or revenue and expense balance data. After initial enrollment, only the general ledger report is used to periodically extract the balance data. DATA CATEGORY FIELD / DETAILS REQUIRED Entities Company code, name and functional currencies Accounts Account code, description and account type (optional) General Ledger Balances Life-to-date balances showing current value at a specified point in General Ledger Balances time, or period balances, typically post-closing at period end Hedge Information Includes amounts, company codes and currencies During the enrollment process with Kyriba, certain information will be needed from SAP to assist with configuration of Kyriba in preparation for exposure analysis. This information is typically retrieved using the SAP Data Browser to gather information from the account definition tables, SKA1 and SKB1, as well as company information from the T001 tables. This is a one-time effort and Kyriba will provide documentation for the specific fields requested. The Kyriba G/L Extract Program for SAP is a report written in ABAP and delivered via transport. The transport contains all the objects required to execute and run the program. The program does not create any database objects nor does it write or update any database tables or objects. The program will read balance data from the SAP general ledger, referencing account configurations to optimize performance, resulting in summary balances by company, account and document currency. In a generalized use case, a functional user will navigate to the Kyriba program in SAP and select a variant or enter variant parameters to suit their situation. The program can be run in foreground or in background with output sent to the ALV or spooled for later download. Once the program has completed, an authorized user will download the result file in Excel format to their desktop, login to Kyriba and subsequently securely upload the file to their client staging area in preparation for exposure analysis. To further maximize efficiency, frequency, time savings, error reduction, and security, while minimizing support required from IT, the extract process (both the execution of the extract query and the encryption and upload of the resulting files) can be automated. An automated extraction, encryption and upload process is particularly beneficial if you have multiple data source instances or systems. For each instance of SAP, your IT team will deploy and maintain the Kyriba G/L Extract Program. The extract program is the only Kyriba software deployed and maintained in your environment. Kyriba Application Security Kyriba understands and appreciates the importance of keeping your highly-confidential f inancial data safe and secure, and simultaneously available to your authorized users on demand. We have passed the scrutiny of our discriminating customers and ensure that our standards for security and confidentiality are the maximum possible. Here are some of the elements that built confidence for our customers: Strong encryption to protect sensitive G/L data both in motion and at rest Annual SSAE 18 Type 2 audits for the Kyriba application and company processes and controls ISO 27001 certification Internet firewalls and an additional level of access protection around the production databases Application layer separation from data with application-only access Role-level access and idle disconnect IP Whitelisting, guaranteeing client access from only specific Internet addresses Continual monitoring through port scans and network intrusion detection systems Complete audit trail in application and data back-up Application hosting with AWS and Microsoft Azure Full redundancy in daily operations for Internet connectivity, failover and load balancing Disaster recovery plan and capabilities provide for full redundancy and a production system recovery objective of 6 hours Annual third-party penetration testing and security audits Employee, contractor and data center personnel background checks Enrollment: A Simple Process The Kyriba Professional Services team will lead your IT and treasury staff through three simple, well-defined steps including set-up, resulting data validation, and an exposure presentation, to achieve ongoing, on-demand SAP data aggregation and Kyriba FX exposure management. A final step automates the file extraction, encryption and upload process. On average, it takes 8-10 hours of an IT generalist’s time per ERP system enrolled in the Kyriba service. Typical enrollment resources include: An SAP Basis resource to install the program from the transport A developer or functional person with access to retrieve configuration data using the Data Browser A functional person who can run the program and verify balances with the Kyriba Professional Services team using native SAP general ledger reports. PROCESS CONTRIBUTOR ROLE DURATION Set Up & Configuration IT or Other Resources Download Kyriba SAP Extract Toolkit; Run SAP utility to get configuration data; Execute test and live G/L Extract Program 10 Hours Extract Result Validation Treasury / Accounting Resource Included Accounts and Sample Data Validation 2 Hours Exposure Presentation Treasury Resource Demonstration of Kyriba and discussion of current and future workflow 2 Hours Optional: Automated File Extraction & Upload IT Resource Configure standard utilities from Kyriba- provided scripts 2-4 Hours Total Project Timeframe: 2 to 4 Weeks During Enrollment, your IT personnel will install the Kyriba SAP Extract Toolkit, run SAP utilities and execute the G/L Extract Program. The toolkit provides detailed instructions for IT, or other personnel with access rights, to run native SAP utilities to retrieve detailed account/entity configurations, a chart of accounts table and functional currency information. Next, you execute the Kyriba G/L Extract Program to produce a test exposure data set for validation. Once the data is validated, you may be asked to re-run the program to produce a final data set to be used for exposure management. This process generally requires approximately ten hours of IT time/effort. During Query Result Validation, your treasury and/or accounting team members will review the sample data generated by the Kyriba G/L Extract Program to verify monetary asset and liability or revenue and expense account information. The Kyriba Professional Services team will produce a sample data set for your review to ensure the data is consistent with G/L balances in SAP. You may also provide data on outstanding hedges, and the validated balance and hedge data is uploaded to Kyriba to calculate FX exposure and support timely, data-driven risk mitigation and cost reduction decisions. This step requires approximately two hours of time/effort. During Exposure Presentation, treasury and Kyriba Professional Services review your current workflow and systems landscape, progress to date, the future vision for the end state of rollout, and workflow and process improvements. A demonstration of the Kyriba software with your live exposure data and a discussion of how exposure visibility can help you optimize your risk management decisions complete the review. This process requires at least two hours of treasury time/effort. Automated File Extraction, Encryption and Upload Automated File Extraction, Encryption & Upload is supported through standard protocols HTTPS (e.g. via cURL) and SFTP (Secure FTP) for automating the transfer of files to a secure staging area within the Kyriba application. Kyriba has customized these protocols with syntax to enable users to transfer files to, and trigger processing within, the Kyriba application. You can deploy scripts (samples provided by Kyriba) based on the needs of your environment, which retrieve the output generated by the Kyriba G/L Extract Program, and encrypt the file(s), before transferring them over 128-bit HTTPS or SFTP to Kyriba. During your Kyriba enrollment, our Client Services team will supply scripts as part of the toolkit and work with you to configure them for your environment. The level of effort required to automate the file transfer is subject to the complexities of your environment but is typically measured in hours, not days. The process requires a Systems Administrator, Developer and/or DBA with privileges to create or modify shell scripts to automate the process or integrate with existing processes.   Benefits of Automated File Encryption and Transmission Data encrypted at rest and in motion Creation of a straight-through process from business systems/ERP to Kyriba Automates transfer of the extracted data files directly to Kyriba increasing efficiency and time savings, and reducing errors Enables more frequent processing and analysis cycles Allows coordinated transfer of files from multiple business systems Additional security through PGP encryption and IP Whitelisting Uses industry standard utilities and protocols: HTTPS file transfer and SFTP Less operational and IT overhead Supported Versions SAP R/3 4.6c, 4.7 ECC 5.0, ECC 6.0 S/4 HANA SAP, SAP ERP and SAP R/3 are the trademarks or registered trademarks of SAP AG in Germany and in several other countries. Other names may be trademarks of their respective owners.   Want to learn more about how to automate seamlessly across your FX management process? Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.  

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...

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.

Modern fraud threats are innovative and constantly evolving. To confront these threats, organizations that want to survive need to deploy the most up‑to-date detection and prevention solutions.

Modern fraud threats are innovative and constantly evolving. To confront these threats, organizations that want to survive need to deploy the most up-to-date payments fraud detection and prevention solutions. In this eBook, we will explore the most common fraud threats to businesses today and detail the leading, AI-based tools that CFOs and CIOs can use to stop attacks before they happen. We’ll explore the ways that Kyriba solutions protect our customers, and impart that knowledge to you. We'll also look into tools like artificial intelligence and machine learning (AI/ML) and application programming interfaces (APIs) are game changers in the fight against fraud. We understand and use these technologies, and it’s time that you did as well. The Changing Face of Fraud Fraud threats have grown exponentially throughout the COVID-19 pandemic as the remote working environment has left companies struggling to ensure that employees are following strict security protocols. According to a 2022 KPMG survey of over 600 executives, the shift to remote work has increased the risk of fraud, and most companies experienced fraud incidents last year. FRAUD OUTLOOK Source: 2022 KPMG Fraud Outlook The losses that stem from fraud are significant. Respondents reported an average profit loss of 1% from fraud and compliance violations in 2021. And the larger the company, the more criminals will target it. A Need for Corporate Investment and Attention With the pandemic continuing for the foreseeable future and challenging organizations’ ability to operate and staff effectively to counter the ever-increasing fraud threat, it is surprising that over half of the companies surveyed say there will be no changes in their budgets to invest in anti-fraud measures. With less than half of organizations today having a program in place to prevent, detect and respond to fraud, it is evident more focus on greater investments in their protections is called for. CFOs, treasurers and CIOs clearly require a more complete set of defenses in the form of new, leading, automated AI-based fraud detection. Pervasive and Emerging Fraud Threats Business email compromise (BEC) scams continue to plague treasury and finance departments. BEC scams typically begin with an urgent email sent to an employee that appears to come from a senior level official, requesting a money transfer. In actuality, a fraudster has copied a legitimate email address, usually after infiltrating a company’s email system via phishing. A variation of this scam consists of emailed invoices that appear to come from a routine supplier that have new instructions on where to send payment. According to the FBI’s Cyber Division, there was a 5% increase in BEC adjusted losses from 2019 to 2020, with over $1.7 billion losses reported in 2019 and over $1.8 billion losses reported in 2020. Check and wire fraud remains a significant problem for treasury and finance departments, as these are the payment methods most susceptible to fraud. AFP research found that 66% and 39% of financial professionals reported fraud activity via these two payment types in 2020. However, check fraud has been in decline in recent years as fewer organizations are using checks for B2B payments. Deepfake voice fraud is a relatively new method of attack but one that has proven highly effective. This brand of fraud consists of criminals making calls using deepfake voice technology, software that can successfully copy a person’s voice via a small audio sample. COMMON VULNERABILITIES FOR ORGANIZATIONS Deepfake voice fraud caught international attention last year when it was revealed that fraudsters used it to complete a $35 million bank heist. Ransomware attacks, though not technically fraud, are nevertheless prominent threats to companies’ systems and bank accounts and have surged in recent years. In a ransomware attack, a company’s internal system is compromised (usually through phishing) and taken over. Users are instructed to either pay a ransom or permanently lose access to their systems. Ransomware as a service (RaaS) is the latest innovation of this threat; it consists of developers selling or leasing ransomware exploits to customers who then unleash them upon unfortunate victims. Tools to Protect Against Fraud To combat the threats of today, your payments fraud detection and prevention solutions should include these capabilities: Automated payment processes to standardize controls Real-time screening of all payments data to identify suspicious transactions User-defined payments screening rules Resolution workflow to investigate suspicious payments An option to avoid alerting payments users who violated a payments rule Monitoring of the status and priority of alerts in a KPI dashboard Modern payments fraud detection software like Kyriba’s Payments Fraud Detection module offer these solutions and more. 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 artificial intelligence (AI) and machine learning to screen payments against historical payment data, pinpointing any anomalies. By providing more complete data, these solutions enable data-driven decision-making. For example, Kyriba’s Payment Fraud Detection solution determines the normality of each payment—whether automated or manual—flagging any with a low normality rank. The solution provides insights into the variables that determine payment normality, allowing users to see why one or more was deemed anomalous. And perhaps most advantageous for the user is that processes aren’t slowed down in any way, even with greater visibility into payment data. Payments could be flagged as anomalous for a variety of reasons, including: A high number of payments for the same third party Payments with unusually high amounts Payments to blacklisted countries according to company policy Suspicious changes to payments imported from an ERP Payments to a bank account used by several third parties Duplicate payments After testing multiple machine learning models, Kyriba’s data scientists selected two solutions to identify irregularities in payments. Isolation Forest An isolation forest model is an unsupervised algorithm that works on the principle of isolation anomalies; anomalous instances in a dataset tend to be easier to separate from the rest of the sample. In the following example, we can see that anomalies require fewer random partitions to be isolated, compared to normal points: Generative Adversarial Network One problem many machine learning models run into when trying to identify fraud is the lack of data around fraud. Most organizations haven’t experienced significant payments fraud and thus lack the depth of examples to share. Others who may have been the victims of fraud may be reluctant or unable to share the specifics. So, training AI models can be challenging because the algorithms can only learn from good payments and, at best, a handful of bad ones. Generative adversarial networks (GANs) can solve this problem. A GAN is a deep learning model that pits two separate neural networks against each other. One network (the generator) mixes real data and synthetic data together and attempts to outwit the opposing network (the discriminator). Kyriba creates a “fraudster” network (the generator), hiding synthetic fraudulent among legitimate transactions based on a client’s payment history. Then, a “police” network (the discriminator) sifts through the data, separating the illicit transactions from the good ones. By training the fraud detection model on these competing networks, Kyriba can better identify fraudulent transactions when viewing real data. Generative Adversarial Network (GAN) Model Dashboards Dashboards can be set up to display all suspicious payments and prioritize their resolution, based on factors such as detection rules, risk exposure, incident counts and a fraud detection scorecard. Dashboards provide authorized users with complete transparency into all payment screening and can resolve outstanding actions efficiently. Fraud Prevention Workflows Modern payments fraud detection modules also support fully automated, end-to-end workflows for the resolution of outstanding suspicious payments. Users can also determine how each detected payment should be managed, enforcing the separation of duties between the initiator, approver and reviewer of a detected payment. Reviewers can also be determined by payment rule and specific scenario (e.g., the treasury manager reviews payments less than $1 million, while payments over $1 million go to the treasurer), and non-treasury personnel can be assigned to review certain detected payments. Reporting and Audit Trails Leading technology solutions can ensure that detected suspicious payments are permanently tracked in the system for daily, monthly or annual reporting. History is maintained indefinitely and all details of the suspicious transaction—including the audit trail of detected and resolved actions—are retained for internal and external audit reporting. Payment Hubs With a payment hub, organizations have all their fraud protection capabilities in one place. Payment hubs consolidate payment streams from ERPs, finance, treasury, legal, capital markets and decentralized teams, transforming disaggregated processes into a single source of record for all outgoing payments. A payment hub also transforms payment data into bank-specific file formats and connects directly with global banks via multiple protocols, including host-to-host, SWIFT and regional networks. Payments from ERPs or other systems can bring an entire enterprise-wide payments landscape under the consistent and risk-focused payments fraud detection framework. With API-driven connections and integration tied into an approval and payment fraud detection and prevention workflow, controls and fraud are enhanced and easily governed. Payment Hub for Payments Fraud Detection Fraud Mitigation Matrix Treasury and finance professionals have many payment fraud detection tools at their disposal. The following list of solutions provides an overview of some the capabilities that today’s tools deliver for mitigating fraud risk. Fraud Mitigation Matrix Solution Key Protections Capabilities Payment Fraud Detection Scenarios Pre-Defined Detection Rules Flags unorthodox payments for further review Easy to customize and come up with your own rules Real-Time Screening AI/Machine Learning Dashboard Screens payments against historical payment data Displays all suspicious payments and prioritizes their resolution Payment Fraud Prevention Workflow Fully Automated Workflow Enables users to resolve outstanding suspicious payments Allows users to determine how detected payments should be managed Enforces separation of duties around a detected payment Designates reviewer(s) by payment rule and specific scenario Provides the ability to assign non-treasury personnel to review payments Features an option to hide alerts from initiators/approvers of a payment Allows scenario-based stopping of payments until resolved Enable to bypass for low-value payments Sets up tiered approvals Reporting & Audit Trails Complete KPI reporting Detected payments are permanently tracked in the system History is maintained indefinitely APIs: The Future of Payments Fraud Detection Real-time payments, which are gradually becoming more prevalent, bring unprecedented visibility and transparency to both the payer and the payee. However, there is also no stopping the transfer of funds once a real-time transaction is executed. Therefore, fraud needs to be prevented in the approval process before a payment request reaches the bank. Building APIs into the payment platform allows users to fully automate bank account validation and payment policy screening, identifying exceptions in real-time. APIs can instantly match payments against third-party data; for example, they can be used for sanctions list screening or verifying the ownership of the bank account to whom your company is paying. By using APIs for third-party system integration with your payment platform, your organization can ensure real-time access to any needed database for account or compliance validation. Exceptional payments can be immediately quarantined for further review, while unexceptional payments process normally. Learnings and Takeaways CFOs and treasurers require a more complete set of payments controls to mitigate modern fraud threats, including artificial intelligence/machine learning and APIs. Organizations have three common areas that make them vulnerable to fraud: technical systems, processes and human error. Modern threats include business email compromise scams, check fraud, wire fraud, deepfake voice fraud, and ransomware. Technologies that can be used to combat fraud include pre-defined fraud detection rules; real-time screening, alerts and notifications; fraud prevention workflows; reporting and audit trails; and payment hubs. As the threats continue to evolve, treasury and finance teams need to heighten their awareness. Interested in learning how to build out payments fraud detection and incident response programs to maximize protection end-to-end? Check out this on-demand webinar. Cybersecurity and fraud experts from Corelight and Kyriba outline fraud defense strategies.

Remote Treasury Management System implementations are possible with proper planning, organization, and understanding. Depending on the scope and stakeholder groups involved, they can also be complex with multiple moving parts. The organizations that have the...

Remote Treasury Management System implementations are possible with proper planning, organization, and understanding. Depending on the scope and stakeholder groups involved, they can also be complex with multiple moving parts. The organizations that have the most success with remote implementations tend to: Understand the general challenges of a remote workforce, what works, and what does not Utilize a standard implementation methodology to streamline the process Recognize and appreciate the benefits of conducting the implementation remotely As you can see, both effective and efficient communication and a systematic way of conducting the implementation play an important role in every successful remote TMS implementation. By keeping these key points in mind during the implementation process, treasury is well positioned to deliver on its objectives and ensure the company is better positioned to realize its goals. The General Challenges of a Remote Workforce (What Works and What Does Not) Understanding common challenges to a remote implementation helps the project team stay well positioned and on schedule. What follows are a few frequent concerns for remote teams and solutions for how to best tackle them. Communication Styles One of the most vital aspects of success in our relationships, both personally and professionally, is communication. With a dispersed project team and multiple organizations and people involved, how effectively the project team communicates can make or break a remote TMS implementation. Otherwise, ideas don’t get shared or transferred and collaborations suffer. The earlier you establish a communication style, the better. BEST PRACTICES: Acknowledge Differing Communication Styles: Not everyone likes to communicate the same way – while you may prefer to receive an email for certain items, others like to talk through each task. Familiarizing yourself with everyone’s habits and preferences from the onset can ensure the project runs smoothly while warding off potential conflict. While you may be able to figure this out through trial and error, you can save time by asking about communication preferences. That way, going forward, you know whether to utilize instant message, email, or pick up the phone to get the quickest response. Beware of Digital Communication Limitations: When you are not working face-to-face, body language is missing from your interactions. Strive to over-communicate, being conscious of how your intended message might be received. Lack of Visibility Naturally, as you are not working in an in-person environment, it can be difficult to accurately assess what your project team is doing at all hours of the day. Everyone has day-to-day responsibilities in addition to project work, and are likely balancing multiple implementations at once. With so many competing priorities, it can be difficult to reach your team and easy to make assumptions about misunderstandings. BEST PRACTICES: Commit to a Calibrated Schedule: Have team members denote if and when they are out of the office during the day so everyone is aware of availability. To effectively combat lack of visibility, it is important to return to the basic purpose of communication - making sure everyone is in the loop. Limit the number of emails back and forth and try to consolidate daily questions into one email. For example, start an email at the beginning of the day and add to the email as you have questions before finally sending at the end of the day. This helps everyone keep their focus instead of fighting off multiple emails throughout the workday. Set communication protocols upfront. For instance, if an item needs immediate assistance, put “High Priority” in the subject line. For other lower priority inquiries, set a response time that works for the team. Utilize standardized reporting. Project milestones will be determined in the project planning phase based on the rollout strategy. The project manager will produce the following project management deliverables:– Detailed Implementation Project Plan – Periodic Project Status Report – Periodic Project Status Meeting – Open Issues Log – Risk Management Log – Meeting Agendas and Meeting Minutes Project Management In the office, you can easily collaborate in conference rooms and by making rounds in the building. In a virtual setting, you are only as collaborative as the tools you have will allow. BEST PRACTICES: Explore Different Tools: In the existing technology landscape, we are lucky to have a variety of tools available at our fingertips. For example, video software like Google Meet and Zoom helps with collaboration, ProjectPlace helps define and oversee tasks being completed, and Dropbox enables a way to collaborate on files and store them in a place everyone can access. Google Hangouts, Slack, and Microsoft Teams are additional options to help your virtual office mimic in-person communication and availability. No matter what you are using, determine your toolkit at the start of the project and ensure everyone knows how to use each platform. Define Roles and Responsibilities: Having clearly defined roles and responsibilities facilitates clear communication and ensures everyone understands their role on the project. During the course of the implementation, the Customer will need to dedicate certain resources in order to help ensure the success of this project. The following table outlines sample project team members required. TMS Project Team Role Responsibilities Project Manager Primary point of contact during the entire remote TMS implementation. Ensures project is on track; monitors tasks and Customer deliverables. Schedules all TMS project resources and manages the performance of those resources. Manages the project budget and the change management process. Works with Customer project manager to schedule and facilitate project meetings. Identifies project risks and manages risk mitigation activities. Manages issues logs and tracks resolutions. Leads project status meetings and prepares regular updates to the status document and action items log. Functional Consultant(s) Subject matter expert during the remote TMS implementation. Leads solution configuration design, blueprint sessions, system configuration, standard report configuration and execution of project plan. Delivers training session and provides knowledge transfer to the Customer. Primary support for user acceptance testing and go‑live preparation. Technical/Connectivity Consultant Develops integration to facilitate connections with banks, external and internal systems as necessary within the scope. Supports initial testing and trains Customer staff for on-going operations. Below is a sample Customer team. The actual number of contacts and additional roles, if any, should be discussed at the onset of the project, ideally during the kick-off call. The Customer will be responsible for making sure the appropriate resources are available for the implementation. Customer Project Team Role Responsibilities Project Sponsor Executive Stakeholder, accountable for overall project success. Project Manager / Project Lead Ensures project is on track; monitors tasks and Customer deliverables. Schedules all Customer resources and manages the performance of those resources. Works with project manager to manage scope and the change management process and schedule and facilitate project meetings. Identifies project risks and manages risk mitigation activities. Contributes to action items logs and tracks resolutions. Provides regular updates and status on action items to the implementation manager. Subject Matter Experts (i.e. Cash Manager, Funding and Investment Manager, Accounting) Provides knowledge transfer on current process and future state to the implementation team. Assists in configuration and validation of the modules in scope and report development. Develops testing scenarios for user acceptance testing. Trains other staff members on team as required. Administrator Responsible for understanding the entire workflow of the system and assisting with training additional staff post-implementation. Responsible for system and user security permissions. Maintains functional knowledge of the entire application. Capable of providing ‘help desk’ type support to user community. Maintains workflow processes and updates assignments as required internally. Acts as point of contact for all system related issues requiring internal support. IT Team Works with team to set up integration of import and export files. Project Complexity Because remote project teams often sacrifice the convenience of having the team in one place, keeping the project as simple as possible is an additional way to minimize conflict, challenges, and roadblocks. A standardized methodology will help ensure the project is on the right track. BEST PRACTICES: Create a Road Map: Determine how to best configure the TMS to meet the defined requirements and processes while taking into account industry best practices. The most successful system design projects occur when there is a holistic understanding of both the business requirements and the TMS capabilities by all participants in the project, including business and technology stakeholders, as well as third-party vendors involved in the implementation. A sample step-by-step guide is below, broken up into achievable parts. Phases of a Successful Project While every project team’s roadmap may be different based on experience and complexity, all successful projects will have the following phases. Prior to the pandemic, it was customary to conduct the remote TMS implementations in a hybrid format, where most of the implementation was conducted remotely with key components in-person. If possible, it is recommended to have those interactions in-person, especially for the blueprint session to learn the cadence of the team. Having strong communication practices with a solid methodology is key to your project’s success. 1. Project Kick-Off The purpose of the kick-off is to formally introduce the TMS and Customer implementation teams and review the project approach to the project scope on a formal call. For remote teams, this step is critical to the project’s success as it sets expectations and is the first chance for clients to familiarize themselves with the project team. A successful kick-off call will discuss the following topics: Roles and responsibilities for the remote TMS implementation and customer project teams Confirmation of project scope Purpose, format, and schedule It is best to provide a clear “blueprint” questionnaire that asks general questions to help analyze existing processes. Provided by the implementation team, this helps understand current state to better match the project to the future state vision. Referential workbook Schedule an additional meeting to review expectations in detail. The referential workbook is the basis of the Kyriba system and contains the core referential data, such as account numbers, users, and bank locations essential to the completion of the project. Bank connectivity and technical analysis preparation Discuss bank communication, Customer protocols, and technical architecture. This includes the Customer contacting its banks for implementation and connectivity purposes. Determining the database name and initiating procurement of Kyriba environments will help the project run smoothly. 2. Blueprint Creating a project outline based on the blueprint questionnaire answers will help create a more detailed understanding of the required tasks in comparison to the project scope. The objectives of this phase are: To document and understand the functional and technical requirements of the implementation based on Customer’s treasury process To understand future state process and make key design decisions based on best practice recommendations by the implementation team To conduct a fit/gap analysis To build out project plan with implementation roll-out strategy and go-live milestones 3. Configuration The purpose of a successful configuration is to build and validate the functional requirements document in line with the Kyriba system. The connectivity consultant works on establishing the bank connections for bank statements and payments along with any interfaces. As the system is being configured, create various checkpoints with the Customer to ensure the configuration is in line with their requirements. As a best practice, the Customer should be involved in the validation process and provide any feedback for changes before user acceptance testing can begin. 4. Training The training stage provides key user training to the Customer to empower them to conduct user acceptance testing and prepare for go-live. The Customer should designate core users who will attend the training sessions and fully participate in the training exercises. The implementation team must provide a detailed agenda prior to the training session and the Customer will be responsible for ensuring appropriate users who will carry out the functions in the system and attend the sessions. 5. User Acceptance Testing (UAT) and Parallel Testing The UAT stage allows Customer users to test production of the fully configured Kyriba system to ensure all requirements have been met. The Customer will examine each module in scope, as well as the full process flow during UAT. The Customer is responsible for building the UAT test cases and will lead the testing of all test cases with assistance from the implementation team. Key tasks to perform here are the log of open items, assessment of impact to go-live, and agreement on resolution. 6. Preparation and Go-Live The final stage is preparing the Customer to move to Kyriba as the system of record and operate in a go-live state. Any final system configurations will be validated and users will operate Kyriba as their day-to-day system. As a best practice, a formal sign-off of golive is asked from Customer’s project team. While not a part of every project, oftentimes new information may surface that necessitates a change in requirements. These changes may impact project scope, estimated level of effort, project timeline or product features. Should you need to reexamine project scope, a Change Order may result in adjustments to the project schedule and/or budget. Benefits of Remote TMS Implementations By implementing the best practices outlined above, your project will run smoothly. Below are a few of the many benefits you can actualize in remote implementation. 1. Improved Work/Life Balance It is rare that consultants work on just one project. More than likely, they are juggling multiple clients, modules, and implementations at once. By reducing the commute time to a traditional office, consultants have more capacity to answer queries, greater availability for configuration, and increased flexibility to live their lives – a win-win for both the Customer and implementation team. 2. Faster Response Times Mobile teams typically have greater access to project technology and are not restricted to accessibility from the office. With phone apps and 24/7 connectivity, Customers and teams likely won’t have to wait long to get a response to their query. Oftentimes, this moves the project along quickly as you minimize the amount of time it takes to progress to the next step, especially if there is a lingering question that needs to be answered before additional progress can be achieved. 3. Higher Productivity and Motivation With many companies shifting to virtual workplaces, we are also seeing a reevaluation of workday tasks to mitigate distractions. Collaboration is essential, yet not all collaboration is necessary. With competing priorities, many leaders are recognizing that granting teams the freedom to self-organize is actually increasing productivity and boosting morale. 4. Reduced Cost Committing to remote work often means a reduction in cost; removing the need for office space allows for significant savings, especially as budgeting no longer needs to account for travel. For the customer, this means they can achieve more for less money – whether they’d like to implement more modules, or instead just conserve funds for additional process improvements. As with any project, proper planning is key. As you prepare for your remote implementation, keep this information in mind to ensure a smooth remote TMS implementation. Want to learn more about how to prepare for remote treasury management system implementations and avoid project risk? Check out this webinar.

Modern treasurers face numerous challenges due to the evolving financial landscape and the ongoing pandemic. Disruptions such as global supply chain issues, staffing shortages and fraud attacks have caused organizations to re-evaluate their processes...

Modern treasurers face numerous challenges due to the evolving financial landscape and the ongoing pandemic. Disruptions such as global supply chain issues, staffing shortages and fraud attacks have caused organizations to re-evaluate their processes to be able to survive and continue to operate as efficiently as possible.

Applying Principles of Quality and Efficiency from the Manufacturing World to Treasury and Finance to Achieve More Efficient FX Risk Management. One of the principal tenets of Lean is a focus on customer value. Activities that do not have a direct bearing on the value of the product or end result are targeted for elimination. Our customers, using our platform and Lean principles work to transition their foreign currency related systems and processes to create greater automation and efficiency.

The quantified negative currency impact for North American and European companies has continued to impact MNCs negatively to the tune of $27.87 billion for Q3, 2021 and is increasing adversely when comparing the quarterly results of the past few years. The need for a process that mitigates foreign exchange risk becomes even more apparent when organizations experience impact spikes from volatility due to the global COVID-19 pandemic. Manufacturers first adopted Lean principles and processes where they needed them most: on the manufacturing floor. Revisiting Henry Ford’s flow production assembly line model, Kiichiro Toyota created the Toyota Production System (TPS) model, which propelled Toyota and the Japanese industry into a new age of productivity and global competitiveness. Toyota’s ideas have since been widely embraced and translated into concepts like Lean production and Six Sigma, who are common in global manufacturing. Companies and consultants who have demonstrated success using these approaches to eliminate wasteful processes and improve quality have extended them to other industries and other disciplines. While Six Sigma is a very scientific rigor around quality control, Lean looks to produce more with fewer resources and to help processes flow more smoothly. Lean, which tends to be less dogmatic than Six Sigma, describes a process for improvement and a set of workplace best practices. The management techniques include taking a long-term view of the business, as well as active mentorship of staff at all levels. There is great potential for companies who apply Lean and TPS principles to improving financial processes, as the guiding principle of Lean directly applies to the challenges faced by organizations trying to manage their FX risk. With little standardization and tedious, manual processes, there is a great opportunity for companies to focus more on value and eliminating waste. However, Lean is more about fixing a specific process. Lean practitioners outside Japan tend to focus heavily on specific analysis tools and omit critical elements of the best practices and management techniques. For Lean implementations to be successful, companies need to go beyond a specific project approach and integrate Lean as a guiding principle so that it can lead to continuous improvement. Applying Lean to Foreign Exchange Risk A growing number of companies in the U.S. are beginning to take a closer look at the principles of Lean and how they can help improve the costly, inefficient and often ineffective FX exposure management processes typical of most organizations today. By taking a methodical and disciplined approach, they are able to significantly reduce the time and effort spent aggregating, validating, and analyzing foreign currency data to make better risk mitigation decisions. Equally important, they create visibility to the entire process and support an environment that makes continuous improvement possible. Companies of all sizes with FX exposures can benefit from extracting and compiling their exposures from various systems whether they be ERPs, procurement or billing systems and applying Lean methodologies and processes to ensure hedging activities and other related processes like trading, confirmations, and settlements are all done as efficiently and effectively as possible with appropriate policies and procedures applied. Focus on Value and Eliminate Waste One of the principal tenets of Lean is a focus on customer value. Activities that do not have a direct bearing on the value of the product or end result are targeted for elimination. Our customers, using our platform and Lean principles work to transition their foreign currency related systems and processes to create greater automation and efficiency. Finance and IT must be partnered and work to assemble project teams with representatives from finance, treasury, and IT along with strong project sponsors to set sights on creating greater value and eliminating waste across the overall foreign exchange exposure management process. Finance and treasury, supported by IT, must methodically go through and aggregate transaction data from their ERP or other related systems to identify exposures and, in turn, deliver the capacity to make appropriate hedging decisions to mitigate risk. Pulling together regional experts and business unit representatives or various department leaders is a significant investment of resources, but it gives companies undergoing the exercise of streamlining FX and other processes exactly what was needed to gain visibility of the entire process, end to end. These cross-functional reviews often result in identifying manual processes required to pull together the data and validate results through the use of spreadsheets to calculate exposures. Once identified wasteful, manual processes are mapped out, it’s important to take the appropriate steps and have commitment from your executive leadership team and stakeholders to make the changes. For instance, the use of automation can cut the number of steps required to go from data aggregation to risk mitigation decision in half, while delivering greater transparency to the process as a whole. Assessing the Whole Value Stream Another tenet of Lean involves taking a holistic view of any process, considering the impacts and dependencies of other processes, both up and downstream. Manufacturing plants designed along Lean/TPS principles allow leadership to witness the entire process, end-to-end, from any place on the factory floor. To be effective, that same sense of transparency can be applied to the foreign exchange exposure management process. For many companies, finance is responsible for aggregating foreign currency transaction data from their ERP systems, which is then typically passed to treasury for appropriate risk management; whether it’s simply allowing the risk to reside on the balance sheet, as part of a natural hedge, actively managing the risk through a derivative and identifying how the impact to the income statement should be accounted for. Automation creates the bridge between data aggregation, validation, and analysis, so that both finance and treasury have visibility to detail and summarize views of the company’s currency exposures. As a result, discrepancies and potential errors become easier to spot, with instant visibility by every stakeholder in the process. That visibility extended beyond Treasury, Finance, and IT to executive management, who could gain a better understanding about how business practices impacted the company’s exposure to foreign currency risk. Automating FX processes illuminates underlying business practices driving overall financial practices and put a new lens by looking at the big picture. Strive for Continuous Improvement: Momentum Building The concept of continuous improvement is a key component of Lean; one that prods companies to go from one-time process improvement initiatives to making customer value and waste elimination a way of doing business. Companies benefit most from implementing software tools to support their new process workflow and provide greater transparency, achieving ongoing improvements requires continuous communication, teamwork, and leadership. As part of the analysis of waste elimination from FX exposure management processes, it is important to quantify the time saved on non-value-added activities and defined how that time/effort would be reapplied to creating additional value. In this way, Lean practices have the potential to build and “snowball” from one process to the next, where the more time saved and value added, the greater the opportunity to save more time and create even more value.   Want to learn more about how to improve your FX management process? Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

Real-time or instant payments initiatives are proliferating all over the globe, but corporate adoption has lagged thus far. To justify investment in real-time payments finance and treasury departments need to define clear use cases...

Real-time or instant payments initiatives are proliferating all over the globe, but corporate adoption has lagged thus far. To justify investment in real-time payments finance and treasury departments need to define clear use cases for them. This new eBook, Making Real-Time Payments a Reality for Finance and Treasury, explores the recent push for real-time payments around the world, as well as the potential that these payments have for businesses.

During these times of accelerated growth and change, interest in supply chain finance solutions that can provide thorough evaluation and analysis is rapidly increasing. The Supply Chain Finance (SCF) & Cash Conversion Cycle (CCC...

During these times of accelerated growth and change, interest in supply chain finance solutions that can provide thorough evaluation and analysis is rapidly increasing. The Supply Chain Finance (SCF) & Cash Conversion Cycle (CCC ) Analyst Report will cover a variety of solutions that address pain points in the cash conversion cycle.

In today’s ever-changing business environment, there are several key factors that are driving change across the treasury aggregation landscape. The Treasury Aggregator Analyst Report covers the pain points driving this technology.

In today’s ever-changing business environment, there are several key factors that are driving change across the treasury aggregation landscape. The Treasury Aggregator Analyst Report covers the pain points driving this technology.

The latest Strategic Treasurer Analyst Report provides a glimpse into the current TMS space and outlines the primary benefits of a treasury management system.

The latest Strategic Treasurer Analyst Report provides a glimpse into the current TMS space and outlines the primary benefits of a treasury management system.

With many treasury teams engaging in remote work, remote implementation of critical projects has become part of the new normal. For treasury teams, the best practices around remote implementation have come into sharp relief...

With many treasury teams engaging in remote work, remote implementation of critical projects has become part of the new normal. For treasury teams, the best practices around remote implementation have come into sharp relief very quickly. Following this new playbook enables treasury teams to work from anywhere, while offering best-in-class levels of efficiency and automation. Yes, remote implementations of treasury systems aren’t new, but concerns and reservations have amplified since the pandemic, and leaders and delivery teams need to know how to address any issues in the process. In this easy-to-read playbook, co-produced with Clearsulting, the finance transformation consulting firm, treasury team members will overcome reservations about remote work with a surefire plan, featuring: Implementation best practices Taking advantage of technology Essential ingredients and stages of implementation Optimizing the benefits of remote implementations In this eBook You will learn about the common concerns leaders may have about remote implementations, and how these can be overcome by following best practices. You will also learn about the role technology can play in keeping remote delivery teams productive and engaged – and how to optimize the benefits of a remote implementation. Despite the disruption brought on by the COVID-19 pandemic, companies have not been deterred from implementing new treasury systems. In fact, the rise of working from home has underscored the importance of solutions that enable treasury teams to work remotely, while offering the greatest possible levels of efficiency and automation. In particular, an over 667 percent rise in fraud (according to Barracuda Networks) and the growing need for visibility into liquidity have prompted some treasurers to accelerate their implementation time lines. But what about the implementation process itself? Traditionally, new solutions have often been adopted via an on-site implementation process, complete with face-to-face training – all of which may currently be unfeasible because of lockdown conditions and social distancing requirements. The answer is a well-structured remote implementation process. Remote implementation is not a new phenomenon: even before the COVID-19 crisis, some vendors already provided the option of managing implementations remotely when needed. Nevertheless, leaders who do not have experience of remote implementations may have reservations about the lack of face-to-face contact and may question whether critical deadlines can be met. For delivery teams – which typically include the vendor, internal team members, and any external consultants used – there is plenty that can be done to ensure time lines are fulfilled. In addition, harnessing best practices and available tools, including regular collaboration, secure file-sharing and videoconferencing solutions, can facilitate regular, productive communication, while also keeping the team productive and engaged. In fact, a remote implementation can deliver certain benefits above and beyond an on-site implementation, including cost savings and productivity gains. Remote Implementation: Common Concerns For some leaders, the prospect of implementing a system remotely brings several concerns about the possible pitfalls, from the lack of face-to-face contact to delays to the project time line. Here are some of the concerns most commonly expressed by leaders: Lack of face-to-face collaboration. Leaders are often concerned that their delivery teams will work less efficiently without face-to-face communication. At the same time, delivery teams may feel that leaders lack an understanding of how effectively they are working. Limited access to information. When carrying out an on-site implementation, it is usually easy to access physical documentation or speak to someone in the next office about a query. In a remote working environment, this is more difficult – so leaders may be concerned about the added time and effort needed to locate information from team members. Miscommunication. When working with global teams, time zone differences, cultural differences and language differences can sometimes result in miscommunication, particularly when emails and instant messages are taken out of context. Interpersonal challenges. On a similar note, it can be harder to interpret other team members’ tone and body language when working remotely. Meeting deadlines. Some managers may have reservations about the timings of a remote implementation, suspecting that working remotely will delay the project time line and make it harder to meet critical milestones. These are valid concerns. A poll during a recent webinar by Kyriba and Clearsulting found that 42 percent of participants had been affected by a lack of personal interaction impacting their work or projects during the past six months, while 18 percent cited interpersonal challenges. However, with the right approach, these pitfalls can be avoided, and a successful remote implementation achieved. Implementing Best Practices While remote implementations are not without their challenges, these can be addressed by adopting best practices. Companies should consider the importance of: Establishing the rules of engagement at the outset Communicating extensively Scheduling regular huddles Developing and sticking to a project plan Encouraging and supporting the team Rules of Engagement It is important to establish expectations for communication and collaboration from the outset. This should include spelling out how often people are expected to communicate, and which channels should be used for different types of contact. For example, videoconferencing could be used for daily checkins, while instant messaging services could be used for urgent queries or general conversation. Also important is establishing any best practices for the chosen communication channels. For example, when using videoconferencing it is good practice to advise people to stay on mute when they are not talking and to make sure everyone on the video call gets the opportunity to have their voice heard. Communicating Extensively Effective communication is more important than ever in a remote environment. This includes making sure that everyone involved is aware of the current state of play, as well as updating the project plan with the current completion status. It is also worth noting that good communication sometimes means seeking more detail from other people. If the answer to a question is a straightforward ‘yes’ or ‘no’, it can be helpful to seek elaboration in case any nuance is missing. Schedule Regular Huddles Another element of effective communication is to schedule regular huddles to address any knowledge gaps and make sure everyone knows what they need to accomplish and when. Sometimes this will mean arranging meetings for the whole group – but sometimes it will mean one-to-one meetings with individual team members. Huddles may also include informal conversations, which can help to build team camaraderie. As well as keeping focused on project time lines, it is also important to remember that team members are individuals who may have other obligations while working from home, such as child care. As a result, some people may need more flexibility over the hours they work during the day – and any individual requirements should be communicated to the team. Developing the Project Plan Developing – and sticking to – a project plan, and tracking progress on key milestones, is essential to the success of any project. To achieve this, companies should make sure that everyone knows which assignments they have, when they are due, and what information they will need to complete their tasks. A small group should also have ownership of the project plan, rather than having too many cooks in the kitchen. Encourage and Support the Team Finally, working remotely can be an isolating experience – which makes it important to check in regularly with other team members to make sure everyone is engaged. Actions such as promoting positivity, and measuring performance rather than perceived presence behind the computer screen, can also help to build a culture of trust and empower the team. Further, during remote work, teams are encouraged to take mini breaks, take a walk, take time to disconnect from technology, or socialize with family or neighbors. Taking Advantage of Technology There is no question that technology plays a critical role in keeping delivery teams engaged during a remote implementation. The use of these technologies has quickly ramped up in recent months. In a poll taken during the webinar, 98 percent of participants reported an increase in their use of technologies such as project management tools, collaboration tools and video chat. Technology can help in four key areas: Organization. Tools like Smartsheet and Microsoft Project can help the team track and celebrate milestones, as well as monitor any outstanding issues, so people are better-informed during status calls. Collaboration. Simple communication tools such as Skype, Teams and Slack can be used to chat, keep notes and deal with any ad hoc requests, thereby reducing the need for meetings. Face-to-face interaction. Research has shown that 80 percent of communication is nonverbal, and while meeting in person may not be possible during a remote implementation, face-toface interaction using videoconferencing technology like Zoom, Teams and Skype is the next best thing. Equally, though, it is important to make sure meetings are not too long, as people can lose focus. Secure file-sharing. During an on-site implementation, it may be straightforward to access the local network. But in a remote implementation, different methods are required to share files. When approved by IT, the use of cloud-based secure filesharing can save time, avoid duplication and support real-time collaboration. Essential Ingredients of a Remote Implementation As with an on-premises implementation, it is important to consider whether the following critical items are in place before embarking on a remote implementation: Project Management Executive sponsorship Has this been secured? Project management How much is needed to keep the project on track? Sufficient budget Is enough budget in place? Realistic time lines Can the team realistically meet the agreed time lines? Resources Internal resources Do they have the required bandwidth for the project? Key stakeholders When do they need to be brought into the project? Design and Build Design planning Which interfaces will be needed with existing technology? Reviewing inefficient processes Can inefficient processes be improved rather than replaced? Sufficient testing How much testing is needed to iron out any issues and which teams? Documentation What documentation will be needed to communicate information about file formats and configuration to other users? Stages of Implementation The implementation process includes the following stages, each of which will need to be tailored for a remote implementation model: Discovery. Using videoconferences to define what the project is intended to solve, as well as identifying any quantitative data that will be needed to configure the system. Developing a road map. Prioritizing modules that will be included in the implementation strategy and creating an implementation road map. Design and configuration. Gathering static data and creating a document that outlines how the solution will be implemented; defining bank connectivity and workflow configuration; gaining approval for design decisions. Build. Configuring each module based on the company’s business requirements; carrying out core user training via video; performing a quality-assurance review. Testing and validation. Testing integration points and interfaces; performing and documenting system integration testing (SIT) and user acceptance testing (UAT). Preparing for go-live. Building a communication plan and preparing any necessary documents. Go-live. Executing go-live plans; ensuring documentation matches everything needed to sustain the benefits of the new system. Operation. Performing a project postmortem and documenting the lessons learned; identifying opportunities for continuous improvement. Optimizing the Benefits Following any implementation, it is important to understand the improvements that have been achieved. This should include taking a pre-implementation snapshot of the company’s liquidity and risk processes, and measuring these again after the implementation to demonstrate all the qualitative and quantitative improvements that resulted, such as interest expense savings, bank cost savings and productivity gains. Benefits of Remote Implementation Alongside the benefits to be achieved by adopting a new system, it is also important to note that a remote implementation is not simply a series of challenges to overcome: This approach can also bring a number of benefits in its own right. For one thing, travel expenses account for a significant portion of the total cost of an on-site implementation – but these costs are saved during a remote implementation. And with many surveys finding that employees are more productive when working from home, a remote implementation can harness those productivity gains. In addition, when used effectively, the use of technology such as videoconferencing can also help employees feel more included, valued and celebrated. Reaping the Rewards While the COVID-19 pandemic has brought tremendous challenges for economies, businesses and individuals, one silver lining is that companies are now seeing the benefits of remote working. In fact, many have said that they wish they had invested sooner in digital technology and cloud systems. There is also a greater focus on achieving more automation in processes, with companies now looking at how they can create the capability to achieve transformation and automation across their businesses. Conclusion The prospect of a remote implementation might seem daunting for companies that have previously opted for on-site implementations. But with the right approach and tools in place, delivery teams can keep on track with key milestones and remain motivated and engaged – particularly when working with vendors that already have extensive experience with remote implementations. The resulting implementation process may be faster and cheaper than the equivalent on-site implementation. To ensure a smooth implementation process, delivery teams should aim to take advantage of best practices, from establishing the rules of engagement at the outset to tracking the project’s progress as closely as possible. Key to this is the use of collaborative tools, videoconferencing services and file-sharing solutions to facilitate close communication and overcome the obstacles that a remote approach can present. By adjusting each stage of the implementation process to the remote working environment, companies can gain the full benefits of their new system – and may even find they are better positioned to embrace new ways of working elsewhere in the business. Want to learn more about how to prepare for remote treasury management system implementations and avoid project risk? Check out this webinar.

Libor has been used by corporate treasury departments for 30 years, amassing trillions of exposures within the financial system. The Libor transition to Risk Free Rates is a global event with an unequivocal 2021...

Libor has been used by corporate treasury departments for 30 years, amassing trillions of exposures within the financial system. The Libor transition to Risk Free Rates is a global event with an unequivocal 2021 end date that is drawing ever closer. While business and the wider market have been provided with new overnight rates, they have not been told how to implement them, migrate to them or deal with the consequences of using the new rate mechanisms. Much has been left open to choice or for a wider market consensus to arise, which has generated uncertainty and resulted in market participants looking to others to make decisions. Without clear guidance, corporate treasury departments have been left to work out a path for themselves. Waiting for greater clarity has been an attractive option, but with market-wide resourcing expected to be stretched thin in 2021, risks also arise from being at the end of the queue. The increasing numbers now pro-actively looking to put plans in place are having to make judgement calls and foresee issues on complex financial topics, the consequences of which will become clearer over time. This Treasury in Practice guide intends to support those choices, providing the latest information on the expected changes in the market that will be crucial in helping corporate treasury departments gain knowledge and prepare for the transition from Libor while protecting their businesses and ensuring positive outcomes for their treasury portfolios. Topics include: Understanding why Libor is being replaced Suggesting where to look for Libor exposure within your organization Providing guidance on SOFR and Ameribor Libor replacements Discussing the latest thinking in regards to migration, fallbacks and spread adjustments Introduction In 2017, the UK Financial Conduct Authority (FCA) announced that it no longer plans to compel banks to submit London Interbank Offered Rate (Libor) quotes past 2021. Once that happens, Libor will lose its status as the global interest rate benchmark and that title will likely be taken over by an Alternative Reference Rate (ARR). Needless to say, this shift has major implications for treasury departments, come 2022. In this Treasury in Practice Guide, underwritten by Kyriba, we will provide a detailed look at why this once trusted benchmark rate got to this point, which rates will be taking its place in 2002, what actions regulators have taken to being the transition, and how treasury departments should prepare. Libor will soon be a thing of the past. This is your opportunity to plan for a world without it. “Central banks set up working groups like the ARRC to come up with determinations and answer two questions. One, could they find a replacement that did not employ expert judgment, but that was entirely reliant on transactions? Two, how would we get from Libor to that alternative reference rate?” Why Libor is Ending Regulators began pushing for a transition away from Libor following the 2012 revelation that multiple financial institutions had manipulated the rate in order to improve their positions among other banks and clients. But while one could argue that the scandal was an outlier that is not truly representative of Libor’s potential, in actuality, it revealed key flaws inherent in the rate itself. Following the scandal, the International Organization of Securities Commissions (IOSCO) established a set of principles for determining a good benchmark rate, and Libor doesn’t fit that criteria. For example, a key principle is for benchmark rates that they be “anchored by observable transactions,” rather than based on so-called “expert judgment” by the banks. “In most instances, Libor is based on expert judgment. On average, less than 30 percent of submissions are based on actual transactions,” said Ming Min Lee, partner with Oliver Wyman. Furthermore, the transactions underlying Libor submissions—unsecured wholesale term lending to banks—are no longer active following the financial crisis. “Banks have largely moved away from interbank lending to something that is more stable,” Lee said. “So that’s a big change and we don’t expect the transactions that used to underpin Libor to come back.” In remarks made during the Bank Policy Institute’s Credit-Sensitive Benchmark Symposium in September 2020, Nathaniel Wuerffel, Senior Vice President of the Federal Reserve Bank of New York, explained that that a “robust” benchmark rate would be “based on a market that is deep and broad enough that it does not dry up in times of stress, is resilient even as markets evolve over time, and cannot easily be manipulated. By ‘deep and broad,’ I mean that the market has enough volume and diversity of transactions to serve as the bedrock for the trillions of dollars of financial contracts that will reference it.” When assessed against that piece of criteria, it becomes clear why Libor is inadequate, Wuerffel explained. “Over the four decades since LIBOR was formally developed, the wholesale funding market that it seeks to measure has withered,” he said. “The Global Financial Crisis accelerated the decline of Libor’s underlying market, as banks found more stable ways to fund themselves. With so much economic value riding on a thin market, the incentive to manipulate Libor increased and—as we all are painfully aware—such exploitation ultimately became a reality.” Impact on Treasury There is more than $200 trillion in outstanding USD Libor-based contracts. The majority of existing exposures to Libor are slated to mature before 2022, but not all. According to the New York Fed, in the U.S., approximately $36 trillion in notional outstanding will not mature before Libor is set to end, assuming there are no new Libor-based issuances. While most of that exposure is in interest rate derivatives, longer-dated positions in other asset classes are sizeable, such as an estimated $4.7 trillion in consumer and business loans. Most corporate treasury departments have begun to consider their options, but those that haven’t yet are quickly running out of time. Finding an alternative rate is critical because it will affect funding costs. And since the fallback rate would be higher than Libor, treasury departments will want to look for a comparable or cheaper rate. Lee pointed out some ways that treasurers could be impacted by the shift, the most obvious being floatingrate debt instruments, and committed lines with banks. But there are other areas that practitioners might not be thinking about, such as intercompany funding agreements and late payment penalties that could be Libor-based. Libor could also be used in a corporate’s systems and processes. “Libor has been around for 30 years,” Lee said. “If you have a billing or contract management system for your supply chain management activities that has an implicit interest rate built into it, it wouldn’t surprise me if Libor is the reference rate.” Treasurers also need to consider that Libor is currently managed by one administrator across five currencies and a range of tenors. “Multinational corporations will need to care about the evolution of the alternatives for all five currencies, each on its own timeline,” Lee said. “In all likelihood, we will have a multitude of conversion approaches; not just one.” Preparation Tip Understand where Libor exists within your organization. Take note of all your borrowing and funding commitments that are dependent upon Libor. Consider payroll loans, supply chain financing, factoring, asset-based lending, in-house banking, etc. Figure out what your spreads and maturities are, what you’re going to need to refinance your contracts, and what the results of triggering existing fallback language will be. “Not only will you have to manage the adjustments that the banks notify you of on a daily basis, but you’ll have to keep track of it yourself because you’ll need to be much more careful about how rates are changing and what the volatility is in rates so you can continually adjust your funding mix. How is the daily adjustment to SOFR relative to the weekly or monthly adjustment to Libor?” SOFR: Libor's Anointed Successor Over the past several years, markets have begun to craft alternative rates that would effectively replace Interbank Offered Rates (IBORs). In the United States, the Fed formed the Alternative Reference Rates Committee (ARRC), a special group of private market participants, to choose a new benchmark rate. “Central banks set up working groups like the ARRC to come up with determinations and answer two questions,” said Tom Wipf, vice chairman, institutional securities for Morgan Stanley and chair of the ARRC, in a session at AFP 2020. “One, could they find a replacement that did not employ expert judgment, but that was entirely reliant on transactions? Two, how would we get from Libor to that alternative reference rate?” The ARRC has evolved considerably over its existence, assembling corporates, regional banks, and trade groups, and puts them in the room with all the major U.S. regulators. “So it’s a very large and diverse group that in fact banks now sit in the minority when we look across the entire spectrum of the ARRC,” Wipf said. “And we have a set of specific working groups who address particular parts of this market.” The ARRC ultimately selected the Secured Overnight Financing Rate (SOFR) for U.S. dollar derivatives and other financial contracts, and it is the heir apparent for loans. The ARRC has introduced a Paced Transition Plan with steps and timelines designed to encourage the adoption of SOFR. SOFR differs greatly from Libor, and that has major implications for corporate treasury. The ARRC noted that the rate has certain characteristics that could make it a vast improvement: SOFR is produced by the New York Fed “for the public good.” The rate is derived from an active and welldefined market, which makes it difficult to manipulate or influence. It is based on observable transactions, rather than dependent on estimates. SOFR is derived from a market that weathered the global financial crisis, and the ARRC believes that signifies that the rate can reliably be produced in a wide range of market conditions. Fed Chair Jerome Powell and Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission, said in 2018 that the choice of SOFR “resolves the central problem with Libor, because it will be based on actual market transactions currently reflecting roughly $800 billion in daily activity. That will make it far more robust than Libor.” But there are some other key differences between the two that are immediately apparent to a corporate treasurer. First, Libor is an unsecured rate at which banks purportedly borrow from one another—it includes a bank credit risk premia. SOFR, in contrast, is a nearly risk-free rate based on repo financing of U.S. Treasury securities; it’s not a purported rate like Libor. Second, SOFR is also currently an overnight rate only; it’s not a rate of multiple maturities. That could eventually change; the ARRC’s Paced Transition Plan includes the development of a term reference rate based on SOFR derivatives. But right now, they don’t exist. That could mean big operational changes for treasurers, who currently borrow at one month, three months, etc. For that period, Libor is fixed for them. With Libor, there was some amount of predictability, noted Joseph Buonanno, partner with Hunton Andrews Kurth LLP. “But now, they’ll have a SOFR rate that can change on a daily basis,” he said. “So not only will you have to manage the adjustments that the banks notify you of on a daily basis, but you’ll have to keep track of it yourself because you’ll need to be much more careful about how rates are changing and what the volatility is in rates so you can continually adjust your funding mix. How is the daily adjustment to SOFR relative to the weekly or monthly adjustment to Libor?” Buonanno believes that corporates will begin to hedge interest rate risk more frequently in the near future than they’ve traditionally done using International Swaps and Derivatives Association (ISDA) derivatives. “A lot of corporates already do that to comply with all the Dodd-Frank Act rules to continue to trade derivatives on an OTC basis,” Buonanno said. “But I think you’ll see greater use of derivatives in the future.” Treasury's Role Experts generally agreed that SOFR is the only viable alternative to Libor. “The $200 trillion-plus on Libor will move somewhere,” said Tom Wipf of Morgan Stanley and the ARRC, at the 2019 U.S. Chamber event. “So we have to think about where the safest place it is for it to land. [The ARRC thinks] the safest is overnight SOFR.” Unfortunately, the market as a whole is still apprehensive about SOFR. Ann Battle, head of benchmark reform for ISDA, has called on market participants to educate themselves on the rate, as there’s really only so much trade associations and regulators can do. “We’ve given the market the tools they need, now the market needs to learn how to use SOFR,” she said. The goal of SOFR is to be a durable, IOSCO compliant rate, Wipf said. The ARRC sees SOFR is the key pillar that could support the vast majority of current market activity. “We don’t want to do this again,” he said. “We want to do it once and do it right.” However, the ARRC isn’t going to be the one to move U.S. companies onto the new rate. David Bowman, special adviser of the Board of Governors of the Federal Reserve, stressed that the transition from Libor to SOFR needs to be decided by businesses. “Ultimately, we can’t dictate what prices you pay for your contracts or what rates you use in your contracts,” he said. “So this transition ultimately has to be up to the private sector. So we’re giving you one path that you can choose to go down if you’re going to transition.” Tess Virmani, associate general counsel and executive vice president of public policy for the Loan Syndications and Trading Association (LSTA), noted that what many stakeholders desire is a forwardlooking term rate. However, that may not actually be attainable without first moving to a rate like SOFR. “It’s starting to dawn on people that if everyone in the cash markets waits on a forward-looking term rate, we have a problem there,” she said. “If we wait, we may not get that rate.” Battle agreed. “The reality is, you don’t get a forward-looking rate based on SOFR until you have a robust market based on SOFR,” she said. “The derivatives market has to be based on SOFR for there to be a forward-looking term rate.” Preparation Tip Do your homework on SOFR. Learn as much as you can about this new rate and how it is performing relative to Libor. Figure out what that means for your own credit spreads, because credit spreads are based on risk, and each corporate is its own individual risk. Corporates need to compare themselves not only to businesses in the same industry, but also comparable benchmarks and credit spreads that they have historically tracked. Also consider how transitioning to it will affect you, focusing on the procedures that will have to be put in place to track SOFR on a daily basis. Contemplate whether or not you need to do a periodic analysis more often to optimize your capital structure. “In my opinion, we’ll see consumer lending shift first on adjustable rate mortgages. Before that can happen, I believe that GSEs need to provide guidance to lenders by including a new rate amongst the eligible rates for qualifying mortgages. To ensure the new ARM product is able to be financed without paying a high premium, it is an easy assumption that discussions are taking place.” Libor Fallback Language In the spring of 2019, the ARRC released its recommended fallback language for Libor. This language indicates the rate that corporates would fall back on, should Libor become unusable after 2021. The LSTA has issued a guidance on the Libor fallback language for syndicated loans. As the LSTA notes, many loans will be outstanding when Libor ceases, and thus it is “critical” to develop fallback language in any new loans and collateralized loan obligations (CLOs). In the United States, SOFR is poised to replace derivatives, and may also take over for loans, CLOs and floating rate notes. Since SOFR is secured and is expected to be lower than Libor, loans that fall back to it will require a spread adjustment to make the rate more comparable to the current benchmark, the LSTA explained. Fallback language is contingent on a “trigger”, i.e., an event that initiates the switch from Libor to a new rate (e.g., the benchmark administrator or the administrator’s regulator announcing that the benchmark will cease, or a public statement from the regulator that the benchmark is no longer representative). Fallback language also requires a replacement rate to take over for the current benchmark. TWO TYPES OF FALLBACK LANGUAGE The ARRC has developed two versions of fallback language for syndicated loans: The amendment approach: Following a trigger event, the bank group enables a streamlined amendment to replace Libor. The hardwired approach: Fallback language is built into the original credit agreement so that the loan can automatically convert to a new rate in the event that a trigger occurs. The LSTA noted that both versions have their pros and cons. The amendment approach takes advantages of loans’ flexibility and doesn’t lock market participants into a rate that doesn’t actually exist yet. But it also is subject to potential manipulation depending on the economic landscape at the time of the transition. Additionally, if thousands of loans need to be transitioned at the same time, this approach might not actually be plausible. Meanwhile, the hardwired approach would not be subject to manipulation and would likely be more workable en masse when Libor ceases to exist. But it requires participants to agree to a rate that does not yet exist. Thus the LSTA surmises that the market may choose the amendment approach until there is greater clarity on Term SOFR. Switching Ahead of Schedule The LSTA noted that corporates can switch loans to SOFR before the Libor cessation. For the hardwired approach, once it has been identified that a certain number of loans have used Term SOFR plus a spread adjustment, then the agent, required lenders and the borrower can switch to Term SOFR by affirmative vote. For the amendment approach, it can be determined that loans are being executed or amended to incorporate or adopt a successor rate and can elect to switch to that rate. The ARRC is encouraging market participants to switch to SOFR for cash products ahead of Libor cessation, and has even released a whitepaper to help them do that. That makes sense; again, SOFR is the ARRC’s preferred alternative to USD Libor. A treasury professional who wished to remain anonymous told AFP that the atmosphere lately has been leaning towards shifting financing away from Libor quickly—from syndicated business loans to consumer lending. “In my opinion, we’ll see consumer lending shift first on adjustable rate mortgages,” she said. “Before that can happen, I believe that GSEs need to provide guidance to lenders by including a new rate amongst the eligible rates for qualifying mortgages. To ensure the new ARM product is able to be financed without paying a high premium, it is an easy assumption that discussions are taking place.” “The implementation of fallbacks for derivatives will go a long way to mitigating the systemic risk that could occur following the disappearance of Libor or another key IBOR. With the fallbacks in place, derivatives market participants will be able get on with transitioning their IBOR exposures with confidence that there is a robust back-up in case of need.” ISDA Fallbacks Supplement and Protocol In October 2020, ISDA launched its IBOR Fallbacks Supplement and Protocol, in an effort to reduce the systemic impact of the cessation of Libor and other key IBORs while market participants still have exposure to those rates. The ARRC recommends adopting the protocol. The supplement amends ISDA’s standard definitions for interest rate derivatives, incorporating robust fallbacks for derivatives linked to certain IBORS. Changes go into effect on January 25, 2021. After that date, all derivatives that reference the definitions will include the fallbacks. The protocol allows market participants to incorporate the revisions into their legacy, noncleared derivatives trades with counterparties that adhere to the protocol. At launch, 257 derivatives market participants had adhered to the protocol during a two-week, pre-launch “escrow” period. Fallbacks will kick in for a particular currency after there is a permanent cessation of the IBOR in that currency. ISDA noted that for Libor derivatives specifically, the fallbacks in the relevant currency would also apply after a determination by the FCA that Libor is no longer representative of its underlying market. In each case, the fallbacks will be adjusted versions of the risk-free rates identified in each currency. “The implementation of fallbacks for derivatives will go a long way to mitigating the systemic risk that could occur following the disappearance of LIBOR or another key IBOR,” said Scott O’Malia, ISDA’s CEO. “With the fallbacks in place, derivatives market participants will be able get on with transitioning their IBOR exposures with confidence that there is a robust back-up in case of need.” Preparation Tip Get your bankers to include fallback language in your agreements. If you’re doing a refinancing or are entering into an amendment for an existing credit facility, discuss SOFR with your bank partners and see if you can get fallback language implemented into the agreement if your loans extend beyond 2021. Banks may be willing to address the issue and include language that states if Libor goes away, the borrower and the administrative agent will agree on a replacement index. If you have the prime/alternative base rate as a fallback rate, you should probably look to renegotiate to a different reference rate or at a minimum have a clause on how a reference rate would be determined. SOFR Credit Supplement Throughout summer 2020, the New York Fed held workshops to build a shared understanding of the challenges that lie ahead for banks and their borrowers as they attempt to transition away from the London Interbank Offered Rate (Libor) before 2022. These sessions are also exploring methodologies to develop a robust lending framework that considers a credit sensitive spread that could be added to the Secured Overnight Financing Rate (SOFR) for revolving lines of credit, commercial and industrial loans, and commercial real estate loans. Ahead of a meeting that attempted to gauge corporate borrowers’ concerns about the transition, the Fed scheduled a call with AFP and a group of treasury professionals to gain their perspective on the potential credit supplement to SOFR. It quickly became apparent that corporate treasury and finance professionals are apprehensive about the supplement. Practitioners appeared particularly concerned that it could be applied across further SOFR categories. In a follow-up call with AFP members, Meredith Coffey, executive vice president of research and public policy for LSTA, addressed treasurers’ concerns. She doesn’t expect the credit supplement to emerge in Libor fallback language. She began by noting that the ARRC currently recommends using hardwired fallback language for any new agreements beginning after September 30, 2020. The hardwired approach basically says that when Libor ceases or is declared unrepresentative, the market participant falls back to SOFR, plus a spread adjustment. “The spread adjustment that the ARRC is going to recommend in a hardwired approach is the ISDA spread adjustment. Everything is perfectly aligned there—you’ve got SOFR, and you’ve got the spread adjustment as recommended by the ARRC, which will be the ISDA spread adjustment,” she said. “There is little likelihood of going through a risk-sensitive spread adjustment in the hardwired approach.” But what about the ARRC’s amendment approach for fallback language? In this situation, Coffey still believes that the ARRC/ISDA spread adjustment would become the market standard. But it does allow for the possibility that a risk-sensitive spread adjustment could become the norm instead. “So, with a hardwired approach, there’s no chance of getting a risk-sensitive spread adjustment,” she said. “With the amendment approach, I think the risk is low but there is some potential if a risk-sensitive spread adjustment was developed and then became the market standard.” Treasurers that have existing loan agreements that haven’t been amended or renewed recently and mature past 2021 should work with their administrative agent if Libor hasn’t been addressed or if they plan to use the amendment approach, advised Tom Hunt, CTP, AFP’s director of treasury services. In reality, the real deadline is June 1, 2021 for all new loan syndications to be using SOFR as a fallback as recommended by the ARRC. Even more importantly, treasurers should check whether their bank groups subscribe to the ARRC’s recommendations. The smaller the bank, the more likely the amendment approach would be acceptable, and that could include the credit sensitivity component—thereby treating SOFR differently across SOFR exposures in derivatives, loans, asset-based lending, etc. “It’s best to work with your general counsel, understand your position and work with your bank group and administrative agent to address this before the clock runs out, as banks have far more exposures than corporates do,” Hunt said. Renegotiating Revolvers Coffey noted that banks are dealing with “hundreds of thousands” of credit facility amendments under the amendment fallback approach, and not all of them are going to be resolved immediately after Libor ends. For those that don’t, they could end up with a prime-based rate, which she views as the worst-case scenario. “Our concern from the lender perspective is market disruption. From the borrower perspective, I would be concerned that I’m in the group of people that do not get their amendments through, and end up in prime-based rate for a period of time,” she said. Amid this turbulent environment, many banks are being more demanding when clients attempt to amend their revolvers. A treasurer for a major utility explained that his bank advised him that upfront fees and renewal fees would be much higher this year if the company elected to make an amendment on its revolver. “We have a five-year and we’re into our third year. So in normal circumstances, we would renew that this early because we have an automatic renewal clause and we pay upfront. But banks are advising to just wait to see if things cool down,” he said. Most of the input during the call came from noninvestment grade issuers. One treasurer for a major retailer raised questions about “anti-cash drawdown language” in loan documents, in addition to Libor floors. He explained that his company drew down under its revolving credit and parked the money in cash, just to ensure that it had access to capital in case there was a repeat of what happened in 2008-2009. So, he had about $265 million in the bank by June. The treasurer’s company then signed an amendment to its credit facility to expand availability in early June. Two of the biggest changes in that amended facility were the introduction of a Libor floor, and provisions designed to stop cash drawdowns. “So for example, I cannot borrow further on our credit agreement unless I can represent, at the time of the borrowing, that the amount of cash I have in the U.S.—including the amount I’m going to borrow—is going to be less than or equal to $50 million,” he said. So the company would have to spend more than $215 million before it could borrow more. “I think the banks responded by making it crystal clear that you might have done in it in the past, but you’re not going to do it in the future,” he added. Two other treasurers on the call fared better with their banks. They also signed amendments around the same time, but after fighting “tooth and nail,” they managed to avoid both Libor floors and anti-cash concentration language. Banks appear to be testing the waters with these provisions right now, seeing whether corporates will agree to them. A fourth treasurer for a major auto manufacturer said that his company also recently renewed its facility. He said that while he doesn’t believe there is a big push for anti-cash drawdown provisions, his bank did bring them up in the negotiation. “But we were able to successfully renew without that,” he said. “We decided to be everything Libor was not. Libor was international, we wanted a domestic index. Libor was opaque, and we wanted it transparent. Libor depended on opinion, we wanted ours transaction-based. Libor was the wild west and totally unregulated, and we wanted a rules-based, regulated exchange. And most importantly, we wanted to develop something that was unassailable and would represent America.” Ameribor While SOFR is the chosen successor to Libor in the United States, other rates have emerged as potential alternatives. Perhaps the most prominent one is Ameribor, which is the brainchild of businessman, inventor and entrepreneur Richard L. Sandor, chairman and CEO of the American Financial Exchange (AFX). Ameribor isn’t aiming to be a competitor to SOFR per se; rather it seeks to serve the needs of small, medium and regional banks across the U.S. that do not borrow at either Libor or SOFR to fund their balance sheets. According to AFX, these banks “need a separate and distinct benchmark that reflects their actual borrowing costs.” “We decided to be everything Libor was not,” Sandor explained, during a recent call with AFP. “Libor was international, we wanted a domestic index. Libor was opaque, and we wanted it transparent. Libor depended on opinion, we wanted ours transaction-based. Libor was the wild west and totally unregulated, and we wanted a rules-based, regulated exchange. And most importantly, we wanted to develop something that was unassailable and would represent America.” To accomplish that goal, AFX looked at all of the disparate interest rates around the country. Sandor found it highly illogical that rates differed so greatly from state to state, and came up with the idea of creating a national rate by engaging banks in every state in the U.S. Though banks initially rejected the idea, they began to warm up to it once it became apparent that Libor was, in all likelihood, coming to an end. “People started saying, maybe you have an idea. Maybe Libor will go away,” Sandor said. AFX teamed up with Cboe Global Markets, and then approached regulators, agreeing to provide yearly updates on their progress. “We visited the Fed, the OCC, the FDIC, the SEC and the CFTC. The idea was to have an overnight, unsecured market. We opened in December 2015 and we were doing $9 million a day,” Sandor said. “We’re now up to $2 billion a day. We have 204 members, 160 banks and 1,000 downstream correspondents. Our banks have $3 trillion in assets, so we’re 22% of U.S. banks by numbers and 15% by assets.” Sandor says that AFX had a steady, gradual growth model in mind for Ameribor, starting in small towns, but ultimately adding insurance companies, brokerdealers and corporates. In a written statement last summer, Fed Chairman Jerome Powell commented on the suitability of Ameribor as a replacement to Libor. Asked by the U.S. Senate Committee on Banking, Housing and Urban Affairs whether he supports alternative benchmark rates other than SOFR, he replied that the Fed supports the work of the ARRC and views SOFR as a robust alternative that will help many market participants make the switch from Libor. However, he reiterated that moving to SOFR is voluntary and market participants should transition in the manner that is most appropriate for them, given their own circumstances. On that note, he continued that Ameribor is “based on a cohesive and well-defined market that meets the International Organization of Securities Commission’s (IOSCO) principles for financial benchmarks.” Nevertheless, while he believes the rate is fully appropriate for banks when it reflects their cost of funding, he added that the rate is “may not be a fit for all market participants.” Sandor responded that Powell’s comments “reinforce the importance of choice” when it comes to the transition away from Libor. He added that Both SOFR and Ameribor “are complementary to each other” and offer robust alternatives as the market moves away from Libor. These comments reflect those of Robert Owens, director of fixed income strategy for Farmer Mac, who commented on the AFP Conversations podcast that Ameribor is less of a competitor to SOFR and more of an alternative. “Obviously SOFR is the dominant alternative, but I think Ameribor has a nice place, especially in rural America,” he said. Amol Dhargalkar, managing partner and member of Chatham Financial’s board of directors and senior leadership team, noted that while it is difficult to say whether Ameribor will take off or not just yet—particularly for medium-sized and larger corporates— the comments by Chairman Powell could help in that regard. Moreover, some market participants may favor Ameribor over SOFR due to some key similarities to Libor. “Most corporates feel as though they will take the lead of their banks on the appropriate index,” he said. “One of the benefits of Ameribor is that it represents unsecured borrowings between financial institutions—typically smaller ones, relative to the large investment banks that provide services to large multinationals. This more closely mimics the concept behind Libor itself, so banks may find it particularly valuable and interesting as a SOFR alternative. This is particularly true for smaller banks whose funding costs may not be best approximated by SOFR.” The Road to 2021 The Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued a joint statement on November 30, 2020, urging banks to cease entering into new contracts that use USD Libor as a reference rate. The move immediately followed an announcement by the ICE Benchmark Administration (IBA), Libor’s administrator, that it would be consulting in early December on its intention to cease the publication of one-week and two-month USD Libor settings by the end of 2021, with the remaining Libor settings ending on June 30, 2023. IBA also recently announced consultations for its cessation plans for euro, sterling, Swiss franc and yen-based Libor. Meanwhile, the FCA announced its plans for 2021, which includes potentially using proposed new powers under the UK Financial Services Bill “to ensure an orderly winddown for Libor.” The ARRC noted that these actions by the IBA and FCA reaffirm its expectations that Libor will end by December 31, 2021. While New Year’s Eve 2021 might still be more than a year away, the wait to start your post-Libor plans is over. Study up on SOFR and explore other rates like Ameribor if you think they apply to your organization. If you have outstanding contracts that reference Libor that go beyond 2021, make sure you have fallback language in place. Get feedback from your fellow AFP members and your bankers, and perhaps even reach out to the ARRC directly to help you anticipate upcoming challenges. There may even be opportunities to work with them and help make this a more seamless transition. The clock is ticking. For all the latest insights on the Libor transition, visit AFP’s Libor Transition Guide.   Check out this webinar to learn how to plan post-Libor readiness with experts from AFP, Deloitte and Kyriba. 

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 APIs 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. 

More than 70 percent of SAP and Oracle customers are due to undergo an ERP cloud migration within the next three years, a major undertaking. But such a project also offers a great opportunity...

More than 70 percent of SAP and Oracle customers are due to undergo an ERP cloud migration within the next three years, a major undertaking. But such a project also offers a great opportunity to approach payments more strategically in areas such as fraud detection, bank connectivity and payment formats.

The treasury department serves a prominent role, well aligned with overall company strategy. In times of stress and uncertainty, like the Financial Crisis of 2008 and the ongoing coronavirus outbreak, companies typically look to...

The treasury department serves a prominent role, well aligned with overall company strategy. In times of stress and uncertainty, like the Financial Crisis of 2008 and the ongoing coronavirus outbreak, companies typically look to treasury to support all areas of the business, by forging a path forward. In this Treasury in Practice Guide, we’ll be looking at the ways in which treasury is a strategic ally to the CFO, the entire C-suite, and the business as a whole. Establishing trust, investing in technology and defining accurate measurements of success help treasury in its role as a vital partner across the organization. You want to have that seat at the table when those strategic decisions are being made, and if you don’t have that trust, you most likely won’t be invited to the table to make those decisions.” Building Trust During the Financial Crisis, treasury departments emerged as beacons to guide their organizations through a volatile and uncertain time. Since then, many treasury functions have earned that coveted “seat at the table” with senior leadership, contributing to company strategy. Treasury is well-suited for this role because it touches all areas of the company, and because it is—or should be—seen as a trusted partner. “You want to have that seat at the table when those strategic decisions are being made, and if you don’t have that trust, you most likely won’t be invited to the table to make those decisions,” said Bruno Fernandes, deputy CFO and treasurer for the Government of Washington, D.C. You need to understand what’s going on in the business so that you can bring that back, and bake it into your forecast and your process. There’s a trust that has to come on both sides. Not every business case is crystal clear; a lot of judgment has to go into decisionmaking, so trust is the foundation to get things agreed upon.” Good communication is often the key to that trust. The more that treasury and the finance chief are on the same page, the better that relationship will be. “You have to make sure that you have alignment between treasury and the CFO,” said Bob Stark, vice president of strategy for Kyriba. “They need to know what to expect from you and you obviously know what to expect from them.” A good leader in treasury also needs the trust of his or her team. Niklas Bergentoft, treasury leader for Deloitte, stressed that having a good team around you in treasury can often be the key to success. He advises treasurers and treasury managers to find their ‘‘wing woman” or “wing man” on the team that can help them get the things done that they need to get done. And it’s important to cultivate that relationship to make sure you have that support, just like the relationship and support of executive stakeholders are critical to mission success. Dana Laidhold, treasurer for Peloton, added that trust and transparency are essential for treasury to contribute strategically across the organization. “You need to understand what’s going on in the business so that you can bring that back, and bake it into your forecast and your process,” she said. “There’s a trust that has to come on both sides. Not every business case is crystal clear; a lot of judgment has to go into decision-making, so trust is the foundation to get things agreed upon.” Establishing Yourself An essential way to obtain trust from the CFO and across the organization is simply to doing your job well. In treasury, that’s often a bit more complicated than in sounds because treasury departments tend to be small and cross-functional. But amid that often-chaotic environment, treasury also needs to be consistent with its core deliverables. You can’t just bring somebody in and expect them to know everything in a relatively short period of time. This is a complicated world that we live in, and understanding treasury’s role is overwhelming for a lot of people, especially if they get turned over in a position quickly.” For enterprise software company Infor, the key driver is managing cash and liquidity, explained Susan Lee, vice president of treasury. “Our cash is seasonal. Every fiscal year, we go through a short period where liquidity is thin. It is critical for treasury to understand working capital by entity and repatriate funds efficiently,” she said. “The CFO relies on treasury to get through that seasonality without having to borrow from the revolver.” Deloitte’s Bergentoft has observed treasury functions branching out more and focusing on business growth, looking at transactions from the due diligence stage through post-transaction synergy realization. He noted that many treasury departments are partnering with finance on working capital improvements and reduced cost of finance infrastructure through advising the organization on opportunities like payment hubs and payment modernization. “If you are able to free up hundreds of millions of dollars, that has a lot of value for your organization,” he said. When Fernandes first moved from the private sector to the public sector, he focused heavily on working capital, as there was a common goal of streamlining the organization. “We spent a lot of time focusing on liquidity and working capital so that we could be nimble with our investments, as well as our debt issuances,” he said. “That actually saved us millions of dollars in debt service. So the fact that we focused on some of these areas, helped us gain that trust of the CFO.” Finding Opportunities Often when a company is in transition, treasury has an opportunity to distinguish itself and be seen as a relevant group that brings new insights to the table. About a decade ago, Infor transitioned from offering traditional, on-premise software to its customers to delivering a cloud-based subscription model. At the time, treasury knew the shift would have a material impact on its cash trends. “Being able to capture that impact, understand it, tweak and redesign our forecasting models, has enabled us to highlight the new, emerging trends,” Lee said. When Laidhold joined Peloton about a year and a half ago, the company was in the midst of its transformation from a small fitness technology company to a global phenomenon. Prior to her hire, there wasn’t a treasury department and she applied what she calls a “treasury in a box” approach to every area of the organization. “We had just launched in our first non-U.S. markets, so we had to build and develop FX policies,” she said. “We had to think about how we wanted to approach hedging. Additionally, we had just completed a capital raise and we’re planning to head into an IPO, so cash investing was, for the first time, very relevant and important.” Laidhold added that, the CFO was relying on her to provide expertise on how to craft treasury policies and procedures. Laidhold was able to articulate, from her years of experience, what the company needed. A cornerstone to success was working with a CFO, who was willing to give her enough autonomy to take some risks and try new things in order to build out a modern, robust treasury function. Stark noted that having that leeway can go a long way towards helping treasury become involved in strategy. “You have to do the job extremely well, but if you have a little bit more latitude, you can further prove how strategic treasury can be,” he said. Leveraging Technology Though the advantages to adopting new technology may be obvious to treasury, it’s not uncommon to receive pushback from senior leadership. Convincing the CFO to approve an investment in essential treasury technology—even something as commonplace as a treasury management system (TMS)—can often be a tall order. Therefore, the onus is on treasury to sell the CFO on why a technology upgrade is necessary. Organizations may see an increase in fraudulent attempts around processdriven areas. Treasury typically has the relationships with the banks and the TMS vendors that have the latest fraud prevention tools, so it is important for us to bring that to the organization and be part of that conversation.” Building the Business Case When it comes to selling the CFO on adopting a TMS, the time component is perhaps the easiest case to make. A treasury system is an incredible tool to free up time for treasury departments as a whole, allowing staff members to spend more time catalyzing change or developing strategy for the organization, Bergentoft noted. In the current environment, navigating the COVID-19 pandemic, time is especially critical for treasury. Having the time to answer questions around cash and liquidity; model cash forecasts for various dynamic scenarios; and understand the levers the organization has around financing and risk management can make a huge difference. But perhaps more important are the capabilities that a TMS provides, particularly when it comes to safeguarding financial assets. When treasury departments rely too much on manual processes, they leave themselves open to fraud. And that’s something any good CFO wants to avoid. “One thing that my CFO and I talk about on a regular basis, is payments fraud,” Fernandes said. “And one of the things that we looked at when we were in the process of implementing the TMS was how it can help us with those issues that we’re experiencing. Because the last thing I want and the last thing our CFO wants is to be in the Washington Post. So being the District government, that’s something that we’re very cognizant of. And we have had fraud incidents, but one of the things that we focus on is how we can avoid them. And a lot of it is transitioning those manual processes or spreadsheets into more of a streamlined process.” Lee agreed, noting that treasury is essentially the custodian of the company’s bank account, with a directive to safeguard cash. Therefore, as fraud attempts continue to become more and more sophisticated, it’s critical to leverage new technology and tools that are available to improve your treasury controls. She recommends not only looking within your own treasury processes, but also at other departments that touch cash, such as AP, billing and payroll. “Organizations may see an increase in fraudulent attempts around process-driven areas,” she said. “Treasury typically has the relationships with the banks and the TMS vendors that have the latest fraud prevention tools, so it is important for us to bring that to the organization and be part of that conversation.” We make sure that we impress upon our colleagues that you just can’t take wire instructions over the phone.” Adopting New Technologies Earning trust with the C-suite and across the organization often requires treasury to come up with a formal, detailed plan. Fortunately, there are new tools available that can help treasury in its efforts. After Fernandes took over the treasury team in the D.C. government, he began an overhaul that would move the department from a transactional function to more of a strategic one. This required revisiting treasury’s technology, implementing best-in-class systems and processes. Throughout this process, the treasury team revisited its strategy to see if it aligned with the goals of the CFO and the business overall. They ultimately adopted a business strategy tool by ESM Software to build their roadmap. “It helps you create a balanced scorecard by looking at your strategy and aligning it with employee performance,” Fernandes said. “By formalizing that process, what we found is that we are in a better position to be able to support the CFO from a strategic perspective, as well as the rest of the organization.” Fernandes noted that, in many city governments, the software systems are antiquated and no longer supported. That creates a lot of issues because when the people who supported those systems leave, the organization is left with platforms that don’t work. “So we are making sure that we take all of the software systems right out of the box,” he said. “That means an extensive amount of work done with process reengineering, policies and procedures. A lot of people are going to be doing different jobs in the future. But we are already starting to see the transition occur.” Many treasury systems now have automation capabilities that can also help free up treasury to focus on strategy. Going back to the time component, Bergentoft noted that one of the biggest challenge for many treasurers is simply finding the time to participate in strategy. “On the timing side, a big enabler there is obviously the technology,” he said. “So how do you free up the time not just for yourself, but also for the people around you?” He added that the typical treasury department spends about 50% of its time performing manual, operational activity. “So if you’re able to reduce that, you can shift more of the time spent to strategic activities; it becomes a greater part of the day,” he said. As demand has grown across finance for automation, data transparency and advanced analytics, a modern TMS can provide the tools for treasury to be successful in those areas. Following a series of acquisitions, Infor’s treasury department was committed to install a TMS. “At one point, we had close to 700 bank accounts across 45 different countries, so the TMS allowed us to automate that daily reporting and essentially made it real time,” Lee said. Treasury also implemented a control process to organize the data. As bank files came in every morning, the department reviewed each debit and credit and then categorized them into a detailed budget codes. “Several years later, we now have a single database of really good historical cashflow trends,” Lee said. “And with that information, we have been able to highlight working capital across each entity, understand cash seasonality, and measure currency exposures. The data from the TMS is the foundation for all our heavy analytics.” Laidhold believes that the more automation comes into play, the more essential application programming interfaces (APIs) will become for treasury. Systems’ ability to talk to each other and to outside parties will only grow in importance the more connectivity increases. “You can either go deep with a ‘one size fits all’ solution, or you can pool a ‘best of breed’ product that does very specific functions wonderfully,” she said. “And I think APIs are really what’s going to enable the next generation of all financial technologies to be able to take shape.” I have tripled the size of our treasury operations team even after putting automation in. And everybody is working on things that are completely value added to the company’s bottom line. And I just think that’s beautiful.” Impact on Treasury Staff While an organization’s greatest resource should always be its employees, they need to be utilized in the right way if treasury wants to be effective. A good TMS can help with that; you can have a team of highly-skilled treasury professionals at your disposal, but if they’re just manually keying in data day-in and day-out, then you’re clearly not taking advantage of their abilities. Laidhold explained that over the past year, Peloton’s treasury team has fully automated its payment process. “We can take things now end-to-end without anybody on the team touching them,” she said. “So being able to pull all of that key entry out has the team working on really exciting projects to maximize our working capital.” She added that not only are these projects value added, but they’re also actually fun for the team. It’s a win-win all around, because Peloton is getting the most out of its employees and the team is enjoying the work that it’s doing. Fernandes agreed, adding that making the transition from a transactional treasury team to a more strategic group does a lot to boost employee morale. The changes to processes and procedures can be immense, but if the team is working towards a strategic goal that has an impact across the organization, it can really people engaged. Of course, whenever the topic of automation comes up, there tends to be a question of whether that ultimately means treasury will reduce headcount. Indeed, when automation first arrived on the scene, some treasury teams built the business case for adoption around how many jobs could be cut. However, Laidhold thinks that was always a misconception. “I have tripled the size of our treasury operations team even after putting automation in,” she said. “And everybody is working on things that are completely value added to the company’s bottom line. And I just think that’s beautiful.” Furthermore, Bergentoft pointed out that having “cool” technology in place can help attract the best talent in the marketplace. “It’s become an expectation,” he said. “If you want to be a destination for top talent, you need to have some of these solutions in place.” From his perspective, investing in technology and in your people are equally important. Only then can treasury truly evolve. “Having the right skills and the investing in training those folks will be incredibly important, as technologies will not live on their own,” Bergentoft said. Tracking Progress Some CFOs are a little more hands-off, and many companies’ departments are siloed. In that kind of an environment, treasury may struggle to emerge as a strategic partner if there is a lack of visibility into the work that it’s doing. Thus it is often imperative to track treasury performance to show the work that the department is doing and the impact it is having. Fernandes’ treasury team has worked extensively on implementing key performance indicators (KPIs) and aligning employee performance with them. Overall, the department sees it as critical to hold people accountable for what they are trying to accomplish. His team has formalized those KPIs and put them into the aforementioned strategic tool that they used to build their roadmap. “It’s created a nice little dashboard for us to sit down with the CFO, at least on a quarterly basis, and show the progress that we have been making with our strategic initiatives,” he said. He describes that process as a “two-way street” in which treasury shows the CFO what they’ve accomplished, what they need to accomplish, and what they need from senior leadership in order to accomplish strategic initiatives. From speaking to clients, particularly those at larger treasury functions, Bergentoft has found that tying those KPIs to groups or individuals actually results in faster progress. “So whether that’s around your visibility into cash, your forecast accuracy, days of liquidity, or opportunities to improve working capital —whatever those measurements might be—I think that helps drive a very performance focused culture,” he said. Since treasury wasn’t even a function before Laidhold joined Peloton, she made an effort to implement “a ton of infrastructure” so that she has visibility into all of her department’s processes and each of the core areas of treasury. She can then leverage that data when she does her quarterly business review with the CFO, going through each area, digging down into its KPIs. However, Laidhold emphasized that for her organization, reviewing the KPIs isn’t so much about tracking employee performance but is instead a way to consider what those metrics mean for the future. “We talk about where we want to be,” she said. “What are the next projects we need to do to start to move the needle? And the conversation is much more productive and thoughtful than it would be if we were just looking at the measurements themselves.” Stark noted that even though there is currently a trend towards treasury being more data driven, many organizations have struggled to extract and show necessary KPI data. Again, technology can go a long way. “Visualization really shows what you’re successful at,” he said. “It can show, ‘Here’s how people are forecasting, here is actually how we reduce their costs of payments or bank fees,’” he said. “So, I find that the data makes a difference. It simplifies it a little bit by having tools to be able to manage the data, and understand the real performance in treasury.” Getting There Ultimately, there are many factors that come into play as treasury seeks to establish itself as a trusted adviser to the CFO and the business. Technology is an essential tool, but treasury cannot rely on technology alone. The department also needs to find the right people who can maximize that technology to take the organization to the next level. Treasury teams have an abundance of data at their fingertips, but if they cannot connect and integrate that data, they won’t be efficient. “How can you be an ally?” Stark asked. “Do your job incredibly well, have the right people on your team so you can trust them and hence be trustworthy yourself, and be incredibly resilient to threats like fraud. And have the right controls in place so when that emergency question comes up, you have all the data and visibility that you need to make important decisions.” Key Takeaways The following takeaways can help your treasury organization build trust with the CFO and business, ultimately helping you be seen as a strategic ally: Establish good communication and transparency with the CFO, within your department and across the organization. Even though treasury is often asked to perform tasks outside of its wheelhouse, it must stay consistent with its core deliverables. When an organization is in transition, treasury typically has an opportunity to distinguish itself and be seen as a relevant group that brings new insights to the table. Treasury management systems and automation are helpful tools that can help free up treasury from manual tasks. However, treasury needs to build a clear business case for adoption. Modern technology can also help treasury utilize its employees in the most effective way, as well as attract new talent. In more siloed organizations, it is often imperative to track treasury performance to show the work that the department is doing and the impact it is having.   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.

The current global and economic state has highlighted the growing need for treasury and finance team to focus on activating their liquidity. And doing so has become increasingly easy with technology. So how does...

The current global and economic state has highlighted the growing need for treasury and finance team to focus on activating their liquidity. And doing so has become increasingly easy with technology. So how does treasury leverage technology to activate liquidity and generate new growth, and what does it gain by doing so?

 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.

Establishing effective treasury policies while executing consistent operational procedures is one of the most understated responsibilities of treasury. And while a treasury department is only as good as the policies and procedures it has...

Establishing effective treasury policies while executing consistent operational procedures is one of the most understated responsibilities of treasury. And while a treasury department is only as good as the policies and procedures it has in place, many treasurers consider them to be an afterthought, or the ones available are largely outdated.

In today’s ever-changing business environment, there are several key factors that are driving change across the treasury aggregation landscape. Strategic Treasurer’s Treasury Aggregator Analyst Report outlines these key factors and provides other helpful information.

In today’s ever-changing business environment, there are several key factors that are driving change across the treasury aggregation landscape. Strategic Treasurer’s Treasury Aggregator Analyst Report outlines these key factors and provides other helpful information.

The latest Strategic Treasurer Analyst Report provides a glimpse into the current TMS space and outlines the primary benefits of a treasury management system. This latest report dives into how your peers are thinking...

The latest Strategic Treasurer Analyst Report provides a glimpse into the current TMS space and outlines the primary benefits of a treasury management system. This latest report dives into how your peers are thinking about treasury and risk management systems.

Emerging technologies are changing finance functions from the top down. In particular, treasury and finance executives must evaluate how treasury technology can enhance their overall operations. Read part two of AFP's Executive Guide to...

Emerging technologies are changing finance functions from the top down. In particular, treasury and finance executives must evaluate how treasury technology can enhance their overall operations. Read part two of AFP's Executive Guide to Emerging Technologies, underwritten by Kyriba, to learn how treasury and finance are deploying artificial intelligence (AI) and machine learning (ML) in their processes. While these technologies have many uses in cash and treasury management, this eBook explores treasury use cases for: Actual reconciliation Streamlining collections Data consolidation Fraud detection Be sure to also explore part one of this series, AFP Executive Guide to Emerging Technologies: Robotic Process Automation. Emerging Technologies Are Changing Finance Functions Emerging technologies are changing finance functions from the top down. In particular, treasury and finance executives are being forced to evaluate how robotic process automation (RPA), artificial intelligence (AI) and machine learning (ML) can enhance their operations overall. This two-part Executive Guide, underwritten by Kyriba, explores why and how these technologies are reshaping finance. In this section, we will look at how treasury and finance are deploying AI and ML to improve their processes. Artificial Intelligence and Machine Learning A key limitation of RPA is that it is not actually “intelligent.” RPA does what it is told. AI, in contrast, uses machine learning so that it can essentially think for itself. The software learns, without human intervention, by analyzing data. It can be used to develop new rules, instantly discover exceptions and build forecasts. RPA is like an Excel macro; it is automation that mimics what the user tells it to mimic, noted Bob Stark, vice president of strategy for Kyriba. Treasury management systems (TMS) and other types of financial platforms don’t typically rely on RPA within their product, but rather support their customers’ use of robotic process to automate the interaction with other systems. “Machine learning, on the other hand, learns from the data that it receives within the treasury system so has a natural role within a TMS,” he said. But although AI has incredible potential to improve many processes for treasury and finance, it has yet to catch on, noted Jason Dobbs, senior manager, and Kyle Olovson, CTP, senior consultant, both with Actualize Consulting. They see this as irrational, particularly since humans have the ability to only recognize a few patterns. Machines, meanwhile, can pick up on patterns indefinitely. However, recognizing patterns does depend on human design, which means that AI can contain biases that can skew the outcomes. Dr. Rana el Kaliouby, CEO and co-founder of Affectiva and MindShift keynote speaker at AFP 2019, sees bias as the true “threat” that AI poses. She noted that while many people are apprehensive about the technology, what we should really be wary of is AI that is not ethical—systems that perpetuate biases existing today. Therefore, companies that utilize this technology should take care to steer clear of biases whenever they adopt these systems. In an interview with the AFP Conversations podcast, Dr. el Kaliouby explained that the key to avoiding data and algorithmic bias is diversity. “I think the way we get there is to ensure that the teams that are designing and deploying these AI systems are as diverse and inclusive as possible,” she said. “At Affectiva, at my company, we make sure that we bring in people from different age groups, different genders, different ethnic groups, and different perspectives. We have our machine learning scientists, our data scientists and our computer vision folks around the table, but we also bring artists into the equation or psychologists because I believe they have a very different perspective on how we think about this, and that’s really important.” But for the treasury and finance space specifically, Stark is less concerned about bias affecting AI and ML. Unlike RPA, AI and ML aren’t based on what the user thinks, but on what the artificially-intelligent process is able to glean from the data. “I think in a treasury use case, introducing bias is more likely when using RPA because the ‘bot is automating the steps and finding the data that the user thinks is correct,” he said. “In treasury, at least, machine learning programs allow the data to drive the decision, and not you as a programmer. Machine learning can help you overcome your own bias by potentially finding a very different, objective conclusion.” Stark noted that if, in the initial setup of an AI/ML program, an organization sets certain parameters or thresholds before it has adequate data, then it’s possible that biases could impact the outcomes. “But if you do it right, data should drive your decisions rather than the other way around,” he said. Treasury Use Cases There are many treasury use cases for AI, and even more will likely be revealed as practitioners familiarize themselves with the technology and what it can do. Actual Reconciliation AI and ML have incredible potential for cash management and forecasting, particularly when reconciling prior day bank files with yesterday’s expected cash position. “This is one of the first cash management processes performed each day,” Stark said. “And for some organizations, the volume of transactions is so big that it can take hours and multiple people to do that reconciliation.” ML can be used to identify and resolve those discrepancies on its own. “In the simple scenario where the prior day file reports a $1 million wire and we thought it was going to be $900,000, the cash manager will know through their experience what explains that $100,000 difference and what to do about it,” Stark said. “Machine learning will learn from the user’s manual reconciliation, so next time it will reconcile those transactions without human intervention.” Added Stark: “The tests that we did with our clients reconciled 99% of previously unmatched transactions, just by looking at the past six months of data. With more data, the accuracy approaches 100%. The key, however, is the amount of data. Machine learning cannot ‘learn’ from one or two scenarios a day; it needs a large sample size of information in order to find meaningful conclusions.” But AI and ML can do more than detect anomalies—they can recognize when an exception isn’t actually a problem. For example, your company might make a regular monthly payment to a supplier of approximately $10,000. However, a recent payment made at the end of the current month is $15,000. With rules-based automation or even RPA, you likely have a payment control that flags that 50% variance from the normal monthly amount, quarantining that payment for further review. But ML can recognize that this particular payment is part of a larger pattern where the last monthly payment in each quarter is substantially higher than the average. “ML looks at historic data to determine what the true pattern really is to reduce potential false positives,” Stark said. “But the AI process needs to have access to all historic payment patterns in order to make that determination, much like an individual would use their own experience to make that assessment.” So you do not have a ‘one-size-fits-all’ solution for disputes, credits or cash application. You really have to use machine learning algorithms to identify each customer’s different payment patterns and deductions behaviors that they’ve had in the past.” Streamlining Collections AI and machine learning can also be used in the actual AR process as well. Shankar Bellam, manager, solution engineering for HighRadius, noted that one of the biggest challenges for AR teams is the huge amount of customer transactions that they have to manage. “In the B2B space, where you have hundreds of thousands of customers, you have millions of invoices and you really have to go after every transaction,” he said. “So that’s where a lot of time is being spent by having AR teams manually going after invoices and trying to get paid or trying to figure out why the customer has not paid on something.” While RPA allows AR to automate the repetitive, manual tasks, machine learning algorithms can be used for more intricate work, like identifying patterns in transactions. This can help your organization in its decision-making and really tailor the behavioral change that you want to bring about in your customers, Bellam explained. “Maybe you want to change the way you collect from the customer, or maybe change the amount of manpower that you assign to a certain segment of customers,” he said. HighRadius works with a number of top-tier companies, like Nike, Adidas, Johnson & Johnson, Walmart, and Proctor & Gamble. These companies each manage a massive amount of transactions, going across currencies in different regions. “So you do not have a ‘one-sizefits-all’ solution for disputes, credits or cash application,” Bellam said. “You really have to use machine learning algorithms to identify each customer’s different payment patterns and deductions behaviors that they’ve had in the past.” Improving efficiencies in the collections space can have a positive effect on cash flows. “Because of the sheer volume of these organizations and the magnitude of the size—even if they’re bringing in one day of [days sales outstanding (DSO)] improvement—it’s huge in terms of dollar values for these companies,” he said. We try to analyze the data historically to come up with insights; if you augment on top of the data you already have, you can make this smarter.” Data Consolidation AI can also help treasury as it consolidates copious amounts of data from ERP systems, TMS and other bespoke sources when doing cash forecasting. “Everyone cares about the accuracy in the end, but the process to get there is quite cumbersome in most cases—to get your hands on the data, then to mix all the data, and to make something out of it that makes sense,” said Nicolas Christiaen, CEO and co-founder of Cashforce, who discussed AI and ML in an AFP 2019 session. “And then there are the people involved; you don’t want to have 60 people tripping over each other to make that forecast.” To create the forecast, treasury needs to consolidate the data correctly to make sure it is getting the right data sources from the TMS and ERP systems. To improve the forecasting process for its clients, Cashforce looks at historical GL (general ledger) data. “We try to analyze the data historically to come up with insights; if you augment on top of the data you already have, you can make this smarter,” Christiaen said. He added, as an example, that attempting to forecast based on due dates for payments is pointless, as customers rarely pay precisely when you require them to. Hence why it is so important to look at the historical trends and patterns, if available. The final step in Cashforce’s process is what is called its back-testing algorithm. Based again on historical data, Christiaen’s team looks at how good a system-based forecast measures itself against the actuals. “We’re trying to understand the historical deviation of your system’s forecastable data versus the actuals to come up with a segmented variance, and then inject that on top of the current forecast,” he said. “To summarize, I would say it’s using different smart data sources and different smart algorithms which will optimize the accuracy of your forecast. With the back-testing algorithm, we’ve just scratched the surface, in my opinion, of what we can potentially do.” This works by the model having an understanding of what is ‘normal’ for each account or card and recognizing patterns based on past transactions and behaviors. For example, if 99% of the transactions for one account happen Monday through Friday, a transaction that occurs over the weekend will be seen as abnormal and flagged as such.” Fighting Fraud Financial institutions have gradually been adopting AI and ML solutions to protect customer accounts. AI can help banks and their corporate customers keep track of fraudulent activity and anomalies much faster than ever before, explained David Duan, data science stream lead and principal data scientist at Fraedom. “This works by the model having an understanding of what is ‘normal’ for each account or card and recognizing patterns based on past transactions and behaviors,” he explained. “For example, if 99% of the transactions for one account happen Monday through Friday, a transaction that occurs over the weekend will be seen as abnormal and flagged as such.” Duan noted that anomalous transactions aren’t always fraud incidents. However, using AI to flag any transactions that are out of the ordinary is worth the hassle of slowing down unorthodox legitimate transactions. Earlier this year, Visa helped banks prevent approximately $25 billion in payments fraud using AI, reducing global fraud rates to 0.1%. The Visa Advanced Authorization (VAA) is a risk management tool that monitors and evaluates transaction authorizations on VisaNet in real time to help banks identify and respond to emerging fraud patterns and trends. Visa processed more than 127 billion transactions between merchants and banks last year, using AI to analyze all of them in about one millisecond per transaction, allowing for legitimate transactions to be processed and fraud to be quickly rooted out. Of course, there will always be bad actors that try to use innovative technology to their advantage, and AI is no exception. Micheal Reitblat, CEO of Forter, noted that criminals are using AI to mimic the way good users behave. “So instead of collecting static data like credit cards and addresses and getting access to physical locations, they are actually recording user behavior,” he said. “They understand that AI is being used to track fraudsters, so they need to fight back with a similar technology.” Furthermore, the good actors are actually at a disadvantage. Although they have more data at their disposal now than ever before, they don’t have enough “bad” data, Reitblat explained. “If there’s a fraudulent transaction, we can’t collect a million of them just to learn a better model,” he said. Additionally, using AI to make predictions on fraud isn’t like predicting normal customer behaviors, because fraudsters adapt. They are constantly fighting the efforts of the good actors; the moment they understand that AI is being used to identify and catch them, they change their behavior. Once that happens, the AI model needs to learn from scratch again. KYC Compliance Complying with know-your-customer (KYC) regulations is one of the biggest headaches for corporate treasury departments. AI may be able to relieve some of that burden. In an article earlier this year, Eurofinance pointed out that AI has the ability to replace the current system of “scattered humans and fragmented legacy technology” used to ensure KYC compliance. Even smaller businesses may be required to evaluate a multitude of tax and legal updates on a weekly basis across an international network, so using RegTech solutions like natural language processing and machine learning can help immensely. “By treating regulations as data, software will dynamically help ensure compliance and bring compliance into the enterprise risk environment, enabling treasurers to take a genuinely risk-based view of regulatory compliance,” Eurofinance explained. And KYC repositories are also making use of AI. As noted in a previous Executive Guide, IHS Markit has implemented AI in its KYC Services solution. Using intelligent process automation (IPA), the system gathers and analyzes large amounts of complex information from multiple sources, such as corporate registries, exchanges and regulator sites, to build a visual picture of an entity. The solution, which was developed by encompass corporation, has enabled IHS to improve data quality and achieve a 30% reduction in the time taken to gather KYC data. To date, KYC Services has developed more than 30,000 KYC profiles and has more than 160,000 entities represented on its counterparty platform. Financial Planning and Analysis AI and ML have also found a home on the FP&A side, and the technology has actually been there for some time. Dr. Liran Edelist, President of Jedox Inc., who discussed AI at AFP 2019, noted that although the technology is often seen as experimental, many of the algorithms used for budgeting, planning, and forecasting are already in use and were proven decades ago. “The innovation is around the availability of such technology,” he noted in a recent blog. “Just a few years ago, you had to purchase expensive hardware and software and hire a data scientist to build a model that today is most likely available out of the box.” Dr. Edelist pointed out key areas where AI algorithms may help FP&A professionals in their planning and budgeting. One is time series forecasting and prediction. “What we’re seeing is that many activities, both expenses and revenue-related in our organizations, can be automated by machine,” he explained. “The most common use case for AI is for revenue planning—both budgeting and forecasting. However, standard costs in an organization are predictable. Planners can ask the machine to preform, as an example, time series prediction. The system will do it, in most cases, in a better way than what human beings can do.” Although Jedox does not collect statistics that can show how much AI solutions can improve these predictions, users generally see AI making better predictions than humans. One of those clients is Terminix (part of ServiceMaster Group) which has used the technology to greatly improve customer loyalty. “The information that the AI is giving them really allows them to improve customer loyalty,” Dr. Edelist said. “They’re able to see what enables them to keep loyal customers, and on the other hand, why customers don’t return. By nature, it improves the recurring revenue to the company.” Another area where FP&A can use AI is in data cleansing. AI algorithms can indicate a potential abnormalities in data trends that manual methods typically won’t pick up on. “We’ve seen [abnormalities] happening a lot, especially when you need to consolidate data from different systems and integrate it between different systems,” Dr. Edelist said. “And so, for the user, it’s very difficult to go looking for each individual data point on your database, but with the AI algorithm, you can actually find some discrepancies.” But much like in treasury, it’s not just anomalies that can be identified. The algorithm can also pinpoint trends that users might not be able to see. “Some of those discrepancies are really showing a change in trends,” Dr. Edelist said. “The algorithm can give a clearer picture of the variances, which makes the analysis easier. Where RPA replaces mouse-clicks and Excel macros, AI actually helps the decisionmaking process start sooner. It replaces a lot of collection and aggregation of treasury data, which often consumes many peoples’ mornings, and allows the strategic part of your job to start at 8 a.m. instead of later in the afternoon. You get so much more done when you don’t have to spend your morning finding and reconciling data. It’s not only an improvement on manual processes; it’s an improvement on automation. And anyone that doesn’t recognize that isn’t going to be here in five years.” Taking the Next Step Artificial intelligence and machine learning have the potential to change the game for treasury and finance, in a way that RPA never can. This is because AI and ML software learns, without the need for human interaction. RPA is essentially process decision-making, where is AI/ML is data-driven decision-making, and the latter requires a mind shift for many treasury and finance departments to truly get on board with it. Additionally, as is the case with RPA, treasury and finance professionals may be apprehensive about AI/ML because they fear that their jobs could ultimately be phased out. But it is much more likely their roles will simply need to evolve with the technology. The more familiar they become with it, the better off they’ll be. “Where RPA replaces mouse-clicks and Excel macros, AI actually helps the decision-making process start sooner,” Stark said. “It replaces a lot of collection and aggregation of treasury data, which often consumes many peoples’ mornings, and allows the strategic part of your job to start at 8 a.m. instead of later in the afternoon. You get so much more done when you don’t have to spend your morning finding and reconciling data. It’s not only an improvement on manual processes; it’s an improvement on automation. And anyone that doesn’t recognize that isn’t going to be here in five years.” 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.

Treasury & Risk's October Special Report covers the importance of FX automation, detailing the need, benefits and best practices of automating FX risk management.

Treasury & Risk's October Special Report covers the importance of FX automation, detailing the need, benefits and best practices of automating FX risk management.

In the past, building a case for adopting new technology has proven to be a huge obstacle for treasury and finance teams. However, with emerging technologies such as RPA (robotic process automation) and AI...

In the past, building a case for adopting new technology has proven to be a huge obstacle for treasury and finance teams. However, with emerging technologies such as RPA (robotic process automation) and AI (artificial intelligence), more companies are seeing the value and impact that technology investments can have on treasury. With new technology comes new capabilities, and RPA is helping treasury teams extend their abilities beyond the current boundaries of cash and treasury management. RPA helps expand visibility and controls for better risk management and provides in-depth treasury intelligence by transforming data and information. Read part one of AFP's Executive Guide to Emerging Technologies, underwritten by Kyriba, to learn how robotic process automation is improving treasury operations. Be sure to also explore part two of the series, AFP Executive Guide to Emerging Technologies: Artificial Intelligence & Machine Learning. Emerging Technologies Are Reshaping Finance Emerging technologies are changing finance functions from the top down. In particular, treasury and finance executives are being forced to evaluate how robotic process automation, artificial intelligence and machine learning can enhance their operations overall. This Executive Guide, underwritten by Kyriba, explores why and how these technologies are reshaping finance. It will be released in two parts; this first section looks at RPA and how treasury departments are applying it to improve their processes. Robotic Process Automation Robotic process automation (RPA) is the next step in the evolution of automation, using a software robot that mimics human actions. It is typically used in treasury and finance to streamline repetitive, manual processes, freeing practitioners up to focus on more strategic work. According to AFP 2019 speaker Laurens Tijdhof, Partner at Zanders, while there are many new technologies that will ultimately be adopted by treasury, RPA is one that is already having an impact. “The quick wins are typically in RPA,” he said. “This is something that is available today; you can really start implementing it now.” Tijdhof noted that other new technologies such as big data, machine learning and blockchain/distributed ledger technology require much more time and preparation to implement. “You need to have a data strategy to prepare for [those technologies], and you have to make sure your system environment is ready to process these new techniques,” he said. However, even though RPA is easier to adopt than some of these other innovations, that doesn’t mean that corporates are flocking to it en masse. The technology is still new and it will still take some time before it becomes mainstream in treasury and finance. “It’s not very prevalent out there right now and I think corporates are basically exploring these things in terms of pilot testing and they’re starting small,” said Kelvin Ang, Director, Treasury Advisory Group, Americas Head for Citi. Ang, who will is speaking in a session at AFP 2019, noted that many finance departments are playing the wait and see game, seeing what their peers are doing with RPA and whether it makes sense to follow their example. “Everybody’s trying to figure out who is doing what,” he said. “‘What can I learn from company A and company B? What are they exactly working on? And more, importantly why are they doing that?’ We’re not talking about the traditional, typical treasury management system. We’re talking about new tech.” The quick wins are typically in RPA. This is something that is available today; you can really start implementing it now.” RPA Use Cases Although many companies who have adopted RPA are still in the pilot stage, others have taken the initiative and are applying the technology in a number of different areas. Zanders’ Tijdhof has observed multiple treasury and finance departments using RPA for many functions; one organization that he has worked with has automated over 50 tasks. Some of them are fairly complex, such as getting FX exposure information from various systems and access points into one consolidated overview. Ravi Iyer, CTP, Assistant Treasurer for Mallinckrodt Pharmaceuticals who discussed his organization’s RPA pilot project at AFP 2018, noted that most treasury and finance departments who are using RPA are doing so to streamline repetitive, manual processes. “Treasurers should look at the processes where they are spending a lot of time—where you take data from one place and have to rekey it into another place,” he said. “Look at how much time you’re spending and do some cost estimates. Then look at what it would cost you to automate those processes using RPA.” Ang has also observed finance functions primarily apply RPA to tried and tested processes—highly replicable, standard tasks that do not require a high level of deviation. “It’s used for the simpler tasks like, for example, cash positioning,” he said. “So, in treasury, every morning, there is a treasury analyst who comes in, turns on the systems and enters the opening balance for the day. Then, he/she looks for information on the expected payments and expected receipts, and comes up with the expected end-of-day balance. “Some companies are now automating this process so that when an analyst arrives in the morning, they no longer have to do this, but instead spend time onthe decision-making process” Ang continued. “This is a great example in terms of a very standard procedure whereby you can apply RPA.” RPA can also be used very effectively in bank reconciliation. This technology is essentially not new; treasury management systems (TMS) have had a built-in code that allows them to match an amount in the ledger against a corresponding amount in a bank statement. What’s new is that RPA adds a bit more complexity, so that it’s not just simply matching dollar amounts and banks. RPA allows you to more easily jump from one system to the next (i.e., move from the TMS to the ERP), gathering more data in less time. Ang likened the technology to macros. “I would say that most people understand what a macro is,” he said. “If they think about clicking on the exact steps that they’re trying to do, recording all the moves and then playing back again every single time they want to run or refresh the data. RPA does exactly that, except that it crosses and moves across the different systems and different environments.” Treasurers should look at the processes where they are spending a lot of time—where you take data from one place and have to rekey it into another place. Look at how much time you’re spending and do some cost estimates. Then look at what it would cost you to automate those processes using RPA.” Making the Case Building the business case for adopting new technology—any new technology—can be a tall order for treasury and finance. Many treasury functions have been running the same treasury management system (TMS) for a very long time; for example, Allianz has been using the same system for 30 years. In her conversations with treasury and finance peers at other organizations, Camille Felton, CTP, FP&A, Senior Lead Analyst, Financial Analytics and Solutions for Chick-Fil-A, has found that it is often quite difficult to get buy-in from senior leadership to invest in RPA technology. “This is not an easy startup cost to be able to swallow,” she said. “It may be a little bit more cost-prohibitive for treasury in organizations where funding is tight. Yet we must think about RPA as a longer-term strategic decision versus a short-term return.” However, companies may find it easier to sway management to approve adoption of RPA over purchasing or upgrading a TMS for one key reason. The bot can be used anywhere in the company, noted Sarah Schaus, Assistant Treasurer and AVP for Allianz Life Insurance Company of North America. A TMS only touches the treasury department, but a bot can impact the entire organization. Greater Implications Whenever the topic of RPA comes up at a treasury and finance conference or forum, the conversation typically turns to whether adopting the technology could ultimately result in some practitioners losing their jobs to machines. The counterargument to that is that RPA frees up financial professionals from having to execute all of those manual processes so they can focus on strategy. The reality is probably somewhere in the middle; some jobs will ultimately be lost, whereas some individuals’ roles will ultimately become more valuable, as they’re not bogged down by busy work. Bob Stark, Vice President of Strategy for Kyriba noted that his treasury clients have all reported productivity improvements after implementing RPA. In every case, this has led to treasury driving more value for the finance team. “Treasury always has more projects than they have time for, so the ROI is relatively easy to measure,” he said. Citi’s Kelvin Ang believes that some jobs may be lost, especially those that oversee smaller manual processes. “As companies start to automate more and more—and we see this a lot, not just in the treasury environment, but in the business operations as well. If you think about a car manufacturer— during the good old days, they manufactured and assembled cars all over the shop before the automated line came in,” he said. “So, what happened with the automated line is similar to what is happening here. The technology comes in and you’re bumping up efficiency. And guess what? Jobs become redundant along the way, largely due to technological advances.” In the treasury environment, whenever there’s a natural attrition, somebody leaves or somebody retires from a treasury team, they don’t go and hire a treasury or finance person or an ex-banker. They go out and hire a data scientist. They go out and hire an engineer. They go out and hire people with new skillsets, to try to look at the same problem through a different lens.” That said, this isn’t a sci-fi movie; there probably will not be a time in which machines take over everything, Ang added. “Humans are still required, as long as there is a certain level of complexity in terms of what is to be done,” he said. “All you really need to do is shift the job focus from being tactical to more strategic.” Ang has observed a bit of a mindshift in the hiring process in treasury departments. “In the treasury environment, whenever there’s a natural attrition, somebody leaves or somebody retires from a treasury team, they don’t go and hire a treasury or finance person or an ex-banker,” he said. “They go out and hire a data scientist. They go out and hire an engineer. They go out and hire people with new skillsets, to try to look at the same problem through a different lens.” So for people who feel they might be at risk of losing their jobs to RPA, it can be a good idea to expand their skillsets. When Schaus adds new team members at Allianz, she seeks out individuals with robotics experience, preferably with the systems her team works with. But for her treasury group, she simply looks for individuals with an interest in learning the technology. “We send them through the training offered by the vendor, and have them shadow our other internal RPA experts,” she said. And in Allianz’s case, RPA has actually created jobs rather than reduce them. The RPA team has grown from three people to seven. Nevertheless, Schaus also knows that as more businesses adopt RPA, certain positions will eventually be phased out. “I understand that people are nervous about losing jobs, but it’s going to happen,” she said. “So my thought is, why don’t you be one of those early adopters? Why don’t you raise your hand and say that you’re interested in robotics, so that you do make yourself marketable for the future?” Case Studies Chick-fil-A In October of 2018, Chick-fil-A’s finance department embarked on an RPA pilot for multiple use cases. One of the biggest challenges for the quick service restaurant chain was that it was experiencing rapid growth, and finance was experiencing capacity constraints as a result. “Even if we wanted to hire more people, we could not find that many people fast enough to get them on board and up-to-speed in order to do the work at the pace it was growing,” said Camille Felton of Chick-fil-A. “One of the things we really struggled with is that everyone at Chick-fil-A today, like other companies, is running at 110% capacity. So we really just said, ‘Let’s take some transactional work and see if we can reduce that effort to free up capacity in areas that need it most.’ And those use cases were so successful that we were quickly able to see the value that this could have in the business.” We said, ‘What if we used a robot to pull down all of our transactional and balance activity from every single bank that we have?’ And then we can use some tools to push that downstream so that at any given time, we could have the cash position readily available.” For treasury, the pilot use case was related to their cash position, which Chick-fil-A had previously performed manually in Excel. Chick-fil-A’s cash management team had created multiple process efficiencies, but they were ultimately gathering copious amounts of data and then populating spreadsheets. While some of their banks had application programming interfaces (APIs) that could be leveraged to pull necessary inputs, others had not yet explored this capability. Additionally, APIs or even using a TMS required initial connection and ongoing support from an IT team that was equally strapped for time, so the treasury team stuck within technologies where they had direct expertise. Enter RPA. “We said, ‘What if we used a robot to pull down all of our transactional and balance activity from every single bank that we have?’ And then we can use some tools to push that downstream so that at any given time, we could have the cash position readily available,” Felton said. “That initial value-add pilot began to show everyone what RPA could do. Ultimately, we created a new group to do specifically RPA in financial services.” RPA was also used to resolve reconciliation issues in accounts payable (AP). “Chick-fil-A had an opportunity to improve the efficiency of matching what we ordered at our stores versus what we were invoiced. Initially, this was done more manually than we’d like to admit, again via Excel,” she said. “But with RPA, we were able to utilize a bot to identify variances and report the discrepancies to our teams instead of them spending valuable time on this research daily.” Now with RPA, AP, treasury and all of financial services have begun to see process efficiencies that are freeing up teammates’ time to shift their focus towards data-driven decisions. Again, these may sound like problems that would be easily solved with a treasury system. However, in Chick-fil-A’s case, it made more sense to go a different way. “Five years ago, we felt we were too small for a TMS,” Felton said. “We just didn’t have many banks. Now we’re seeing we have a need for that, but we’ve found other ways around it because of our IT’s capacity constraints. Due to our growth, IT’s time is focused, rightfully so, on keeping the wheels on the bus for existing systems and their changes. If we were to implement a TMS, we’d get it stable and then turn around and say, ‘We want to add another bank,’ or, ‘We want to change tools.’ Our business is evolving faster than the pace of current IT implementations.” So RPA may be ideal for treasury departments that want to connect disparate systems but don’t have the bandwidth to support a TMS or an API. “If we had a centralized data management platform that could help different systems talk to each other, as well as manage documents in a better way across departments, then we maybe we could use that instead,” Felton said. “But in absence of that, and in absence of a TMS, RPA pairs well with other things.” Allianz Life Insurance Company of North America In 2016, the CFO of Allianz Life Insurance Company informed its finance department that it needed to reduce its expenses by the end of 2019. Allianz’s U.S. finance arm had already been in the process of cutting costs significantly over the past five years, having moved much of its work to its sister company, Allianz India. Trimming expenses further required the next step in the solution toolbox, hence the adoption of RPA, explained Sarah Schaus of Allianz. “What we’re doing is reallocating resources,” she said. “That’s the way a perfect model should work.” The RPA implementation has been largely successful since finance took time to build out the process for using RPA, rather than just implementing the technology without any familiarity and learning on the fly. According to Schaus, it has vastly improved accuracy in treasury and finance, while performing repetitive tasks and transferring data from one system to another. Perhaps most importantly, it makes no errors. Number one, like everything else, the upgrade always takes longer than you expect. And number two, you do need to maintain your manual processes in case there is an issue with the robots, and it takes a day or two to fix them.” The finance department began by purchasing three basic bots, one for treasury, one for controllers and one for corporate enterprise processes. The company also purchased a component called a scheduler, which sets up the times you want certain processes to run. Schaus noted that adopting a bot takes about three months and should really just be looked at as the implementation of a process. “You just put that process on whatever bot has the capacity for it and isn’t going to need to run the same time another process is running,” she said. “So a bot is basically just an empty database and you’re able to program each of your processes on it.” Finance recently performed an upgrade to the bot software, which proved to be a learning experience for the finance department. “Number one, like everything else, the upgrade always takes longer than you expect,” Schaus said. “And number two, you do need to maintain your manual processes in case there is an issue with the robots, and it takes a day or two to fix them.” RPA has already proven to be a huge success. Schaus formerly had an employee that came in at 8:00 a.m. on Monday morning to run a report from the week before. Now, the bot performs this task at 4:00 a.m. The report is there for the manager to review, and robot never pulls the wrong dates or data. In short, RPA reduced a 30-minute task to three minutes. Using a bot has also improved processes for the reconciliation team. The team reconciles policyholder tax payments, and their ledger doesn’t hold details; it’s purely summary-level. “So we created a process for the bot to ensure all of the individual policyholder payments tie with the journal entry on a daily basis,” Schaus said. “And that went from four hours of a person doing all of this to a bot and a person—because the bot can’t do 100 percent of it—to one hour a day.” Finance began its RPA implementation by setting several goals, including training a single pilot robot with four processes, assessing the results of implementing RPA on a larger scale, and creating post-pilot robot implementation processes within controllership and treasury. Having now achieved all of those goals, Schaus is now focused solely on the treasury bot. “It’s gotten to the point where we’ve created an InfoPath document within SharePoint for treasury employees to put ideas of what processes could go on the robot,” she said. “As a leadership team within treasury, we meet to help prioritize those for the RPA team, as well as for the business within treasury, so they have an understanding of what process is going next and why. Now we’re just going through the list of what we’d like to implement and knocking them out, one-by-one.” Ready for RPA According to the 2019 AFP Risk Survey, underwritten by Marsh & McLennan Companies, fully 25 percent of respondents said they use RPA, artificial intelligence and blockchain in some capacity. RPA particularly shows promise in reporting, reconciling and routine data entry. However, in the same survey only a year earlier, the majority of financial professionals named RPA as a technology that could expose their companies to risk. Despite that, few respondents said they were significantly prepared to manage that risk. That’s the problem with new technology; while in theory it can improve internal processes and free up the department to do more strategic work, there are also a lot of unknowns. Moreover, unless your finance department has a mandate to reduce costs, it may be difficult to build a business case for RPA. However, it may only be a matter of time before this technology becomes mainstream in treasury and finance, as more organizations begin to understand its value. In the second part of this guide, we’ll explore artificial intelligence and machine learning and how they might reshape treasury and finance in the near future. Want to see how automation in treasury management improves cash and liquidity management? 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Companies that want to grow need money – but even for promising projects, external sources of finance can be difficult and expensive to access. However, for many companies, there is a secret and untapped...

Companies that want to grow need money – but even for promising projects, external sources of finance can be difficult and expensive to access. However, for many companies, there is a secret and untapped source of cash available to them: the estimated $1.1 trillion worth of liquidity trapped inside companies’ accounts and operations.

The landscape of global payments is evolving as concerns of fraud and the desire for more efficient processes increase. To give insight into how treasury organizations are thinking about the future of payments, Kyriba...

The landscape of global payments is evolving as concerns of fraud and the desire for more efficient processes increase. To give insight into how treasury organizations are thinking about the future of payments, Kyriba commissioned Strategic Treasurer to survey more than 300 organizations to gain a more comprehensive view of the global payments environment.

Companies around the globe generally deal in two opposing cash positions - a cash deficit or cash surplus. And in today’s hyper-competitive world, it is more important than ever for companies to grow capital...

Companies around the globe generally deal in two opposing cash positions - a cash deficit or cash surplus. And in today’s hyper-competitive world, it is more important than ever for companies to grow capital or address a surplus of cash in a way that is scalable with their business.

With over 150 practitioners surveyed, the Strategic Treasurer 2019 Supply Chain Finance Survey discusses and tackles the unique factors that are ultimately influencing the evolution of the SCF space, both from a provider and...

With over 150 practitioners surveyed, the Strategic Treasurer 2019 Supply Chain Finance Survey discusses and tackles the unique factors that are ultimately influencing the evolution of the SCF space, both from a provider and user standpoint.

Over the past decade, treasury teams have been relied upon more and more as strategic partners to the business, delivering insight and intelligence to drive greater value. This has driven demand for more sophisticated...

Over the past decade, treasury teams have been relied upon more and more as strategic partners to the business, delivering insight and intelligence to drive greater value. This has driven demand for more sophisticated treasury technology that offers a greater ROI than ever seen before.

There are likely many things keeping CFOs up at night, but it’s a good bet that global payments security and efficiency rank high on their list. In this report, senior financial leaders break down...

There are likely many things keeping CFOs up at night, but it’s a good bet that global payments security and efficiency rank high on their list. In this report, senior financial leaders break down their challenges and concerns, and discuss best practices for improving global payments.

Technology is evolving at a rapid pace, to the point that innovations are starting to help treasury teams become more intelligent, deliver greater analysis, and offer a truly digital and automated experience.

Technology is evolving at a rapid pace, to the point that innovations are starting to help treasury teams become more intelligent, deliver greater analysis, and offer a truly digital and automated experience.

Connectivity is key to information transparency. Without bank connectivity, treasury teams act with imperfect cash visibility. With the movement to the cloud and mobile technology, connectivity is simplified and within reach of every organization,...

Connectivity is key to information transparency. Without bank connectivity, treasury teams act with imperfect cash visibility. With the movement to the cloud and mobile technology, connectivity is simplified and within reach of every organization, anywhere in the world.

Supply Chain Finance Analyst Report focuses on understanding how SCF can maximize efficiency and optimize cash resources by examining the leading strategies and technologies employed by companies today.

Supply Chain Finance Analyst Report focuses on understanding how SCF can maximize efficiency and optimize cash resources by examining the leading strategies and technologies employed by companies today.

The Treasury and Risk Management Systems (“TMS”) Analyst Report offers a thorough evaluation of the TMS space by providing the data behind which areas of functionality corporates are planning to invest in, the types...

The Treasury and Risk Management Systems (“TMS”) Analyst Report offers a thorough evaluation of the TMS space by providing the data behind which areas of functionality corporates are planning to invest in, the types of solutions seeing the most traction, and an explanation of the primary benefits derived through the use of such a solution.

The Treasury Aggregator Analyst Report focuses on the financial technology solutions that provide sophisticated bank connectivity, payments, security, compliance, and cash management functionality to corporations.

The Treasury Aggregator Analyst Report focuses on the financial technology solutions that provide sophisticated bank connectivity, payments, security, compliance, and cash management functionality to corporations.

CFOs are facing a number of difficult challenges in today’s increasingly interconnected global economy. CFO Publishing, an Argyle company, asked more than 150+ senior finance leaders in a comprehensive new survey their greatest needs...

CFOs are facing a number of difficult challenges in today’s increasingly interconnected global economy. CFO Publishing, an Argyle company, asked more than 150+ senior finance leaders in a comprehensive new survey their greatest needs from their treasurers in a comprehensive new survey. Their responses were surprising and insightful.

This new e-book is designed to provide a quick, graphical overview into how payment hubs can help increase efficiency, reduce costs and enhance fraud prevention.

This new e-book is designed to provide a quick, graphical overview into how payment hubs can help increase efficiency, reduce costs and enhance fraud prevention.

In this special report from Treasury & Risk, underwritten by Kyriba, security experts give their take on how to stay vigilant in the face of potential attacks, so that a fraudulent payment never occurs.

In this special report from Treasury & Risk, underwritten by Kyriba, security experts give their take on how to stay vigilant in the face of potential attacks, so that a fraudulent payment never occurs.

How can today’s CFOs accelerate growth in the face of an increasingly volatile global business environment? According to The Hackett Group, the answer lies in treasury management technology.

How can today’s CFOs accelerate growth in the face of an increasingly volatile global business environment? According to The Hackett Group, the answer lies in treasury management technology.

Why are 10 CFOs ‘sounding off’ about treasury? Because they feel passionate about the direct and immediate value that that treasury can deliver when properly activated via cloud-based technology.

Why are 10 CFOs ‘sounding off’ about treasury? Because they feel passionate about the direct and immediate value that that treasury can deliver when properly activated via cloud-based technology.

Whether it’s improving global cash visibility, managing FX risk or protecting against fraud, more and more companies are seeing the benefits of treasury management systems. However, in their rush to deploy a TMS, they...

Whether it’s improving global cash visibility, managing FX risk or protecting against fraud, more and more companies are seeing the benefits of treasury management systems. However, in their rush to deploy a TMS, they often overlook proper implementation practices, vastly underestimating the challenges and complexity. This results in their TMS project falling short of what they expected due to running out of time, going over budget, or simply getting overwhelmed.

Global Business Intelligence (GBI), a global research and advisory firm, conducted more than 30 interviews with corporate treasurers who have implemented various early pay programs or are thinking about implementing various programs to provide...

Global Business Intelligence (GBI), a global research and advisory firm, conducted more than 30 interviews with corporate treasurers who have implemented various early pay programs or are thinking about implementing various programs to provide deeper content than press release-type information. This corporate guide is designed to help finance, procurement, treasury and supply chain professionals evaluate the latest trends, issues and perspectives that are impacting buyer-led early pay techniques.

Are you and your team providing the right information and decision support to your board of directors? According to recent findings from a new CFO Research survey, most CFOs are not. This is why...

Are you and your team providing the right information and decision support to your board of directors? According to recent findings from a new CFO Research survey, most CFOs are not. This is why we conducted an online roundtable discussion with three experts -- John Granato, CFO of The Andersons, Inc.; Roxi Wen, CFO of Elo Touch; and Bob Stark, VP of Strategy at Kyriba -- to discuss the critical areas where CFOs need to deliver better information and decision support to the board and CEO.

What are the latest trends in treasury, how do you know if you need a treasury management solution (TMS), and what are the common pitfalls to avoid when selecting and implementing a TMS?

What are the latest trends in treasury, how do you know if you need a treasury management solution (TMS), and what are the common pitfalls to avoid when selecting and implementing a TMS?

Strategic Treasurer’s Strategic Treasurer’s newest analyst report for 2017, “The Definitive Guide to Treasury Aggregation Technology Solutions,” details everything financial leaders need to know about treasury aggregators and how they simplify bank connectivity for...

Strategic Treasurer’s Strategic Treasurer’s newest analyst report for 2017, “The Definitive Guide to Treasury Aggregation Technology Solutions,” details everything financial leaders need to know about treasury aggregators and how they simplify bank connectivity for modern treasurers.

Every CFO wants to be a better strategic business partner to the board of directors and the CEO. In many cases they are, but in certain areas, they are failing to deliver what the...

Every CFO wants to be a better strategic business partner to the board of directors and the CEO. In many cases they are, but in certain areas, they are failing to deliver what the board really wants, according to a new survey from CFO Research in collaboration with Kyriba.

For CFOs charged with safe-guarding corporate coffers, there is no silver bullet that can stop payments fraud in its tracks. Managing and minimizing the problem is a holistic, pro-active effort that combines best practices...

For CFOs charged with safe-guarding corporate coffers, there is no silver bullet that can stop payments fraud in its tracks. Managing and minimizing the problem is a holistic, pro-active effort that combines best practices with real-time detection and monitoring technology.

While many treasurers hope they are well prepared to prevent fraud from occurring, every successful fraud attempt exposes weak controls and detection methods that serve as a learning opportunity for others. This guide offers...

While many treasurers hope they are well prepared to prevent fraud from occurring, every successful fraud attempt exposes weak controls and detection methods that serve as a learning opportunity for others. This guide offers excellent insight into the magnitude of fraud threats, ranging from internal collaborative attempts to external hacks and ransomware schemes.

Corporate fraud is at an all-time high -- is your organization protected? One of the mandates of the modern CFO is to make sure they have secure, end-to-end financial controls in place to prevent...

Corporate fraud is at an all-time high -- is your organization protected? One of the mandates of the modern CFO is to make sure they have secure, end-to-end financial controls in place to prevent both internal and external fraud and protect against loss.

The FinTech revolution is upon us and emerging technologies are already having an impact on corporate treasury and treasury technology. See how AFP's latest Treasury in Practice (TIP) guide highlights the treasury potential of...

The FinTech revolution is upon us and emerging technologies are already having an impact on corporate treasury and treasury technology. See how AFP's latest Treasury in Practice (TIP) guide highlights the treasury potential of distributed ledger technology, machine learning, APIs. (FP TiP Guide underwritten by Kyriba)

Supply chain finance (SCF) is becoming an increasingly popular topic among treasurers and CFO as working capital and risk management take on greater importance for modern firms. Donload this new report from Strategic Treasurer...

Supply chain finance (SCF) is becoming an increasingly popular topic among treasurers and CFO as working capital and risk management take on greater importance for modern firms. Donload this new report from Strategic Treasurer to learn more about the current state of the industry.

Accurate cash forecasting is the lifeblood of any treasury department. All financial decisions, from near-term liquidity to strategic planning, are based on forecasts. However, treasurers continue to struggle creating timely and relevant forecast. Download...

Accurate cash forecasting is the lifeblood of any treasury department. All financial decisions, from near-term liquidity to strategic planning, are based on forecasts. However, treasurers continue to struggle creating timely and relevant forecast. Download this new guide from Treasury Strategies.

In this eBook, Actualize Consulting and Kyriba address the many strategic advantages that an in-house bank provides, the key benefits that range from bank fee savings to increased visibility of corporate-wide FX exposures and...

In this eBook, Actualize Consulting and Kyriba address the many strategic advantages that an in-house bank provides, the key benefits that range from bank fee savings to increased visibility of corporate-wide FX exposures and enhanced controls, as well as the must-dos and dont's for a successful in-house bank launch. Considering if an in-house bank is right for your organization? This eBook is right for you!

The modern treasurer now manages an expanded risk profile with increasingly technical compliance challenges and increasingly sophisticated instances of cyber-crime. Meanwhile, strategic cash management, optimizing working capital and centralizing payments among others remain top...

The modern treasurer now manages an expanded risk profile with increasingly technical compliance challenges and increasingly sophisticated instances of cyber-crime. Meanwhile, strategic cash management, optimizing working capital and centralizing payments among others remain top priorities. Download this eBook to gain insight into seven competitive advantages and the the available tools, techniques and technology you can utilize to overcome those challenges.

Knowing what to expect is key to any successful implementation. At Kyriba, we’ve created the best-in-class team and implementation framework – enabling you to transition smoothly to your new system, with less stress and...

Knowing what to expect is key to any successful implementation. At Kyriba, we’ve created the best-in-class team and implementation framework – enabling you to transition smoothly to your new system, with less stress and more efficiency. In this guide, you'll find the keys to quick and seamless implementation, including our certified team Predictable methodology Support after Go-Live. Kyriba is committed to providing an experience that ensures the ongoing success of each and every customer. From well-defined milestones, a clear roadmap, to post-implementation support, this e-book describes how our approach can make your implementation experience as smooth and efficient as possible.

Securing bank connectivity has never been more important as reported fraud attempts focused on infiltrating payment workflows and stealing banking information are on the rise. Thankfully, in the case of bank connectivity, implementing better...

Securing bank connectivity has never been more important as reported fraud attempts focused on infiltrating payment workflows and stealing banking information are on the rise. Thankfully, in the case of bank connectivity, implementing better security protocols to reduce the threat of fraud and cybercrime is very achievable.

This research report, produced by Ardent Partners and underwritten by Kyriba, details the true value of supply chain finance (SCF), covers the opportunities SCF programs can bring, as well as provides a framework for...

This research report, produced by Ardent Partners and underwritten by Kyriba, details the true value of supply chain finance (SCF), covers the opportunities SCF programs can bring, as well as provides a framework for enterprises seeking to leverage this financial solution.

Kyriba and the UK's Association of Corporate Treasurers conducted their fourth annual survey in early 2016 into corporate treasury community's concerns, challenges and priorities. Findings are based on the insights and opinions of a...

Kyriba and the UK's Association of Corporate Treasurers conducted their fourth annual survey in early 2016 into corporate treasury community's concerns, challenges and priorities. Findings are based on the insights and opinions of a cross-section of 332 finance and treasury professionals from companies of all sizes and geographies. Download the report to learn more about the challenges your peers are facing, such as lack of resources and growing operational complexity, more onerous compliance requirements, and an expanding role of treasurer. Increasingly, not only are treasurers concerned with the ‘traditional’ treasury issues of liquidity and risk, but their skills are in demand to take the lead in working capital optimization, and to play a more strategic role in the business. Find out how treasurers are responding to and embracing these challenges, and some of the factors that are driving success.

Treasury management solutions, especially cloud solutions, enable treasurers to provide a higher level of risk management, including disaster recovery and business continuity planning; strategic cash forecasting, and improved currency exposure management. Find out more...

Treasury management solutions, especially cloud solutions, enable treasurers to provide a higher level of risk management, including disaster recovery and business continuity planning; strategic cash forecasting, and improved currency exposure management. Find out more in this report the benefits of a TMS, beyond the basics of time savings and productivity.

Treasury is a critical operation within any organization. With Business Continuity Planning, Treasury has yet another opportunity to demonstrate their leadership by ensuring BCP is a core component of treasury’s risk management plan.

Treasury is a critical operation within any organization. With Business Continuity Planning, Treasury has yet another opportunity to demonstrate their leadership by ensuring BCP is a core component of treasury’s risk management plan.

Working capital has traditionally been a zero-sum game in the supply chain, as increased DPO for buyers incurs extended DSO for sellers, often causing friction in the buyer-seller relationship. With the introduction of supply...

Working capital has traditionally been a zero-sum game in the supply chain, as increased DPO for buyers incurs extended DSO for sellers, often causing friction in the buyer-seller relationship. With the introduction of supply chain finance (SCF) tools such as reverse factoring and dynamic discounting, organizations can maintain prompt payments to their suppliers without adversely impacting their own cash flow, and can even use SCF to leverage their own free cash to generate risk-free returns. Integrating treasury management with SCF solutions enables organizations to implement straightforward programs that support their supplier communities, as well as providing tangible benefits for optimizing their own working capital. This ebook outlines some of the key issues for organizations who may be considering implementing SCF, or are simply looking for details of how an SCF program could benefit their organization. Topics include: Key benefits – both to vendors and suppliers – of SCF programs Outlines of programs available How supply chain finance and treasury management can work together

Risk mitigation and regulatory compliance are two of every CFO’s most pressing concerns. The CFO is expected to provide certainty and predictability of cash flow and earnings targets, yet these variables are subject to...

Risk mitigation and regulatory compliance are two of every CFO’s most pressing concerns. The CFO is expected to provide certainty and predictability of cash flow and earnings targets, yet these variables are subject to daily volatility, and can be impacted by a significant number of internal and external influences. The CFO must also be an expert in compliance, understanding the details of financial regulations, and the nuances of how to most efficiently comply. A treasury management solution (TMS) can provide wide-ranging benefits for a CFO to reduce their exposure to risk and noncompliance, in addition to providing the treasury team with the tools to make more accurate, data-driven financial decisions. This ebook highlights how implementing a TMS can assist the CFO in addressing a number of risk factors, including: Liquidity risk FX volatility Fraud and cybercrime Operational risk Regulatory compliance

This ebook outlines seven of the most critical reasons why treasury professionals in more than 100 countries use Kyriba to manage their organization’s most critical asset. Topics covered in the ebook include: Bank connectivity...

This ebook outlines seven of the most critical reasons why treasury professionals in more than 100 countries use Kyriba to manage their organization’s most critical asset. Topics covered in the ebook include: Bank connectivity Cash forecasting Security and fraud prevention Creating strategic value See for yourself why Kyriba’s SaaS treasury management system is the most-used TMS, trusted by more than 1,500 of the world’s largest and most respected organizations.

In an environment of regulatory change, globalization, market volatility and emerging business and financial risks, the role of the finance function, and the demands on financial leadership, continue to evolve. With responsibilities increasingly crossing...

In an environment of regulatory change, globalization, market volatility and emerging business and financial risks, the role of the finance function, and the demands on financial leadership, continue to evolve. With responsibilities increasingly crossing borders, regulatory and financial infrastructures, business cultures, languages and time zones, global leadership has become the cornerstone of the CFO role. This ebook outlines some of the key questions that CFOs need to ask, in order to position their organization for maximum growth. Topics covered include: The need for 100% cash visibility How the finance function competes The impact of trapped cash Financial risk management

Lack of visibility over cash balances and risk exposures is cited year after year in industry surveys as treasurers’ top priority and biggest challenge. This ebook outlines straightforward steps that corporate treasurers can take...

Lack of visibility over cash balances and risk exposures is cited year after year in industry surveys as treasurers’ top priority and biggest challenge. This ebook outlines straightforward steps that corporate treasurers can take to achieve 100% visibility on global cash balances.

With the growth of SaaS solutions in treasury, it seems that everyone is clamoring to be “in the cloud,” but not all solutions are the same. This guide helps you clear up the vocabulary and...

With the growth of SaaS solutions in treasury, it seems that everyone is clamoring to be “in the cloud,” but not all solutions are the same. This guide helps you clear up the vocabulary and help you understand why the distinction matters. There are many software providers in the treasury software industry masquerading as true SaaS vendors, so it is important to help you find the wolf in sheep’s clothing.

In the wake of Basel III and a highly volatile FX market, effective cash forecasting has become even more critical for treasurers. Read valuable insight from a number of treasury and banking veterans into...

In the wake of Basel III and a highly volatile FX market, effective cash forecasting has become even more critical for treasurers. Read valuable insight from a number of treasury and banking veterans into how organizations can optimize their cash forecasting process, and drive meaningful business value. This special report from Treasury & Risk magazine features thought leaders from organizations including Citi, Deutsche Bank, Kyriba and Treasury Strategies, discussing cash forecasting best practice, as well as advice for developing, executing and measuring successful cash forecasting programs.

Cash forecasting is an art that is rarely perfected. Every organization talks about forecasting more effectively, but few allocate sufficient people, time, and technology to build an effective program. Understanding the importance of an accurate cash...

Cash forecasting is an art that is rarely perfected. Every organization talks about forecasting more effectively, but few allocate sufficient people, time, and technology to build an effective program. Understanding the importance of an accurate cash forecast that can be relied upon for key financial decisions is critical to making the right investments in forecasting. This ebook gives practical advice for treasurers to develop a cash forecasting program that benefits not just the treasury team, but across the organization. It’s essential reading for anyone who is looking to take their treasury program to the next level and drive meaningful value.

This eBook will explain the benefits of implementing a payment hub, shared services, or a combination of the two, as well as solutions to improve workflow processes and mitigate payment fraud, which is the...

This eBook will explain the benefits of implementing a payment hub, shared services, or a combination of the two, as well as solutions to improve workflow processes and mitigate payment fraud, which is the most dangerous threat to a treasurer’s reputation and career. Every day, new stories emerge about hackers successfully stealing from corporates through sophisticated social engineering techniques that specifically prey upon exposures in payment workflows. With this ebook, the CFO and treasury professionals will gain a deeper understanding of how centralizing payments can reduce risk, add control, and maximize visibility of global payments.

Consistent accurate cash flow forecasting is arguably the holy grail of corporate treasury. From securing liquidity to internal customers to support their local business, to providing free cash flow guidance and variance analysis to...

Consistent accurate cash flow forecasting is arguably the holy grail of corporate treasury. From securing liquidity to internal customers to support their local business, to providing free cash flow guidance and variance analysis to the board of directors and investors, to preparing scenario cash flow analysis to support future M&A, share buy-back or dividend strategies, corporate treasurers are tasked with a tremendous responsibility to predict the future cash flow performance of their organization. For an organization’s cash forecasting program to be optimized, there are six critical questions that every treasurer should ask themselves. Download this ebook to learn how to prepare yourself effectively.

Hear from experts at Kyriba and e5 Solutions how to prepare your organization for eBAM. This special report, developed by Treasury & Risk magazine, contains a number of features and essays from thought leaders...

Hear from experts at Kyriba and e5 Solutions how to prepare your organization for eBAM. This special report, developed by Treasury & Risk magazine, contains a number of features and essays from thought leaders in the industry, on topics ranging from the true value that eBAM will deliver to corporates, to innovations in payments and how this could impact businesses.

Treasury departments around the world have been given the mandate of delivering real business value across the organization. The first step toward achieving this is to transform the treasury function from reactive and transaction-oriented...

Treasury departments around the world have been given the mandate of delivering real business value across the organization. The first step toward achieving this is to transform the treasury function from reactive and transaction-oriented to proactive and strategic in nature. Renowned experts from across the Big Four, banks, analysts, treasury consultancies and a broad range of global organizations offer insight on a wide of topics essential to the modern treasury and finance leader. If you want to drive more value for your organization, download this informative and insightful ebook to learn from industry leaders how to become a proactive, strategic, business partner. Themes covered in the ebook include: Thinking more strategically Effectively managing risk to become a more proactive treasury Documenting your treasury vision Centralizing your treasury Automating, innovating and analyzing

There is a broad range of both internal and external threats that face the integrity of an organization’s corporate cash. In order to understand how your organization can become more secure, it’s critical to...

There is a broad range of both internal and external threats that face the integrity of an organization’s corporate cash. In order to understand how your organization can become more secure, it’s critical to know what vulnerabilities you may be exposed to, and how you can counter them. This eBook shows how Kyriba's SaaS treasury management system can help your company become more secure in the war on fraud.

Kyriba and the UK's Association of Corporate Treasurers conducted a survey in early 2015 into treasury teams' use of technology, strategic input into the business and key issues that they face. The report provides...

Kyriba and the UK's Association of Corporate Treasurers conducted a survey in early 2015 into treasury teams' use of technology, strategic input into the business and key issues that they face. The report provides detailed data on technology use, strategic input and productivity of companies with revenues from under £100 million to over £10 billion. This report is an invaluable tool for anyone who is interested in learning about how fraud can impact the organization, how improved productivity is achievable through the use of treasury management technologies, or would simply like to see how their treasury team measures up against their peers.

Learn from experts at Kyriba, Deutsche Bank and Citi how to optimize your organization’s liquidity. This special report, developed by Treasury & Risk magazine, contains a number of features and essays from thought leaders...

Learn from experts at Kyriba, Deutsche Bank and Citi how to optimize your organization’s liquidity. This special report, developed by Treasury & Risk magazine, contains a number of features and essays from thought leaders in the industry, on topics ranging from reducing the cash conversion cycle, to receivables management and the impact of regulatory chance on liquidity management.

As globalization increases, treasury has become an increasingly international operation. However, the practices and regulation of treasury are not uniform across the globe. What may be viewed as best practice in one country may...

As globalization increases, treasury has become an increasingly international operation. However, the practices and regulation of treasury are not uniform across the globe. What may be viewed as best practice in one country may not be appropriate in other markets. This has implications both for North American companies looking to expand globally, and also for foreign companies planning to establish or acquire North American business. Treasury teams need to ensure that their cash management processes are optimized for all markets, to both ensure the smooth running of their treasury operations, as well as complying with local regulations. This comprehensive guide provides essential information for any treasury team that is looking to enter new territories, or already has an international presence, but wants to ensure that it’s adhering to best practices worldwide.

Cash visibility will continue to be the foremost objective for corporate treasury teams in 2015, as better accuracy of current and projected cash balances enables more effective  investment, deployment, and protection of cash from...

Cash visibility will continue to be the foremost objective for corporate treasury teams in 2015, as better accuracy of current and projected cash balances enables more effective  investment, deployment, and protection of cash from risk exposures. Innovative treasurers will continue to strive for improvement through streamlining internal processes, minimizing financial costs for external borrowing and overdrafts, not to mention optimizing returns on surplus cash, with direct and indirect impact on the creditworthiness of the enterprise and interest income/expense performance. Learn how you can improve your organization's cash visibility in order to make more informed, strategic decisions for deploying corporate cash.

A reality that pervades the treasurer’s office in multinational and domestic corporations alike is that reliable cash forecasting, even in the short term, is extremely difficult to achieve in practice. Accurate cash forecasting always...

A reality that pervades the treasurer’s office in multinational and domestic corporations alike is that reliable cash forecasting, even in the short term, is extremely difficult to achieve in practice. Accurate cash forecasting always ranks highly among corporate treasurers’ priorities, but few treasurers can attain the high levels of cash visibility and usage that will be achieved when a truly effective short term forecasting solution is in place. Read this white paper to learn what common challenges treasury department faces​, where they typically make mistakes, and what they can do to deliver short term cash forecasting best practice.

Companies ranging from Target to J.P. Morgan have recently been impacted by corporate financial fraud, and it remains a serious issue. By failing to implement effective technology and processes, many organizations continue to leave...

Companies ranging from Target to J.P. Morgan have recently been impacted by corporate financial fraud, and it remains a serious issue. By failing to implement effective technology and processes, many organizations continue to leave themselves to both internal and external threats. This white paper outlines some of the key issues facing treasury teams, and offers advice on how they can reduce their exposure to financial fraud, through technology and process improvements.

Changing technology, growing global commerce and new monetary policies are requiring corporations to rethink or re-imagine the role of treasury in a post-recession world, as well as what tools will power this function. ​...

Changing technology, growing global commerce and new monetary policies are requiring corporations to rethink or re-imagine the role of treasury in a post-recession world, as well as what tools will power this function. ​ This white paper, developed exclusively for Kyriba by analyst and ZDNet contributor Brian Sommer, ​outlines  how new technology and approaches can help treasury teams navigate the new economy.