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Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report which details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe with at least 15 percent of their revenue coming from overseas, sustained $49.09 billion in total impacts to earnings from currency volatility.

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The May 2023 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the fourth quarter of 2022. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15% of their revenue coming from overseas.   Currency Impact Report - Overview Kyriba Currency Impact Report: Key Findings The collective quantified negative impact reported by both North American and European companies totaled $30.26 billion in Q4 2022, a 35.9% decrease from Q3 2022. 14% of corporates studied (166/1200) quantified +/- impacts totaling $32.21 billion ($30.22 billion headwinds), ($1.99 billion tailwinds). The euro was the currency most mentioned as impactful by North American and European companies, while the Korean won was the most volatile currency. 163 North American and European companies reported currency headwinds in Q4 2022. Of those companies, 154 (94.5%) companies quantified their FX impacts. Total Quantified Currency Impacts by North American and European Companies (Billions) North American Companies’ Quantified Currency Impact (Billions) European Companies’ Quantified Currency Impact (Billions) Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $28.94 billion impact in Q2 2022, 33% smaller than the impact in Q3 2022.1 The average earnings per share (EPS) impact reported by North American companies in Q4 2022 was $0.05, five times greater than the industry standard MBO of less than $0.01 EPS impact. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The euro was the most mentioned currency, a continuation from the prior quarter. The Canadian dollar was the second most-mentioned, followed by the Japanese Yen, the Australian dollar, and the Brazilian real. The euro was the most volatile currency weighted by GDP (page 6). Number and Percentage of North American Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions In Q4 2022 earnings calls, 10 percent of North American companies that reported impacts fielded analyst questions. Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Increasing from last quarter, European companies reported an 68% percent increase in negative currency impacts, with companies reporting $1.28 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 1.1% reported headwinds in Q4 2022. Of those, 100% quantified their negative impacts (see page 15). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The euro was the most mentioned currency in earnings calls for Europe, followed by the United States dollar and the Swedish krona. The Danish krone was the fourth most mentioned, followed by the Russian ruble. The ruble was the third most volatile currency as well as the fifth most volatile currency weighted by GDP (page 6). Number and Percentage of European Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to European Companies (Millions) Percentage of European Companies That Fielded Analyst Questions In Q4 2022 earnings calls, 2 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions Quantified Negative Currency Impact (Billions) Number of Companies Reporting Negative Currency Impact   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The May 2022 Kyriba Currency Impact Report analyzes the reported effects of currencies to North...

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The May 2022 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the fourth quarter of 2021. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15% of their revenue coming from overseas.     Currency Impact Report - Overview Kyriba Currency Impact Report — Key Findings The collective quantified negative impact reported by both North American and European companies totaled $6.74 billion in Q4 2021, a 215% increase from Q3 2021. 16% of corporates studied (187/1200) quantified +/- impacts totaling $11.21 billion ($6.74 billion headwinds), ($4.47 billion tailwinds). The Canadian dollar was the currency most mentioned as impactful by North American companies. The euro was the currency most mentioned as impactful by European companies. 132 North American and European companies reported currency headwinds in Q4 2021. Of those companies, 112 companies quantified their FX impacts. Total Quantified Currency Impacts by North American and European Companies (Billions) North American Companies’ Quantified Currency Impact (Billions) European Companies’ Quantified Currency Impact (Billions) Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $4.56 billion collective loss in Q4 2021, ending a downward trend and a 390% increase in the magnitude of aggregate headwinds.1 The average earnings per share (EPS) impact reported by North American companies in Q4 2021 was $0.04, four times greater than the industry standard MBO of less than $0.01 EPS impact and a maintenance of the level set by the previous quarter. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The Canadian dollar (CAD) was the most mentioned currency, continuing a trend with the CAD being the most mentioned from Q3 2021 as well. The euro was the second most-mentioned, followed by the Chinese renminbi (CNY), and the Russian ruble (RUB). The euro was the most volatile weighted by GDP, while the CNY was the third most volatile and the GBP was the fourth most volatile (page 6). Number and Percentage of North American Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions)   Currency Impact on European Corporate Earnings Increasing from last quarter, European companies reported an 80% percent decrease in negative currency impacts, with companies reporting $2.18 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 5% reported headwinds in Q4 2021. Of those, 61% quantified their negative impacts (see page 15). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The euro was the most mentioned currency in earnings calls for Europe, followed by the Swedish krona (SEK) and US dollar (USD). The Great British pound (GBP) was the fourth most mentioned, followed by the Danish krone (DKK). The euro and the pound were all found to be in the top 5 most volatile currencies weighted by GDP as well (page 6). Number of European Companies Reporting Negative Currency Impact & Percentage of European Companies Quantifying Impacts   Average Negative Impact to European Companies (Millions)   Percentage of European Companies That Fielded Analyst Questions In Q4 2021 earnings calls, 10 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries   Comparison of Currency Impact to North American and European Companies   Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions   Quantified Negative Currency Impact (Billions)   Number of Companies Reporting Negative Currency Impact   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

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

Presented to Kyriba, October 2020 Based on ratings collected in IDC’s 2020 SaaSPath Survey (IDC #US46933620), Kyriba placed in the highest scoring group of vendors serving the SaaS Treasury Management (TM) application market and has been awarded IDC’s 2020 SaaS TM Customer Satisfaction Award. IDC’s customer satisfaction award program, the CSAT Awards, recognizes the leading software-as-a-service (Saas) vendors in each application market who receive the highest customer satisfaction scores based on IDC’s SaaSPath survey. SaaSPath is a global survey of approximately 2,000 organizations across all geographic regions and company sizes, where customers are asked to rate their vendor on more than 30 different customer satisfaction metrics. How Customers Rate Kyriba Figure 1 shows how Kyriba scored in each of the customer satisfaction categories, relative to the overall average scores in each category across all vendors that were reviewed. The inner line represents the overall group averages, while the outside line depicts Kyriba’s scores. Note: All scores have been rounded to the nearest 0.5 for illustration. FIGURE 1: Kyriba Customer Satisfaction Ratings vs. TM Vendor Average Ratings Source: IDC SaaSPath Survey, 2020 Where Customers Say TM Vendors Can Do Better On average, across all the vendors evaluated in this TM market study, figure 2 illustrates the areas in which technology buyers believe the greatest vendor challenges currently exist. These are not specifically reflective of any one vendor, but rather of all TM vendors averaged together, helping to shed light on areas of opportunity for all TM vendors to consider. TM vendors should take note of these areas and self-evaluate how they can improve their own capabilities in these areas to better serve their customers. Likewise, technology buyers and those considering future TM purchases should proactively discuss these potential problem areas with their prospective vendors upfront during the evaluation process to help minimize any challenges in the future. FIGURE 2: TM Vendor Vulnerabilities Source: IDC SaaSPath Survey, 2020 Note: All scores have been rounded to the nearest 0.5 for illustration. What’s Behind IDC’s SaaS Award Program SaaSPath is IDC’s premier SaaS-specific benchmarking survey, providing demand-side guidance on the mind and journey of SaaS buyers, including a deep dive into 15 functional application markets, including accounts payable, accounts receivable, digital commerce, enterprise asset management (EAM), enterprise resource planning (TM), finance, human capital management (HCM), procurement, professional services automation (PSA), sales force automation (TM), supply chain management (SCM), subscription billing, tax, travel and expense (T&E), and treasury and risk. Coverage includes application adoption, deployment models, budget plans and replacement cycle timing, purchasing preferences and attitudes toward SaaS buying channels, application migration strategy, drivers and inhibitors, packaging and pricing options, and in-depth vendor reviews, ratings, spend and advocacy scores for leading vendors in each of the 15 functional application markets. The SaaSPath survey is conducted across all geographic regions of the world, all company sizes, includes roughly 55% IT leaders and 45% line of business leaders, and its respondent base ranges from senior managers up through chief experience officers (CXOs). All respondents go through an extensive screening process to ensure they are familiar with the technologies they are being asked about, are current users, and have influence in their company’s technology buying decisions. Further, all customer satisfaction metrics and ratings are collected solely from current customers of the vendors being rated, to ensure scoring reflects up-to-date customer sentiment based on proper vendor familiarity and knowledge. Each customer is asked to rate their primary application vendor on 33 different metrics, including 19 customer satisfaction metrics (see Table 1) and 13 vendor vulnerability categories (see Table 2). These 33 metrics, detailed below, span across 3 main categories of review, including the vendor itself and its relationship with the customer, several aspects of the product’s implementation, and a broad range of assessment examining the product’s usage and value. TABLE 1: Customer Satisfaction Metrics Q. Based on your experiences, rate Kyriba as a SaaS TM vendor. Please use a 0–10 scale where 0 is ‘Poor’ and 10 is ‘Excellent’. Source: IDC SaaSPath, 2020 TABLE 2: Vendor Vulnerabilities Q. Which of the following issues has your organization experienced with Kyriba as your SaaS TM vendor? Select all the apply. Source: IDC SaaSPath, 2020 Customer satisfaction ratings and vulnerabilities for each vendor are combined and weighted to determine the leading vendors within each application market.

Welcome to the 2022 Treasury Technology Analyst Report, the definitive guide for thoughtful financial stewardship in the digital age. Strategic Treasurer created this report as an aid to practitioners exploring how treasury technology meets...

Welcome to the 2022 Treasury Technology Analyst Report, the definitive guide for thoughtful financial stewardship in the digital age. Strategic Treasurer created this report as an aid to practitioners exploring how treasury technology meets treasury needs. Treasurers considering digitizing their processes often face a learning curve as they approach the complexity of many categories of treasury technology. AI, ML, API, RPA, and many other technological terms can sound like alphabet soup, and few feel confident about navigating selection, buy-in, and implementation efficiently. This report can help. Treasury Technology Analyst Report 2022 - the Definitive Guide to Treasury Technology Solutions Today’s treasurer faces a rapidly shifting technology environment full of acronyms and innovations. Those needing the help of modern technology are often those most pressed for time, and the relevant information on technology lies scattered across the internet, buried in either technical jargon or oversimplifications. The goal of the Analyst Report is to offer a single document explaining what matters about technology to today’s busy treasury department. We release a new report annually with content fully revised to be relevant and up-to-date in the current context. Our hope is that you will be able to pick up a single book (or open a single digital document) and come away with insight into the technology landscape’s trajectory, a good idea of which functionality and solution types are most relevant to your company’s current and anticipated challenges, and a solid framework for how to proceed. If you have encountered our Analyst Reports in years past, you may have seen separate documents for different technology types. In 2021, anticipating the upcoming addition of enterprise liquidity management (ELM) solutions as a fourth solution category, we decided it was time to combine the reports into a single document to simplify the reader’s experience. The 2022 Analyst Report begins with an “Overview” section aimed at exploring foundational concepts and terms and discussing treasury challenges and technology innovations on a macro level. Following the Overview, readers will find four categories of solution types explained in detail: treasury management systems / treasury and risk management systems (TMS/TRMS), treasury aggregators, supply chain finance and cash conversion cycle solutions, and the more recently defined category of ELM. The Environment and Challenges Facing Treasury The market for digital treasury tools is impacted by every factor that impacts treasury itself. The department’s responsibilities and the environment it must cope with both shift with every major economic event and with every wind that changes the face of corporate operations in general. What follows is a discussion of what we consider the top factors influencing treasury’s needs and concerns today. Use this section to consider how your own organization and industry relate to the general factors driving treasury technology adoption and how that might impact the solutions available for your specific needs. Adding Demands Rapidly, Adding Staff Slowly The demands placed on treasury seem to multiply with each new economic event and corporate challenge. As more is added to treasury’s plate, the department must respond either with more manpower, more tools to leverage, or both. Treasury’s core responsibility has always been to protect the organization’s most liquid assets, making them managers of cash and of the risks to that cash. As events occur, corporations become aware of more risks to their cash — often through their own painful experiences, global impacts, or experiences of other companies. Economic crises, clearly increasing fraud risks, and other factors all serve to turn the C-suite’s attention on their liquidity risk managers: treasury. As a whole, treasury is glad to have the ear of the C-suite, to have the importance of treasury risk management recognized more widely, and to have more specific areas of risk management entrusted to their care. Treasurers are now considered responsible in many companies for improving organizational efficiency and overseeing payment security, and many of the expectations for its foresight and leadership in treasury risk management have climbed. Several of the other items listed in this section on the treasury environment are part of this increase — situations that demand higher risk awareness, more rapid analysis, and broader attention. While the expansion of treasury’s role is an honor, each increase multiplies treasury’s workload — and these are just the industry-wide increases in treasury demands. As each individual organization grows into new regions, faces new regulations, or acquires subsidiaries, treasury’s workload extends again. The steady expansion of treasury’s responsibilities has been coupled with fairly little increase in its staffing, as survey data shows treasury teams growing only slowly over the years. One added staff member alone cannot make up for the level of demand increases. Treasury needs leverage, and that leverage can most often be found in the form of technology. Vendors have responded to seeing treasury departments stretched thin by building highly efficient tools. By automating many of the most onerous and time-consuming tasks, treasury technology extends the reach of the staff and empowers them to do what only they can, such as strategic and advisory tasks. Some consider the technology vs. staff issue a zero-sum game, but this is not the case in treasury. Certain tasks are, without doubt, being automated in most companies. Staff whose roles are defined by easily automated tasks will need to reskill. However, a lower headcount is not needed in treasury. Rather, technology makes the slow increase in headcount sufficient by offering staff the leverage and efficiency they require in order to do what is increasingly asked of them. Security in the Hybrid and Remote Era The abrupt shift in work locations and the temporary (or permanent) closing of offices around the world in the early weeks of COVID-19 brought on a storm of logistical issues as well as fraudulent activity. Some of the factors that contributed to the security situation were temporary, such as the rampant confusion that lent credence to almost any explanation for payment information changes. However, some of the complications forced long-term adaptations, such as digitization of payment processes, that will continue to be used whether the company remains remote or not. Indeed, the pandemic gave a jolt of forward momentum to adoption of treasury technology. The percentage of payments made electronically shot up in 2020 and has remained elevated since (figure 1). Industry standards have shifted to more electronic processes, and any companies continuing to allow remote work must have the infrastructure and tools to support the logistics and security needs that come with the work from home (WFH) environment. Despite the long-discussed and somewhat implemented “return to office,” the prevalence of remote work and of companies using a hybrid model (remote some days, in office others) has dramatically and — it seems — permanently increased in the wake of the pandemic. Besides the obvious need for digital systems that allow for remote access, the remote worker’s security needs require modern technology. Meanwhile, criminals’ tools and methods have continued to improve, forcing more robust security measures regardless of work location. While relying on a solution, especially one housed in the cloud with remote access capabilities, may seem a counterintuitive measure for fraud prevention, these solutions actually serve to strongly counteract vulnerabilities in three primary ways: They reduce touchpoints or manual handoffs. The fewer the touchpoints, the less opportunity criminals have to insert themselves into a process. They mitigate complexity and improve visibility, narrowing the front that must be defended and making it harder for criminal activity to go unnoticed. They allow for built-in controls that cannot be bypassed. With rising industry standards, heightened risks, cyber insurance requirements, and remote work, the security environment and work location changes are challenging many organizations to speed their adoption timelines for solutions that can help snuff out their vulnerabilities. Efficiency and Scalability Whether due to economic conditions, supply chain problems, geopolitical issues forcing abrupt changes, or other issues, companies today find themselves in need of efficiency, scalability, and the flexibility they offer. Efficiency and scalability are both more easily achieved by leveraging modern technology. Efficiency has to do with processes taking as long as they need to for achieving quality results and no longer. It conserves resources (including time and manpower) so that your company can use them when and where they are most needed. Inefficiency, on the other hand, brings with it error-prone processes (which can be costly), wasted capital, and limited options. For example, if payment approvals take the full length of payment terms, the company loses the option to avail itself of early payment discounts. In areas such as these, inefficiency erodes the company’s control over liquidity and flexibility in time of turmoil. This alone is enough to make efficiency across relevant areas of the organization a matter of import to treasury. In addition, organizational leadership relies on treasury to provide rapid analysis and insight into the impacts and threats caused by various situations. For many treasury departments, the levels of efficiency required to rapidly analyze today’s masses of data despite thin staffing are only achievable through technology and automation. On the scalability side, recent years have proven volatile for the corporate world. Some have seen rapid growth in certain areas. Some have abruptly had to shutter operations in particular countries or lines of business. Many have had to adjust and redirect their strategies due to supply chain problems, lockdowns and travel restrictions, skyrocketing gas prices, and more. For these and other reasons, the corporate world is finding itself in need of rapid scalability, and treasury itself may have to swiftly adapt. When processes are manual, scalability is low. Automation multiplies staff efforts, and many solutions — especially those built on more modern concepts such as software-as-a-service or microservices — make it far easier for treasury to easily adjust the capacity and leverage they are working with up or down as circumstances change. Heavier Compliance Burdens A 2021 survey found that 54% of treasury and finance respondents considered the compliance burdens to be heavier than they had typically been in the past. Over the next 1-2 years, 66% expected their regulatory burdens to increase, and only 3% expect to see any decrease. The compliance and regulatory environment also ranked as the most impactful out of several options on the respondent organizations’ capital spending or cash holdings (see figure 3). From Know Your Customer (KYC) requirements, which respondents expected to be the most impactful to their operations in the next three years by a large margin, to PCI-DSS, GDPR, FBAR, etc., regulations are put in place to protect against negligence and willful actions that enable fraud and other problems. While many of these regulations help protect companies and banks, complying with them takes time and resources. It is, without doubt, burdensome, and each year seems to add some weight. Regulations spur the adoption of financial technology in two ways. First, some solutions directly or indirectly streamline the compliance process. For example, networks such as SWIFT are working to ease the KYC process by allowing corporate participants to upload KYC information once to the platform instead of compiling and sending the paperwork anew for each bank. In addition, complying with any regulation that requires financial or account information, such as FBAR, is much easier with solutions that give faster, more accurate financial visibility. The second way compliance serves to push adoption forward is that some regulations have specific technical requirements that may not be possible to meet for some companies without a modern solution. These regulations are often security related. Big Data, Complexity, and Visibility Companies and, specifically, treasury departments in 2022 do not have the luxury of ignoring data. While a strong data strategy takes time to form and implement, every company should at least have a strategy in the works. For many, implementing these strategies will require technology. The ever-growing “big data,” which denotes the overwhelming amounts of data that are pouring into and through companies in increasingly varied forms, continues to prove both an immense opportunity and a challenge. Companies that harness their data are able to gain valuable insights into everything from their own operations to market behavior. However, harnessing that data effectively requires careful management, thoughtfully architected storage, and massive processing power. Meanwhile, the complexity that creates big data, coupled with any growth companies are experiencing, leads to complicated processes and difficulty achieving visibility. Many treasury teams that used to get by with manually logging into bank portals and managing cash positions on Excel are now facing more banks, more accounts, more portals to log into, more formats, and more internal information to manage. Maintaining complete visibility is vital for treasury. Without it, fraud risks are higher, compliance is more difficult, and the treasurer does not have a complete view of the situation from which to advise the organization. Yet with every expansion, every added bank account, and simply every year that passes, increasing data and complexity make it more difficult to achieve that visibility without the use of technology. With solutions that can manage and also help harness data, treasury is able to thrive and support their organizations’ long-term growth. Geopolitical Tensions and Economic Stress It should come as no surprise to most readers that 2022 and the years leading up to it have been years of some global turmoil. From pandemics to armed conflicts and from supply chain issues to soaring inflation, companies and individuals alike have had to cope with a great deal. We’ve discussed how lockdowns, fraud, and the need for scalability in these scenarios have all contributed to rapid adoption of digital processes and robust solutions. The usefulness to treasury of technological support and automation during times of any kind of upheaval, however, is worth discussing separately. When risks become realities and when economic and geopolitical events loom large, organizations need their treasurers to be ready with rapid analysis and strategic guidance. Treasury cannot do this when manual processes are delaying their cash positions, limiting their visibility to all accounts, or when any part of the process leading up to strategic advising takes too much time and manpower. Technological solutions such as those discussed in this report offer treasury margin. They automate portions of the process, reduce errors, and save staff time. This allows all members of the treasury team to continue fulfilling their roles even when there is more information to process and more factors to consider, which is often when the treasury function is most vital to the company’s ongoing success. The Treasury Technology Landscape With a variety of factors driving treasury’s interest in technology, there are quite a few relevant types of solutions. Some of them directly streamline treasury’s own operations. Others are primarily aimed at streamlining different areas of the corporation, but they impact organizational liquidity, efficiency, or security in ways that make them important to treasury’s cash and risk management goals. In this report, we will discuss the general impact of several components and innovations, from APIs to ML. We will then take some time to focus in on a few solution categories, briefly defined here: Treasury Management Systems / Treasury and Risk Management Systems (TMS/TRMS) A TMS is treasury’s core solution for its own operational needs. When a treasury department outgrows Excel, these systems offer a more robust platform for daily tasks such as cash management and positioning, visibility, accounting, and forecasting. A TMS’s benefits also extend to security, flexibility, and smoothly integrated workflows. For treasury teams that use multiple tools and need to share information with other areas, their TMS can serve as a foundation on which the other tools function and to which other areas’ solutions can connect. A TRMS, while largely comparable to the average TMS, offers deeper risk management functionality. Treasury Aggregators (TA) A TA combines the functionality of a data consolidator with that of a payment hub. These solutions are ideal for organizations with complex payment flows or banking information. They simplify data gathering and pass aggregated banking information along to any areas that need it, and they establish connections and translate payment formats, allowing for centralized and efficient payment processes. Supply Chain Finance (SCF) and Cash Conversion Cycle (CCC) Solutions SCF and CCC solutions, while they do not directly help with treasury’s own operations, can significantly improve liquidity and working capital. SCF solutions digitally empower programs that create win-win scenarios for buyers and vendors, whether by leveraging the buyer’s superior credit and third-party financing or through leveraging the buyer’s own excess capital. CCC solutions automate various portions of the cash conversion cycle, streamlining processes and, therefore, increasing the efficiency and flexibility of the company’s cash management. Since these solutions tend to cut across multiple departments and impact working capital, the treasurer is often needed as a leader to help identify the real problems and the best solutions. Enterprise Liquidity Management (ELM) A new evolution in treasury technology, ELM systems offer a comprehensive view of liquidity across the organization. These robust solutions include the base functionality of a TMS, but with far more extensive reach. From supply chain finance and payments to foreign exchange, the data showing what’s really happening to liquidity is often scattered across different departments at large corporations, making it difficult for treasury to keep close track and strategize accurately. ELM systems are built to integrate information from across the company, allowing treasury to view and manage liquidity on a comprehensive scale. The Foundations of Treasury Technology Treasury technology has a multi-decade history and is built on many individual innovations along the way. Understanding where the landscape is today, as well as where it’s going, requires a brief study of where it has come from. Data Data has a growth rate of approximately 40% year-over-year. In more recent years, this has led to “big data,” but the growth of data has been challenging and driving innovation since much earlier. From formats to connectivity and processing power, many of the things we will be discussing are built to manage the ever-increasing volumes and types of data. Cash is still king, but treasury departments are learning to value data as a particularly precious resource that allows them to protect the king effectively. Processing Power Fortunately, processing power efficiency increases at an even faster rate than data and doubles every 18 months. This allows computers and systems to keep up with and manage the masses of data. However, coupled with data growth, this rapid growth in processing power means that technology is improving, progressing, and changing at a somewhat dizzying rate. Solutions that were state-of-the-art a decade ago are typically far behind the average solutions coming out today. Connectivity Connectivity has come a very long way in the past several decades. It has moved from the mail service to teletype machines, and from teletype to host-to-host (H2H) connections and SFTP. Payment Services Directive 2 (PSD2) in Europe — a regulation requiring banks to accommodate customers wanting to access their data through third parties — was largely achieved through application programming interfaces or APIs, which has spurred their adoption worldwide and brought them into the spotlight for a new generation of connectivity. Hosting Models Hosting models for treasury technology, notably for the TMS, have seen a few iterations over the last couple of decades. Early solutions were installed onsite and hosted on the clients’ servers. These solutions, often called “on-premises solutions,” were difficult to upgrade and to maintain and faced inevitable obsoletion eventually. Application service providers, or the ASP model, attempted to solve these problems by hosting the solution with a third party tasked with maintaining it. The approach improved upgrade issues and lowered the maintenance burden on clients, but these solutions still faced obsoletion and other issues. Software-as-a-service, the SaaS model, is the current standard. These solutions are cloud-hosted and multi-tenant, purchased on a subscription basis, and are maintained and upgraded by the vendor. Since the vendors can directly and fairly easily update and rework the software over time, and since they are incentivized to do so through the subscription payment model, SaaS solutions are seen as holding onto their value for far longer than earlier types. Democratization of Technology In 2004, Texas Instruments released the TI-84 graphing calculator, selling it for around $120. This handheld calculator had significantly more processing power and RAM than the most powerful and wildly expensive computers available only 40 years before. Many of us have grown familiar in our personal lives with the experience of looking back on technology from a few years ago and marveling at how much less functionality and power that technology gave us compared to far less expensive technology available today. This applies to the corporate technology world as well. Today’s treasury solutions hold drastically more processing power and functionality than their predecessors and can be obtained for far lower costs. We call this the “democratization” of technology, as the expanded functionality coupled with affordability serve to broaden the market of the solutions. Early installed TMSs, for example, were only financially feasible for extremely large and complex organizations that desperately needed them. Today, there are comparatively powerful options that are affordable enough for a small company of less than $500M in revenue, and the market is only continuing to expand.

Executive Summary Thank you for reading this edition of the Non-Banking Financial Institution (NBFI) Survey. This survey was underwritten by Kyriba for the 2nd year in a row as they continue to serve an...

Executive Summary Thank you for reading this edition of the Non-Banking Financial Institution (NBFI) Survey. This survey was underwritten by Kyriba for the 2nd year in a row as they continue to serve an increasing number of companies in these industries. This survey and the report were written and produced by Strategic Treasurer. The previous iteration of this survey focused solely on insurance companies, but by expanding this research in 2022 to related industry verticals, we have been able to capture a greater breadth of “treasury intensive” financial companies. The majority of survey respondents were headquartered in North America (Canada, United States, Mexico), with European companies representing the next highest level of coverage. Asia-Pacific headquartered firms made up 4% of respondents. With this year’s research, we sought to better understand the priorities, plans, and activities that financial institutions were focused on. The results didn’t disappoint. You are invited to read through the top ten items from the research and see what is dramatic and notable, as well as what hasn’t changed much. We learn from each of these situations, and knowing what others are doing informs our thinking and may help adjust our priorities. Disbursement Preferences: Staff, Technology, and Then Structure NBFIs are centralizing their staff and using specialized payment technology most heavily. However, the use of pay-on-behalf-of (POBO) structures is in the early stages of adoption while showing strong signs of likely growth. Highest Priorities: Security, Compliance, Efficiency NBFIs face numerous competing demands, and security/fraud prevention (66%) dominates all other priorities, including compliance (45%). Efficiency matters too in a more limited measure. Benchmarking — Achieving a Personal Best What are companies measuring? They are most frequently tracking their current performance against their own historical numbers (62%), while a minority of firms currently perform external benchmarking: 41% against similar company types, and 24% against companies of the same size or complexity. Thank you for taking the time to read through this report. For those who invested the time to take the moderate-length survey, you have our deep appreciation. You are helping out this vital industry. Your input allows us to understand what is happening and what professionals are thinking and doing in the NBFI space. As always, those who take the survey receive more information and details from the research. It is one additional way of thanking you for your time. Key Finding Analysis 1. Heavy Users of Accounts The NBFI world uses multiple account types, and a notable minority have a high volume of accounts. These accounts cover operating activity (in this survey, we use the term “demand deposit accounts” or DDA), investment activity (custody accounts), and trust accounts (trust). DESCRIPTION OF ACCOUNT TYPES: Demand deposit accounts and current accounts: These are transactional accounts at the organization’s operating bank. Various deposits and disbursements flow in and out of these accounts, and cash is held in them. Custody accounts: These are accounts at custodial banks that hold investments/securities for the organization making investments. Securities are held in these accounts. Trust accounts: These are accounts that are managed by a trustee (typically a bank) on behalf of a third party. Activity running through these accounts is approved and executed by the trustee based upon valid and appropriate instructions. 2. Disbursement Preferences: Staff, Technology, & Then Structure How are NBFIs organizing their staff, leveraging technology, and using payment structures? The use of “centralized staff” (payment factory or shared service center) and “centralized technology” are both likely to achieve majority status shortly. POBO looks to continue its strong growth and is expected to achieve a one-third adoption level within a few years. Centralized staff: Service centers (49%) are the most used option (amount in use or being implemented). Specialized technology: Payment hub technology is highly popular, with 48% using or implementing these tools, and another 11% indicating that they are evaluating the use of this technology. Payment structure (POBO): The pay-on-behalf-of structure is in use or being implemented by 29%, with another 14% evaluating it. DESCRIPTION OF ACCOUNT TYPES: Centralized staff: This refers to a shared service center or center of excellence that handles the operational activity for, in this case, disbursement activity. These can be either regionalized or centralized on a global basis. Specialized technology: A payment hub is a common name for the technology that can support all aspects of payments. This is a system or service that allows for 1) an approval process for payments, 2) data transformation, or putting payment instructions into the proper format, 3) operational management, delivering and confirming payment information to the right payment rail or messaging platform, and 4) other services: security, validation, confirmation, etc. Payment structure (POBO): The pay-on-behalf-of structure allows a company with many subsidiaries or affiliates to use a single structure for disbursements. This structure may be a separate entity that is created for this purpose or may be an existing entity. The disbursements are routed through this POBO structure, and the individual entities/companies transfer the value of the payments and the related liabilities to that entity for processing and management. Instead of having 10 disbursement accounts with 10 similar processes, this is collapsed into one for efficiency of capital and time purposes. 3. INSURANCE COMPANY. Insurance Liquidity Concentration, & Aggregation Techniques Institutional money market funds (MMF) are the most common tool for aggregating investment balances among insurance companies. Sweep mechanisms are used by over half of insurance companies and represent an easy way of automatically ensuring all cash is invested. Notably, only 2 out of 9 companies are using insurance liquidity pools currently. This service allows for consolidated investing and segmented tracking for the participants in the insurance liquidity pool. When we combine the responses for currently in use, implementing, and evaluating, the numbers stack up as follows: Insurance liquidity pool: 50%. (Currently in use: 22%.) Investment sweep: 73%. (Currently in use: 56%.) Institutional MMF: 95%. (Currently in use: 67%.) DESCRIPTION OF ACCOUNT TYPES: Insurance liquidity pool: Primarily in the United States, insurance companies may have the options of establishing their own investment pools that support multiple companies and investment portfolios. The company can combine shorter-term funds from multiple portfolios and insurance activity and invest them in larger blocks. This reduces the number of trades and effort while allowing the individual portfolio managers to have greater liquidity while earning higher rates. Individual ownership is tracked. There are specific rules that must be followed. Many companies refer to their liquidity pool or pools as “STIP” for “short-term investment pool.” Investment sweep: Excess cash left in operating accounts or investment accounts is moved to an investment fund automatically. The excess funds are “swept” into an investment account and in many cases are returned the next day automatically 4. Non-Insurance NBFIs Have More Waterfall Payments than Insurance Companies One-third of NBFIs overall generate 11 or more waterfall payment series each year. Nearly half (46%) do not have any. Stratifying the respondents between insurance companies from the rest of the NBFIs shows that the use of waterfall payments among insurance companies is roughly half of other NBFIs: Insurance companies: − 22% have 11 or more each year. − Majority (61%) do not have any waterfall payments in a year. Non-insurance company NBFIs: − 42% have 11 or more each year. − 29% do not have any waterfall payments in a year DESCRIPTION OF ACCOUNT TYPES: Waterfall payments: There are multiple situations where an investment arrangement requires payments to be made to an entity that is at the top or middle of an entity hierarchy. Payments made to the first entity are then cascaded down through other entities until everything is completed. This cascading is referred to as a “waterfall payment,” and typically these payments flow downstream on the same date. 5. Highest Priorities: Security, Compliance, Efficiency NBFIs face numerous competing demands. Priorities help determine the emphasis and order for which activities and initiatives are staffed, funded, and completed. For this question, seven options were provided for respondents to rank in order of priority. Looking at what respondents ranked 1st and 2nd for highest priorities, it was clear that there seems to be a strong consensus about the top of the house. ADDITIONAL DISCUSSION: Willie Sutton is famous for his response to the question of why he robbed banks: “That is where the money is.” We could imagine the corollary in response to this in a similar question-answer style: “Why are you (NBFIs) focused on security/fraud prevention?” “Because there are many more Willie Suttons out there with far more automation and sophisticated tools trying to rob us.” Compliance is always a top priority for regulated businesses like most NBFIs. Fines, fees, and reputational damage are some of the key motivators. Only security/fraud tops compliance. Is this due to the cost and reputational damage being an even higher concern for NBFIs? 6. Payment Controls Are a Continuum of High to Low Adoption. Fastest Expected Growth: AI/ML Limited access and encryption (all payment files) are the only two methods used by the majority of companies. Four other services sit between 30% and 47% adoption, and another 10-17% of firms expect to add to these services. Use of AI/ML to protect against payment fraud has a 30% “plan to use” response. This represents nearly double the rate of the next highest controls. Machine learning is highly effective at detecting patterns. This pattern detection can also spot anomalies — instances where a pattern isn’t consistent. Fraudulent items can often be detected based upon the “patterns” of changes, access, and frequency, and a user can review those items before payments leave the company ADDITIONAL DISCUSSION: The principle of least privilege requires companies to restrict the access of users and credentials to only those areas/systems/data that are relevant. Then, if a credential is stolen or if an individual seeks to steal information or money, their ability to act or move around is greatly limited. This mitigates the amount of damage that can occur if one credential is compromised. Encryption of all payment files should make it more difficult to see and edit confidential banking information. The public/private key process also renders editing a file far more difficult, as the encryption/decryption process will alert the system or users of the error. AI/ML. Anomaly detection capabilities can be learned by an ML tool, and various rules for detection can also be programmed in. When this is done, the user is alerted to anomalies that need to be reviewed by a human. The alerts can be informational only (and the payment continues unless stopped by the person), or they can be part of an interdiction (the payment stops unless and until a human reviews and approves the interdicted item). 7. Measurements: Financial Performance Wins Over SLA What gets measured, we are told, gets improved. What is being measured? Two-thirds of companies trace various financial performance metrics. Staff performance is a distant second at 41%, followed by quality-related performance measures (38%). ADDITIONAL DISCUSSION: It is not surprising that in finance areas, measuring financial performance takes the top spot in this survey. However, why do not even 3 out of 10 companies measure staff professional development if people are the most valuable asset? Is there little correlation between staff development and success? Is it related to the fact that measuring staff development is highly challenging? What is the benchmark? 8. Benchmarks — Personal Best What do companies want to improve? It may be that they are measuring what is most important to them. It may be that more companies measure what they can most easily get measurement data for. Most companies track their current performance against their own historical numbers, while some performed external benchmarking. 62% measure themselves against themselves. The external benchmarks are as follows: − 41% measure themselves against similar companies (similar industry verticals). − 24% measure against companies of about the same size ADDITIONAL DISCUSSION: Company complexity has a variety of dimensions. The most common factors companies think about for comparable numbers are 1) revenue/sales and 2) industry vertical. Other factors of complexity include 1) number of systems in use, 2) how many countries the organization operates in, and 3) the number of underlying processing systems. Benchmarks are used for a variety of reasons, including: − Staff size/resources − Efficiency purposes − Confirmation as to the position of the company via leading practices − Progress over time against their own performance and others in their “peer group” 9. Collateral Management: The Most Common Manager Is…Treasury Collateral management is a risk related function that supports the operational and investment activities of many NBFIs. Treasury is the department that is most frequently responsible for managing collateral (31% of firms). More than one-fourth of firms don’t assign this role. 10. Collateral Management’s Impact on Cash Positioning: Tracked Separately. Collateral management within NBFIs appears to be relatively immature (non-integrated). Just over a third (34%) indicated that they have visibility or links to the collateral and underlying exposures. − Collateral and exposures can be seen together: 17%. − Clear view into collateral pools: 14%. − Can see the exposure and collateral within the cash positioning and forecasting process: 3%. Most firms (66%) track collateral and cash positioning in separate channels with no cohesive or unified view. ADDITIONAL DISCUSSION: The practice of collateral management appears to be, on average, somewhat informal for many NBFIs, as can be observed from the following data points: − 28% of companies don’t have collateral management assigned to a particular area. − 66% lack a unified view of collateral or track it in a separate channel than their cash positioning activity Silicon Valley Bank’s collapse is a warning for all finance leaders. Check out  this on-demand webinar and hear Kyriba's top treasury and payments experts discuss the collapse, subsequent fallout, and how your organization can mitigate risk with improved liquidity planning.

Advanced treasury management and data-delivery capabilities enable finance organizations to see their global cash, liquidity, and risk exposures and create value for the business. Recent disruptions, such as the pandemic and current inflationary conditions,...

Advanced treasury management and data-delivery capabilities enable finance organizations to see their global cash, liquidity, and risk exposures and create value for the business. Recent disruptions, such as the pandemic and current inflationary conditions, have thrust treasury management into the spotlight. With rising interest rates and a strengthening US dollar, many finance organizations are turning to their treasury departments to proactively mitigate currency impacts upon foreign earnings and to enhance the use of internal liquidity over capital markets. Some are also looking to reduce costs in response to inflation. These factors are putting pressure on treasury departments to elevate their operating models and to digitally transform their capabilities around financial risk, balance sheets, working capital, and payments while simultaneously reducing costs. Some organizations are responding to these pressures by accelerating their digital transformation agendas and moving core capabilities into the cloud. They are also seeking to use internal and external data more extensively by enhancing their analytical capabilities. One way to accomplish these objectives is to combine a leading, cloud-based financial system, such as Workday Financial Management, with the enhanced treasury management capabilities of a cloud-based, supplemental system, such as Kyriba. Eight potential ways to achieve ROI Greater process efficiency via treasury automation and standardized reports. Timely and accurate cash visibility. Reduced banking fees and transaction costs. More effective hedging programs to manage FX and IR risk. Enhanced liquidity management and funding opportunities. Decreased IT support and required maintenance. Improved operations and fraud detection. Greater agility and enhanced business continuity via global SaaS platforms. Treasury as a value lever: Leveraging a Supplemental Treasury Management System Supplemental treasury management systems (TMS) generally offer in-depth functionality across treasury management and accounting, bank connectivity and payments, control and compliance, risk management, and supply chain finance. Accordingly, the business case for implementing a supplemental TMS can be compelling, especially for companies that need to perform complex intercompany lending, hedging, risk valuation, foreign exchange, and other intricate financial operations. However, modernizing the treasury management function requires a combination of capabilities, including industry-specific knowledge of leading practices; functional specialties such as strategy and operations, risk management, financial advisory, tax, and cyber security; and highly experienced professionals with technical skills across the various ERP ecosystems such as Workday and Kyriba. Deloitte not only offers these diverse capabilities but also integrates them efficiently. Deloitte is also a recognized market leader in finance transformation; it has achieved the highest quality rating on Workday implementation scorecards and it is Kyriba’s only enterprise-certified alliance relationship, having received implementerof-the-year awards for the last three consecutive years. With these qualifications, Deloitte is well-positioned to help you combine a cloud-based financial management system with a supplemental TMS. This can open up many opportunities for cashmanagement cost savings and improved treasury function performance. Cloud-based solutions to enhance visibility and management of cash, liquidity, and risk exposures Leverage Deloitte’s extensive finance transformation experience, knowledge of leading practices, and familiarity with the financial management and treasury management capabilities found in leading platforms such as Kyriba and Workday. Tailored for treasury optimization As detailed in Table 1, finance leaders have the ability to alleviate many common ERP treasury-management pain points by tapping Deloitte’s extensive finance transformation experience, knowledge of leading practices, and familiarity with the financial management and treasury management capabilities found in leading platforms such as Kyriba and Workday. How can we help Deloitte can assist you in taking the next steps to modernize your treasury management capabilities by guiding you through an initial scoping session to determine a personalized path forward. During this session, we can apply our technical acumen, treasury knowledge, and finance transformation experience to help you: Assess the current state. Develop a digital finance strategy based on combining leading cloud-based systems. Identify finance transformation opportunities and create a roadmap for realizing them. Design the solution and develop an implementation plan according to leading practices. System integration and implementation support for your selected solution. Ultimately, through proprietary accelerators and pre-defined data integrations, we can help you streamline your TMS implementation, delivering it simultaneously with a cloud-based financial management implementation, or after it is complete. Time to get strategic? Treasury management trends triggered by digital disruption several years ago have only intensified under recent economic conditions. The role of the treasury function continues to grow as a value-add partner of the CFO and a strategic advisor to the business—all while core treasury goals and mandates, such as liquidity risk management and being a steward for financial risk management, have become even more important in a world of volatile markets, tight supply chains, and rising interest rates. Could it be time for your organization to get strategic about liquidity management with a cloud-based financial management system and a supplemental treasury management system? To find out, contact us.   This document contains general information only and Deloitte is not, by means of this document, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this document. Product names mentioned in this document are the trademarks or registered trademarks of their respective owners and are mentioned for identification purposes only. Deloitte is not responsible for the functionality or technology related to the vendors or other systems or technologies as defined in this document. As used in this document, ‘Deloitte’ means Deloitte & Touche LLP, which provides audit, assurance, and risk and financial advisory services and Deloitte Consulting LLP, which provides strategy, operations, technology, systems, outsourcing and human capital consulting services. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2023 Deloitte Development LLC. All rights reserved.   Want to learn more about how to gain with a supplemental treasury management system? Check out this webinar to hear how Deloitte helped Exelon and Constellation Energy modernize their Treasury organization through a Kyriba implementation.

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

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

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The January 2023 Kyriba Currency Impact Report analyzes the reported effects of currency volatility to...

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The January 2023 Kyriba Currency Impact Report analyzes the reported effects of currency volatility to North American and European companies’ earnings during the third quarter of 2022. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15% of their revenue coming from overseas.     Currency Impact Report - Overview Kyriba Currency Impact Report -Key Findings The collective quantified negative impact reported by both North American and European companies totaled $47.18 billion in Q3 2022, a 26.6% increase from Q2 2022. 24% of corporates studied (289/1200) quantified +/- impacts totaling $64.22 billion ($47.18 billion headwinds), ($17.04 billion tailwinds). The euro was the currency most mentioned as impactful by North American and European companies, the Argentine peso was the most volatile currency. 256 North American and European companies reported currency headwinds in Q3 2022. Of those companies, 244 companies quantified their FX impacts. Total Quantified Currency Impacts by North American and European Companies (Billions) North American Companies’ Quantified Currency Impact (Billions) European Companies’ Quantified Currency Impact (Billions) Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $43.15 billion impact in Q3 2022, 26% larger than the impact in Q2 2022.1 The average earnings per share (EPS) impact reported by North American companies in Q3 2022 was $0.05, five times greater than the industry standard MBO of less than $0.01 EPS impact. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The euro was the most mentioned currency, a continuation from the prior quarter. The Canadian dollar was the second most-mentioned, followed by the Russian ruble, the Chinese renminbi, and the yen. The euro was the most volatile currency weighted by GDP (page 6). Number and Percentage of North American Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions In Q3 2022 earnings calls, 22 percent of North American companies that reported impacts fielded analyst questions. Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Increasing from last quarter, European companies reported an 33% percent increase in negative currency impacts, with companies reporting $4.03 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 1.7% reported headwinds in Q3 2022. Of those, 100% quantified their negative impacts (see page 15). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The euro was the most mentioned currency in earnings calls for Europe, followed by the Swedish krona and the US dollar. The Danish krone was the fourth most mentioned, followed by the Russian ruble. The ruble was the fourth most volatile currency as well (page 6). Number and Percentage of European Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to European Companies (Millions) Percentage of European Companies That Fielded Analyst Questions In Q3 2022 earnings calls, 3 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions Quantified Negative Currency Impact (Billions) Number of Companies Reporting Negative Currency Impact   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report which details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe with at least 15 percent of their revenue coming from overseas, sustained $49.09 billion in total impacts to earnings from currency volatility.

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The October 2022 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the second quarter of 2022. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15% of their revenue coming from overseas.   Currency Impact Report - Overview Kyriba Currency Impact Report: Key Findings The collective quantified negative impact reported by both North American and European companies totaled $37.27 billion in Q2 2022, a 126% increase from Q1 2022. 24% of corporates studied (284/1200) quantified +/- impacts totaling $49.09 billion ($37.27 billion headwinds), ($11.82 billion tailwinds). The Russian ruble was the currency most mentioned as impactful by North American companies, as third most by European companies. 243 North American and European companies reported currency headwinds in Q2 2022. Of those companies, 229 companies quantified their FX impacts. Total Quantified Currency Impacts by North American and European Companies (Billions) North American Companies’ Quantified Currency Impact (Billions) European Companies’ Quantified Currency Impact (Billions) Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $34.25 billion impact in Q2 2022, 133% larger than the impact in Q1 2022.1 The average earnings per share (EPS) impact reported by North American companies in Q2 2022 was $0.10, ten times greater than the industry standard MBO of less than $0.01 EPS impact and the highest spike in average EPS recorded by this report. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The ruble was the most mentioned currency, a continuation from the prior quarter. The Canadian dollar was the second most-mentioned, followed by the euro, the Australian dollar, and the yen. The euro was the most volatile currency weighted by GDP (page 6). Number and Percentage of North American Companies Reporting Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions In Q2 2022 earnings calls, 8 percent of North American companies that reported impacts fielded analyst questions. Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Increasing from last quarter, European companies reported an 68% percent increase in negative currency impacts, with companies reporting $3.02 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 2.3% reported headwinds in Q2 2022. Of those, 100% quantified their negative impacts (see page 15). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The euro was the most mentioned currency in earnings calls for Europe, followed by the US dollar and ruble. The krona was the fourth most mentioned, followed by the pound. The ruble was the most volatile currency as well as most mentioned in North American earnings calls (page 6). Number and Percentage of European Companies Reporting Negative Currency Impact Average Negative Impact to European Companies (Millions) Percentage of European Companies That Fielded Analyst Questions In Q2 2022 earnings calls, 5 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The July 2022 Kyriba Currency Impact Report analyzes the reported effects of currencies to North...

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The July 2022 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the first quarter of 2022. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15% of their revenue coming from overseas.   Currency Impact Report - Overview Kyriba Currency Impact Report: Key Findings The collective quantified negative impact reported by both North American and European companies totaled $16.46 billion in Q1 2022, a 144% increase from Q4 2021. 20% of corporates studied (236/1200) quantified +/- impacts totaling $24.03 billion ($16.46 billion headwinds), ($7.57 billion tailwinds). The Russian ruble was the currency most mentioned as impactful by North American companies as well as by European companies. 205 North American and European companies reported currency headwinds in Q1 2022. Of those companies, 194 companies quantified their FX impacts. Total Quantified Currency Impacts by North American and European Companies (Billions) North American Companies’ Quantified Currency Impact (Billions) European Companies’ Quantified Currency Impact (Billions) Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $14.66 billion impact in Q1 2022, over 3 times larger than the impact in Q4 2021.1 The average earnings per share (EPS) impact reported by North American companies in Q1 2022 was $0.03, three times greater than the industry standard MBO of less than $0.01 EPS impact and a maintenance of the level set by the previous quarter. 1Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The ruble was the most mentioned currency, an increase from the prior quarter where the ruble was the fourth most mentioned currency in North America. The euro was the second most-mentioned, followed by the renminbi, the pound, and the Canadian dollar. The ruble was the most volatile currency as well as the most volatile weighted by GDP; the euro was the second most volatile weighted by GDP (page 6). Number of North American Companies Reporting Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Decreasing from last quarter, European companies reported an 17% percent decrease in negative currency impacts, with companies reporting $1.80 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 3% reported headwinds in Q1 2022. Of those, 100% quantified their negative impacts (see page 15). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The ruble was the most mentioned currency in earnings calls for Europe, followed by the krona and US dollar. The renminbi was the fourth most mentioned, followed by the franc. The ruble was the top most volatile currency as well as most volatile weighted by GDP (page 6). Number of European Companies Reporting Negative Currency Impact Average Negative Impact to European Companies (Millions) Percentage of European Companies That Fielded Analyst Questions In Q4 2021 earnings calls, 10 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions Quantified Negative Currency Impact (Billions) Number of Companies Reporting Negative Currency Impact   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. 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. Key takeaways from the study include the following: From a corporate finance perspective, liquidity is the strategic resource necessary to deliver value and growth under any circumstance, including but not limited to maintaining solvency. Enterprise Liquidity Management provides diagnostic decision support intelligence on all liquidity transactions, then enables indispensable actionability and operational interconnectivity between internal and external systems. ELM is powered by the Enterprise Liquidity Platform, a fully integrated software suite (e.g., Treasury and Risk Management, a comprehensive Payments Hub, and Working Capital Finance solution sets) all of which are connected, integrated, and networked through Open APIs that provide indispensable, secure machine-to-machine automation between software applications. The result is that all cash and liquidity-related data and process workflows within the organization and its external finance ecosystem are unified into a “Golden Source” of intelligence and, then within the same system, made actionable as a strategic decision-making support system. Managing cash and liquidity across large enterprise ecosystems demands the support of a dedicated infrastructure engineered to overcome one of the most significant burdens to corporate finance: the proliferation of disjointed software applications. An ELM platform differentiates from traditional treasury management systems, extending visibility, security, and actionability across all of finance internally and externally beyond cash positioning and forecasting: the treasurer can understand multiple liquidity management scenarios and—directly from the platform—move and optimize liquidity to or from the right location at the right time. The goal of this paper is to inform the market that ELM has become a strategic practice area for CFOs, Treasurers, and other corporate finance leaders who understand the newfound urgency to leverage new technologies and techniques to capture opportunities and eliminate risks. Introduction Liquidity is the strategic resource necessary to deliver value and growth under any circumstance, including but not limited to maintaining solvency. The speed and complexities required of corporate finance leaders to manage cash and liquidity in realtime, however, and especially during market shocks such as the 2008 and Covid-19 crises, has surpassed the ability of humans to build better and better spreadsheets. Even the largest ERP and treasury management system providers struggle to deliver value in the new world where comprehensive, cross-functional liquidity management has become a board-level mandate. Aite-Novarica Group’s view is that emerging leaders in the space are thinking differently and developing new technologies to enable liquidity to be managed holistically as a new practice area within the CFOs purview. While from a conventional liquidity management standpoint almost every global and regional bank has the technology in place in the form of a web-banking portal, enterprise users expect to consume decision support data through transaction banking cockpits and portals developed according to standard business process flows and practices. These cockpits must be interoperable and interchangeable. Finance and treasury executives and managers don’t want any longer multiple web-banking user interfaces that require system experts to cut and paste highly-valuable financial data into “software soups”. Fintech players must develop and present technology solutions and software applications that support their corporate clients’ internal, strategic liquidity management objectives and, at the same time, allow the enterprise to meet external client needs. This thought leadership paper introduces the concept of enterprise liquidity management as a formalized practice area for corporate finance; it further analyzes the technological, process architecture, and execution workflow capabilities required to make it happen. Following, this paper develops the concept that corporations of all sizes and complexity aim to have all their subsidiaries on a central repository for cash and liquidity-related operations rather than on individual web-banking portals. The concept is similar to the idea of a self-contained infrastructure to manage liquidity, as if it were an “ERP for liquidity management”. The paper introduces Enterprise Liquidity Management as a new financial technology category. Methodology This thought leadership paper is based on desktop analysis and extensive examinations of various solutions used by treasurers to manage corporate liquidity. Using the life cycle steps of liquidity management operations as a benchmark, Aite-Novarica Group’s groundwork also included analyzing the limitations of currently available solutions. To validate the conclusions of the research, Aite-Novarica Group will refer to the findings of an analysis conducted on Kyriba’s Enterprise Liquidity Platform and on its impact on the corporate organization culture, business processes, IT performance, and its alignment with management’s goals1. The Liquidity Management Lifecycle and the Need to Unify Fragmented Systems Enterprise liquidity is the lifeblood of every business of any size. Considering the numerous definitions used to describe it, liquidity confirms to be a strategic resource for corporate chief finance officers (CFOs) to deliver value and growth under any circumstances including but not limited to insolvency. Enterprise executives know that information technology permeates business operations and is the most powerful tool for change. Corporate finance business units, however, appear not to be the most technically mature in the organization, so only enlightened corporate CFOs are at the forefront of corporate finance digitization to transform the way they leverage cash and liquidity to build resiliency, earn growth, and generate strategic value to customers, shareholders, and boards. If resiliency, growth, and value are the targets for corporate finance, the task is now for the CFO and his teams to practically meet such targets. To his/her rescue comes liquidity management: in times of crisis a proper management of the company sources and destinations of liquidity contributes to make the organization more resilient. At the same time the ability to manage corporate liquidity not only helps the company to survive but also sustains the value of the company through growth: value is generated when the company has proper funding to distribute dividends, buy back shares, and grow by investing in other avenues and controlling capital expenditures. Liquidity is the organization’s lifeblood, irrigating all internal functions and lines of business; as blood needs to be enriched with oxygen, liquidity needs to be enhanced by a complex external ecosystem, including banks, financial data suppliers and market places, and fintech players. Liquidity is also typically managed along different time dimensions. In long-term vision, CFOs grow and protect cash availability by operating financial transactions with multiple settlements. The most iconic of such transaction is drawing down a debt for cash. This triggers the long-term need to repay the debt at the end of maturity up until the final settlement. Another transaction with long-term financial repercussion is a hedge transaction that will take the company to enter in a swap with multiple settlements, maybe for the next two or three years. On the short-term execution, the corporate treasury office generates or consumes liquidity with cash transactions. Examples of cash transactions are one-off payments to a supplier, an employee, or an FX spot transaction. Between long-term financial transactions and short-term cash operations should stand strategic planning. Financial Planning and analysis (FP&A) that the CFO uses to understand what will be the budget for next rarely translates in terms of liquidity requirements and usually lacks critical data to ensure there is enough money: Should it be borrowed? How to hedge the risk? The budget fixed at the beginning of the year will inevitably move as time goes by. The necessary adjustments swing the pendulum from the very short-term treasury operations to the long-term forecasting of the outcoming liquidity. A bank that negotiates with a CFO will always ask the company’s liquidity plan for the next year, sometimes even several years ahead depending on the market segment the company operates in. This demands the treasury department and financial manager of each subsidiary to integrate their figures, usually on a monthly basis, into the centralized corporate FP&A view that gives the CFO the most updated and reliable liquidity profile of the company. Enterprise Liquidity Management - A New Practice Area in the CFO Suite Beyond closing accounts, the CFO’s constant focus is- hence- to know where liquidity comes from and where it can be allocated, and, with that intelligence, ensure its protection (from fraud and over-exposure) throughout. This requires more than a mindset shift towards prioritizing the strategic value of liquidity--it requires a purposebuilt layer of software to make it happen. We believe this combination constitutes the design and deployment of a new Practice Area. To start, Aite-Novarica Group suggests to measure the value of liquidity beyond the ordinary ‘cash and cash equivalents’ balance sheet item. This indicator may in fact be deceptive if not depurated from the component of the uncommitted drawn facilities. There is a possible risk that the lender may ask for the repayment anytime, and this scenario will vaporize the value of the borrower’s assets. On the other side, the value of cash and cash equivalents must be increased for the total value of the undrawn committed facilities the company can still access. These represent reliable and immediately accessible liquidity because the time to draw down such facilities in general is very fast, usually in the order of a couple of days. The example of the metric to gauge the real potential value of available liquidity is yet one of the many key capabilities a CFO should have available in the ELM Practice Area, a decision support system. At the back of these capabilities the CFO and the treasurer need a system that unifies the data scattered across a landscape of IT systems totally fragmented, the more disjointed the larger and complex the organization. Historically, the CFO suite has been an installed on-premise (almost monolithic) ERP sometimes combined with an equally monolithic treasury management system (TMS), now morphing into a composed set of a core solution (e.g., SAP, Oracle) and connected mission critical best-of-breed solutions such as payroll and benefits, budgeting and planning, order-to-cash, procure-to-pay, and risk management. The most recent trend sees companies shifting their IT infrastructure to the cloud with multiple objectives: constant innovation, business continuity for critical functions, or real-time flow of information while lowering the total cost of ownership of the underlying software and hardware infrastructure. A New Category: ELM Enterprise users expect to consume decision support data through interoperable and interchangeable cockpits and portals, developed according to standard business process flows and practices, typically provided by banks – or, through monolithic ERPs combined with an ever-increasing portfolio of specialized point solutions. Today, as we see the emergence of “composable” ERPs capable of providing value beyond simply recording transactions, there remains a major void in the marketplace. Corporations aim to have all their subsidiaries on a central repository for cash and liquidity-related operations rather than on individual and separated web-banking portals. The concept is similar to a self-contained infrastructure to manage liquidity and introduces to a new financial technology category: Enterprise Liquidity Management. Treasury has evolved from account management staff duties (e.g., reconciling cash every morning and putting cash in the right accounts) to a more strategic, cross-functional role, so corporate finance decision makers are receptive to ELM as the suite that enables companies with long-term vision to work with multiple liquidity structures and make autonomous and simultaneous decisions across use cases, particularly treasury. The next sections will provide detailed descriptions of the modules that constitute the ELM construct. At this point is important to capture the possible ELM use cases. As an example, the ELM construct allows the corporate user to drawdown from a credit line directly from their liquidity cockpit. Or, to recommend the corporate decision maker at what point does it make sense to go back to market and refinance. This makes it possible to look at external debt in a completely new way. Users don't want just to model cash, they want to make sure they can model all their cash flow deadlines. The ELM tools model and not just showcase. They are part of a set of open and scalable intelligent systems to come to decisions. From a conceptual standpoint, the ELM is a platform composed of three layers (Figure 1). FIGURE 1: THE THREE LAYERS OF THE ELM PLATFORM The first- the operations layer- groups the application modules to run treasury, payments, risk management, and working capital optimization. The connectivity layer is the second layer- and the raison d'être of ELM- that takes a standalone suite of rich software features to a system open to the world, thanks to the development and use of connectivity APIs. The composed infrastructure of two or three large ERPs that most large enterprises have today generates a portfolio of point solutions that can be best connected through an API architecture. This architecture enables not just the visibility of data, but the unification of that data, enabling the user to leverage AI for decision support. The third layer- the execution layer- makes it possible to analyze and understand the data exchanged between the connected systems, take the best decision using business intelligence capabilities, and leverage machine learning and artificial intelligence (AI) to turn information into decisions and- this is key- to execute directly from the corporate treasurer’s enterprise system.

Kyriba’s Currency Impact Report (CIR), a comprehensive report detailing the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, revealed $12 billion in total impacts to earnings...

Kyriba’s Currency Impact Report (CIR), a comprehensive report detailing the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, revealed $12 billion in total impacts to earnings from currency volatility.

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

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

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The October 2021 Kyriba Currency Impact Report analyzes the reported effects of currencies to North...

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings About the Report The October 2021 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the second quarter of 2021. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15 percent of their revenue coming from overseas. The Kyriba Currency Impact Report can be used as a benchmarking tool for corporate boards and CFOs to gauge their company’s currency impacts in comparison to other multinationals.   Currency Impact Report - Overview Quantified Negative Currency Impact (Billions) Number of Companies Reporting Negative Currency Impact North America and European Multinationals See Headwinds Wane North American and European companies reported a combined $4.25 billion in quantified negative currency impacts in Q2 2021, down 55 percent from the previous quarter. European companies accounted for 45 percent of the impact, reporting $1.93 billion in quantified impacts. North American companies quantifying headwinds reported a total of $2.32 billion in negative currency impacts, a low trend for the fiscal 2021 year. For the first time in the history of this report, the combined pool of corporations reported $23.62 billion in tailwinds . All FX impacts represent a significant percentage of earnings this quarter, a vulnerability CFOs should continue to prioritize for risk managers. Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $2.32 billion collective loss in Q1 2021, ending a trend upward and a 60% decrease in the magnitude of aggregate headwinds.1 The average earnings per share (EPS) impact reported by North American companies in Q2 2021 was $0.03, three times greater than the industry standard MBO of less than $0.01 EPS impact and a maintenance of the level set by the previous quarter. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The euro (EUR) was the most mentioned currency, similar to Q3 and Q4 of fiscal year 2020. The Canadian dollar was the second most-mentioned, a unique appearance. The Chinese renminbi (CNY) was the third mostmentioned, followed by the Great British pound (GBP) and the Japanese yen (JPY). The euro was the most volatile weighted by GDP, while the JPY was the third most volatile and the GBP was the fifth most volatile. The CNY was the fourth most volatile unweighted (page 5). Number and Percentage of North American Companies Reporting Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies That Fielded Analyst Questions Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Declining from last quarter, European companies reported a 47 percent decrease in negative currency impacts, with companies reporting $1.93 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 5% reported headwinds in Q1 2020. Of those, 82.4% quantified their negative impacts (see page 14). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The US dollar (USD) was the most mentioned currency in earnings calls for Europe, followed by the euro (EUR) and Brazilian real (BRL). The Chinese renminbi (CNY) was the fourth most mentioned, followed by the Japanese yen (JPY). The real is an atypical appearance as the most mentioned currency, which continues the trend from Q3 2020. The euro, renminbi, and yen were all found to be in the top 5 most volatile currencies as well (page 5). Number and Percentage of European Companies Reporting Negative Currency Impact Average Negative Impact to European Companies (Millions) Percentage of European Companies That Fielded Analyst Questions In Q2 2021 earnings calls, 5 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions   FX Risk Management is one of the most difficult objectives handed to a CFO’s organization. Kyriba has a team of experts to offer extensive FX Advisory Services to our clients. Check out Kyriba's latest demo session and see how Kyriba helps its clients mitigate the effects of currency volatility and reduce hedging costs.

Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report which details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe with at least 15 percent of their revenue coming from overseas, sustained $49.09 billion in total impacts to earnings from currency volatility.

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings. The Kyriba Currency Impact Report can be used as a benchmarking tool for corporate boards and CFOs to gauge their company’s currency impacts in comparison to other multinationals. About the Report The July 2021 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the first quarter of 2021. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts organizations. The companies included in this data set are large multinational firms doing business in more than one currency with at least 15 percent of their revenue coming from overseas.   Currency Impact Report - Overview Quantified Negative Currency Impact (Billions) Number of Companies Reporting Negative Currency Impact North American Companies Experience Surge in Impact and European Companies See Continued Headwinds North American and European companies reported a combined $9.54 billion in quantified negative currency impacts in Q1 2021, up 55 percent from the previous quarter. European companies accounted for 38 percent of the impact, reporting $3.67 billion in quantified impacts. North American companies quantifying headwinds reported a total of $5.87 billion in negative currency impacts, a break in the low trend we have seen in the last two quarters. This is potentially due to the continued volatility of the USD. Top 5 Volatile G20 Currencies Top 5 Volatile Currencies as Weighted by GDP Percentage Currency Impact on North American Corporate Earnings Negative Currency Impact to North American Companies (Billions) Average EPS Impact Reported by North American Companies *Industry Standard MBO of Less than $0.01 EPS Impact Currency Impact on North American Corporate Earnings North American companies reported a $5.87 billion collective loss in Q1 2021, ending a trend upward and a 322% increase in the magnitude of aggregate headwinds.1 The average earnings per share (EPS) impact reported by North American companies in Q1 2021 was $0.03, three times greater than the industry standard MBO of less than $0.01 EPS impact and a maintenance of the level set by the previous quarter. 1 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by North American Companies as Impactful The Chinese renminbi (CNY) broke a two-quarter trend of the euro being the most mentioned currency. The Great British pound (GBP) was the third most-mentioned, followed closely by the Brazilian real (BRL) and the Swiss franc (CHF). The franc is an atypical appearance in North American earnings calls, but was also present in the top 5 mentioned last quarter. The renminbi was in the top 5 most volatile currencies, as well as top 5 most volatile weighted by GDP (page 5). Number and Percentage of North American Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to North American Companies (Millions) Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions Most Impacted North American Industries Currency Impact on European Corporate Earnings Negative Currency Impact to European Companies (Billions) Currency Impact on European Corporate Earnings Continuing an upward trend, European companies reported a 23 percent decrease in negative currency impacts, with companies reporting $3.67 billion in FX-related losses.2 Of the 350 Europe-based multinationals analyzed, 5% reported headwinds in Q1 2020. Of those, 88.9% quantified their negative impacts (see page 14). 2 Impacts are likely underestimates as most companies with currency headwinds generally do not report them. Top Currencies Referenced by European Companies as Impactful The US dollar (USD) was the most mentioned currency in earnings calls for Europe, followed by the euro (EUR) and Chinese renminbi (CNY). The Great British pound (GBP) was the fourth most mentioned, followed by the Swedish krona (SEK). The Swedish krona (SEK) is an atypical appearance as the most mentioned currency, which continues the trend from the previous two quarters. The euro, renminbi, and pound were all found to be in the top 5 most volatile currencies as well (page 5). Number and Percentage of European Companies Reporting and Quantifying Negative Currency Impacts Average Negative Impact to European Companies (Millions) Percentage of European Companies Reporting Impacts That Fielded Analyst Questions In Q1 2021 earnings calls, 7 percent of European companies that reported impacts fielded analyst questions. Most Impacted European Industries Comparison of Currency Impact to North American and European Companies Average Quantified Negative Currency Impact (Millions) Size of Quantified Negative Currency Impact (Billions) Number of Companies Reporting Currency Impacts Percentage of Companies Reporting Impacts That Fielded Analyst Questions Currency Impact Report - Summary Summary: Kyriba July 2021 Currency Impact Report The collective quantified negative impact reported by both North American and European companies totaled $9.54 billion in Q1 2021, a 55 percent increase from Q4 2020. The renminbi was the currency most mentioned as impactful by North American companies, and the third most mentioned by European companies. The US dollar was the currency most mentioned as impactful by European companies. 95 North American and European companies reported currency headwinds in Q1 2021. Of those companies, 81 companies quantified their FX impacts.

Digital treasury tools, such as robotic process automation (RPA), machine learning and artificial intelligence (AI) are already being used to facilitate treasury automation. The use of treasury technology leads to better decision-making and also...

Digital treasury tools, such as robotic process automation (RPA), machine learning and artificial intelligence (AI) are already being used to facilitate treasury automation. The use of treasury technology leads to better decision-making and also frees time for skilled treasury practitioners to focus on strategic development. This guide outlines how RPA, ML and AI can–and are–being used to improve treasury management processes for receivables finance, payments, fraud detection and more. The guide also explores how to build a business case for a new automation project. The Need for Technology to Maintain Effective Operations Corporate treasury departments rely on technology to maintain effective operations. The technology varies and is constantly improving, offering ever more sophisticated solutions and functionality. Treasury uses a wide range of different technologies, from spreadsheets developed in-house to manage a specific process to highly sophisticated treasury management systems. Technology is also an enabler as treasury evolves from an operational department to a strategic partner to the whole of the business, with automation playing an increasingly important role. While technology is critical to improving operational efficiency, that efficiency is only achievable if the technology is deployed to perform suitable tasks, which requires accurate expectations of what each type of technology can and, just as importantly, cannot deliver. Treasurers must be able to do two things: Identify key inefficiencies, or “pain” points, within their operations. Match each activity to an appropriate technology with the potential to solve them. Pain points manifest themselves in different ways, whether as errors, such as missed investment opportunities or unhedged exposures, or as timeconsuming manual processes, such as the preparation of the cash position. While the root causes and associated operational weakness are relatively simple to identify, the challenge lies in selecting appropriate solutions to solve those problems. All companies have these pain points and, if left unchecked, they are only going to get worse. With the increased use of real-time payments, we are moving ever nearer to a world of real-time finance, an environment of constantly changing data. Without more automation, treasury practitioners simply will not be able to make decisions quickly enough. On a positive note, digital treasury tools, notably Robotic Process Automation (RPA) and machine learning, are already being used to facilitate treasury automation. The use of these tools can be shown to lead to better decision-making; it also frees time for skilled treasury practitioners to focus on strategic development. This guide outlines how RPA and machine learning can, and is, being used, and shows how to build a business case for a new automation project. Robotic Process Automation, Machine Learning and Artificial Intelligence In this section, RPA and machine learning/artificial intelligence (AI) are defined and explained along with the potential benefits of their use. The next section includes three use cases to highlight how different companies have already deployed digital technologies to streamline operations. Robotic Process Automation Robotic Process Automation is a rules-based technology enabling users to automate repetitive tasks. It effectively uses a software “bot” to replicate a series of manual processes performed by a person. Unlike a standard workflow process that operates within a single system, an RPA bot can be set up to capture data from multiple systems, as it mirrors a human treasury team member by sitting above existing systems. Because of this, RPA processes can often be implemented quickly and without major disruption to existing operations. RPA is typically used to replicate a manual, repetitive task, or series of tasks, that can be tightly defined. Machine Learning and Artificial Intelligence Artificial intelligence (AI) is the use of a computer or machine to mimic certain elements of human intelligence. Machine learning (ML) is a branch of AI, in which a machine learns how to identify patterns in data. Unlike RPA, which simply replicates a series of repetitive processes, machine learning can be used to analyze data to identify trends or patterns, via the use of algorithms. This goes to the heart of many companies’ problems with data analysis: companies generally hold, or amass vast stores of data, but they do not convert it into meaningful information. As with RPA, data analysis via machine learning is faster than human computation; once set up, machine learning can operate any time (constantly, overnight or according to a customized schedule), enabling decisions to be made with the optimal, latest available data. However, implementation is more complex than typical RPA scenarios. Machines can learn, or be taught via amendments to the underlying algorithms, patterns over time, but they are reliant on access to multiple data to perform meaningful calculations. Companies need to be prepared to make the investment in technology and data cleansing or preparation before any machine learning would be effective, both from a results and a cost perspective. The Potential Benefits of RPA and Machine Learning Although the use cases vary, the use of RPA and machine learning offer similar potential advantages, including: Improved accuracy. With RPA, as long as the process is set up correctly, the bot will perform the same tasks in the same way every time. The risk of human processing errors is eliminated and, if any variance between RPA outcome and actual outcome is identified, the RPA process can be adjusted. In the case of machine learning, accuracy will improve over time, as the machine learns and the algorithms are adjusted. Significantly reduced processing time. Bots and machines can perform typical tasks in a fraction of the time it takes a person to complete. This means that activities can be performed faster, so decisions can be made on the most recent available data. Results available, globally, when needed. Machine learning and RPA technology can operate at any time, so calculations can be performed overnight or on desired schedules to meet operational requirements. So, for example, in the case of cash positioning in a multinational organization, results can be available when teams in each location start their respective days, rather than two or more hours into them. Time management. Eliminating mundane processing from a treasury professional’s day frees that time to devote to more value-added activities, whether that is engaging with additional timesaving activities, supporting the wider business or focusing on strategic decisions. Improved morale. Although some treasury staff will be concerned about the impact of RPA and machine learning on their own jobs, for most organizations the technology will be an additional process that will improve team members’ experiences by eliminating the stress of calculating positions under time pressure or reducing the risk of error. Team members will also have time to spend on more interesting and personally rewarding activities. How Emerging Technologies Are Being Used This section outlines three ways RPA and machine learning are being used to solve particular problems faced by individual treasury departments. Case Study: Automating Time-Consuming Tasks via RPA One insurance company’s treasury department used to spend hundreds of hours a year processing internal customer requests for check images. While critical for the business as a whole, these requests were timeconsuming to complete and added no value within finance. The treasury team developed an internal RPA process via bot to automate the process. While the team had to spend some time training their internal customers on the new process so that requests were made in a standardized format to enable bot processing, the system is now operational and running three times a day. Using the bot has improved the response time for treasury’s internal customers, while releasing time back to treasury to devote to more value-added activities. It is now a task that treasury no longer has to perform. In addition, the customer experience and SLA have improved, as treasury can now typically respond to a customer’s request in a matter of hours, rather than weeks. Case Study: Improving Cash Flow Forecasts One of the key benefits of RPA is that it can be used to process data from a number of different company systems. This makes RPA a useful tool to improve cash flow forecasts, as they are built on data sourced from banks, treasury management and ERP systems and from other company departments, including payment teams. Séverine Le Blevennec, senior director of EMEA Treasury at Honeywell has led the development of an RPA process to improve the accuracy and timeliness of the in-house bank’s cash flow forecasts. She identified RPA as a technology that might have the capability to enhance the existing forecast, and then took time to fully understand whether RPA could work by examining the technology in some detail. Convinced that RPA was the potential solution, Le Blevennec then engaged with internal and external stakeholders to communicate her vision. She worked with Honeywell’s technology providers and banking partners to see whether data could be supplied in a more accessible way, wanting her colleagues to view the bot as a useful colleague, not as a threat to their jobs. Critically, Le Blevennec knew the bot needed to have a significant positive impact from the start, as she wanted the project to energize her colleagues toward future digitization projects. In other words, the new process had to deliver the expected returns. Ensuring this required a review of the current process and a strict testing program. Le Blevennec learned that “rule-based programming [like RPA] requires detailed documentation.” She revisited all existing processes and created seven workflows for seven different activities, from maturing time deposits to intraday payments and collections. She emphasized the importance of testing. Tests were performed in a mindset in which it was expected that “things could go wrong.” Then, before going live, the team used the new spreadsheet alongside the old process to make sure everything worked as expected. Since going live, Honeywell has seen some significant benefits. The new system is more efficient: Two hours a day have been saved. It is more accurate: The old manual system could only include data from about 40 Honeywell bank accounts. Today, data from over 160 accounts are included in the forecast, and any new accounts can be included easily. Enhanced visibility has resulted in improved counterparty risk management, reduced levels of un-invested cash and, as a result, increased investment returns. Most importantly, Honeywell’s treasury team has seen the benefits. They are less stressed, and more engaged for the next stage in Honeywell’s digitization journey. Case Study: Receivables Management A steady growth in sales, resulting in increased receivables, is usually good news. But it might not be for an AR team, over-reliant on expensive lockbox processing. With over 2,500 monthly checks all needing some form of human intervention coupled with increased sales, a technology company’s AR team suffered from low morale, leading to delays in receivables processing and reduced confidence in the accuracy of AR data in the ERP. As a result, the treasury team was so busy processing payments, they didn’t have time to convince customers to transition to more efficient, less costly electronic payment formats. The team recognized they needed a solution that could be scaled and that would allow them to react in the ever-changing B2B payment environment. It is one thing to recognize the need for change; it is another to understand how to bring it about. The team did their research and spoke to their banking partners. One discussion started with an enquiry on how to implement a more modern lockbox, utilizing the OCR codes; it ended with the team realizing that machine learning could be used to automate some of the processes. They were able to design a solution that would get machines to do much of the previously manual work. However, there were hurdles to overcome. For example, in one division, clients tended to pay by claim, rather than by invoice, and the ERP system didn’t hold the claim line item information. The team realized bridging the gap between the system holding the claim information and the ERP was well-suited to machine learning. Once the solution was operational, it freed time for the team to manage exceptions and also to improve the quality of the data on which the AI system relied. The time savings enabled the team to work with customers to send and enhance information coming into the system, so the machine learning tool could better consolidate and match the data, and constantly learn to improve. The result was dramatic. By replacing the manual gathering, consolidation and formatting that was required every morning, the AI-enabled receivables solution allows the company to quickly improve the time taken to process a payment. Most payments are processed within two days. This was achieved because of the consolidation of information. The payments are now standardized. Reconciliation is simpler, with the team confident all the information is there. Three months later, with even more time available as the machine continues to learn from manual exception management actions, the team can spend more time with collections and customers to help them provide better remittance information, further improving matching. The team can now build electronic adoption, with the AI bringing together remittance and payment automatically. Now, every time a match is confirmed, the system can see it and learn from it. The team can respond quickly to queries. Information is tracked immediately, so there is no need for time-consuming searches for data. The team has confidence in the data, and morale is high as they can focus on more value-added activities. Making the Business Case to Implement As with any technology project, it is critical to build a strong business case when seeking to adopt RPA or machine learning. This means getting buy-in from a project sponsor, and approval from all required stakeholders. Setting and achieving key success metrics will give credibility to the project, which in turn will help treasury practitioners introduce more digital finance initiatives. To help make a compelling business case and ensure the objectives are well defined, there are a number of key considerations. Understand the technology to maximize the potential benefits. As outlined above, different technologies are better suited to solving particular problems. The project owner needs to understand the nature of the problem and how the proposed technology will solve it. Some proposals may appear to be a standalone solution to a particular problem with limited impact across the wider business, yet when examined further, are either extendible into other functions and/or require change to operations within those functions. Optimize processes before automating. If there is an existing process, map it and review whether it can be made more efficient. Many manual processes incorporate separate checks and approvals to protect against error and fraud. While some may need to be migrated into an automated process, for example if a transaction exceeds a certain pre-set limit, it may not be necessary to migrate all of them, as long as the rules are tightly written. A machine learning project may require improvements to data management to enable automated data analysis. Communicate and educate stakeholders on the proposed solution. Communication is central to the success of any project. Senior management will have to approve the project. If IT input is required, they will need to be engaged early in the planning process to secure resources. Banks, technology providers and other data suppliers should also be approached early to plan how they can support the project. Treasury team members will want to understand the implications for them. Identify potential returns. One of the key benefits of automating a process, whether by RPA or ML, is to remove layers of human involvement in either mundane, standardized processing or time-consuming data collation and analysis. So, although there will be some clearly measurable costs and benefits, many will be “softer” benefits in the form of released time and reduced risk of error and fraud. Establish and monitor success metrics. It can be helpful to identify some clear targets to serve as measurements of the success of the project, such as how much time an RPA project has saved. It may be possible to illustrate consequential benefits too, such as improved investment returns due to more accurate cash forecasts. If possible, use these measurements to refine the bot or machine to achieve further efficiencies. Scale the solution; look for the next step. Measuring the outcome of one project will help build support and momentum for others. As technology develops, there will always be further ways it can be adopted to improve treasury operations. Greater Automation Is the Future As this guide has indicated, technology is enabling corporate treasury departments to operate more efficiently by automating processes and taking advantage of more advanced data analytics. In turn, these changes further enable transformation and evolution of treasury departments from laborintensive operational, tactical departments into strategic partners to the wider business. The adoption of new treasury technologies continues to accelerate, driven by multiple factors. Two stand out: the evolution of the “internet of things,” and the move toward “real-time” finance. While the catalysts for the development of these two trends is different, the implications for treasury and finance are closely linked. The Internet of Things The value of the internet of things comes from the way data can be shared between billions of different devices being connected via the internet. It allows individuals to control their personal environment (e.g., smart lighting and heating) and companies to manage a whole range of processes from stock ordering to logistics management. For treasury and finance, the value will come from being able to link the physical and financial supply chains and gain better insight into cash. To do so effectively, data sent out by these connected devices needs to be analyzed by artificial intelligence; the devices simply produce too much data to be analyzed in any other way. The Implications of Real-Time Finance There is a clear trend toward more real-time activity in treasury and finance, with real-time payments being just one, albeit significant, step. Notably, the move toward real-time processing is also a shift to 24/7/365, always on operations. Treasury will need to consider how to manage this change and, particularly, how to manage risks that will emerge overnight, including between the Friday close and the Monday restart. The growth of e-commerce has already provided a sense of changes to come. Consumers who pay online expect to see their order status updated in real time and, in some sectors, the service or product available in real time too. With the adoption of real-time payments, actions not limited to fraud prevention have to take place in real time as part of the payment initiation process, as real-time payments are generally irrevocable, with no opportunity to stop or amend payments. But managing payment processes is just one part of a much wider change that the adoption of realtime payments will bring to finance and treasury. If payments are being made in real time, treasury departments will need to manage their liquidity in real time too and they will rely on a level of automation and artificial intelligence to do so. And before long, the foreign exchange and money markets will move toward real time, profoundly affecting the treasury departmental day, which is currently structured by cut-off times. For these reasons, it seems inevitable that both RPA and artificial intelligence, including machine learning, will play a more prominent role in the management of corporate treasury departments in the coming years. Conclusion Although RPA and AI are seen as cutting edge, in reality many companies are benefiting from these technologies through solutions provided by their banks and technology partners. For organizations yet to implement the technology, doing so successfully requires three key steps: Identify a pain point to be solved. RPA and AI/machine learning both work best when implemented to solve particular problems. Don’t start using RPA; start using RPA to automate a process. Match the technology to the task. Different types of technology solve different problems. If you want to automate a process, RPA is likely to be the more suitable solution. If you want to analyze data, investigate AI, including machine learning. Build a business case. RPA and AI/ ML are likely to become even more important in the future, so a successful first project is important. Make sure your chosen technology can do what you want it to do, then build support for your solution among stakeholders including, critically, the treasury team. You can then use your successful first project as the springboard for future development.

Welcome to the 2020 Treasury and Risk Management System (TMS/TRMS) Analyst Report, your definitive guide to smart financial stewardship in the digital age. Strategic Treasurer created this report as an aid to practitioners exploring...

Welcome to the 2020 Treasury and Risk Management System (TMS/TRMS) Analyst Report, your definitive guide to smart financial stewardship in the digital age. Strategic Treasurer created this report as an aid to practitioners exploring how treasury technology meets treasury needs. The Strategic Treasurer team created this publication with one overarching goal in mind—to equip readers with critical information as they seek answers to complex treasury management technology questions. Should my organization purchase a new TMS? If so, which system offers the functionality my firm requires? Will a major implementation be too difficult and disruptive? How do I streamline the process to achieve optimal results? After months of market research and comprehensive data analysis, we have compiled this report to help treasury practitioners make more contextually informed decisions regarding technology solutions. We hope the coverage within, which revolves around current and projected challenges across the industry, will help readers overcome obstacles, enhance treasury operations and improve workflow. Let’s get started! What Is a TMS/TRMS? One of the greatest levers for success in our day and age is that whenever a task becomes so complicated and time-consuming that it hinders our overall mission, we can find a way to have computers do it for us. As treasury professionals are often painfully aware, their industry is constantly and increasingly plagued by these types of tasks. Treasury Management Systems (TMS) and Treasury and Risk Management Systems (TRMS) are programs designed to lift the burden of manual processes from treasury departments, enabling more efficient, effective and secure operations. They accomplish this by integrating and automating many of treasury’s primary functions. The Types of TMS/TRMS and the Ecosystem The needs of treasury departments differ depending on their organization’s industry, size, areas of intensity, global presence, and departmental breakouts. To meet these varied needs, vendors have developed a variety of solutions designed to suit different needs and situations. The available systems, then, can often be broken down, at least loosely, along certain differentiating factors. While we will not attempt to categorize specific solutions in this report, we will discuss a few of the different types and some of the distinguishing factors one may find among these systems. TMS/TRMS: The first distinction that needs to be discussed may be the most difficult to define clearly. Any difference that exists between a TMS and TRMS lies primarily in emphasis. One might call a TRMS a subtype of TMS with, as the name implies, more robust and specific risk management capabilities. In many cases, the terms “treasury management system” and “treasury and risk management system” have been used almost interchangeably in the industry, which is why we choose to acknowledge both in the title of this annual report. For the remainder of this report, we will refer primarily to TMS with the understanding that what applies to one will typically apply to both. TMS Functionality Functionality: TMS typically come with core functionality and additional functionality that can be purchased as needed. The diagram on page 4 shows how the core functionality, which typically encompasses cash management and visibility, undergirds the additional capabilities. Core: Cash Management and Visibility: By automatically pulling balance and transaction data from all connected bank accounts, the TMS allows users to bypass the manual bank portal login and download processes. Within the system, users have visibility to all account balances in one place and can sort and view both past and present transaction data. The system’s cash positioning capabilities take the bank data pulled to show the location of the organization’s cash and identifies actions for the day, enabling users to make wise borrowing and investing decisions. Syncing with the cash position is cash forecasting, a liquidity planning functionality that shows a schedule of planned payments and anticipated receipts over various timeframes (week, month, quarter and/or year). In recent years, vendors have experimented with the use of machine learning (ML) in forecasting, and many have found it highly effective at improving forecasting results and decreasing the headaches usually involved in this area of treasury. ML’s uses in treasury technology will be discussed in more detail later on page 16 of this report. Some accounting functionality is typically also a core feature of a TMS. Since all the transactions and activity passing through the TMS needs to be recorded on the books, the accounting module automates that process as much as possible via rules and logic. Payments: In addition to core modules showing scheduled payments, a payments module allows the TMS to double as a payment platform. Users can initiate and execute payments through this single system with controls built in, allowing for greater efficiency and enhanced security. Compliance and Security: With the ever-growing regulatory and compliance burdens and the relentless frequency and increasing sophistication of fraudulent attacks, treasury departments need help. While all TMS come equipped with multiple security features, some offer additional security and compliance elements that can aid in reducing the headaches of security and exposure to various threats. Debt and Investments: Syncing with both cash position and forecasting, the debt and investment management functionality shows your current debts and investments, including availability, maturity dates and any scheduled payments. Risk Management—IR, Commodity, Counterparty: Add-on risk management functionality revolves around helping treasury see, manage, and drive out exposures, especially in the areas of interest rate, commodity, and counterparty risk. FX Management: Technically, foreign exchange management falls under the umbrella of risk management, but its level of complexity and magnitude often leads to it appearing as a separate module in a TMS. As with risk management functionality, an FX module will aid the treasury department in handling the exposures inherent in foreign exchange. Different vendors often focus more deeply in one area or another. Some may offer a module for each of the functionalities listed above, while others may specialize in one or two areas. Many vendors first entered the market with smaller, specialized systems designed as an add-on to help with only one element, such as payments or FX management, and gradually built out a TMS from there. These vendors are still likely to be strong in their original specialty. For organizations looking into purchasing a TMS, identifying areas of intensity in your own operations and needs and collecting data about the past, current, and projected scope and focus of various solutions’ functionality will prove a vital step in finding the right partner. Hosting Models A TMS may be installed on-premise (hosted on the organization’s own servers) or hosted in the cloud via the ASP (Application Service Provider) model or the SaaS (Software-as-a-Service) model. Most installed and ASP systems are now considered “legacy,” whereas SaaS is the current industry standard due to its cost-effective nature, low-hassle implementation and maintenance, enforced updates, and ability to continue developing as technological advances are made. That said, some firms may still choose installed or ASP solutions to suit their unique needs and situation. TERMS TO KNOW INSTALLED The hardware and software is managed internally. This includes the application of upgrades and management of test, development and production instances. HOSTED/ASP The hardware is managed externally by a third party on a single instance for the company. The software program can be supported internally or by the third party. SaaS The hardware and software is managed externally by the third party in a multi-tenanted manner. Who Needs a TMS Your company is seeing rapid growth, and spreadsheets are beginning to hold you back. Excel is a useful and flexible tool that is aptly suited for use in the treasury departments of small organizations. As the company grows, however, more functionality is needed, and financial data grows in both volume and complexity. Spreadsheets and the manual processes that accompany them inevitably become too inefficient and rudimentary to properly handle the expanding tasks. When spreadsheets begin to hold your department back, it is time to look into a TMS to support your company’s continued growth. This often happens when firms are working with several banks and have reached $100MM or more in annual sales/turnover. Your treasury team is understaffed, and you need more people, automation or both. The demands on treasury are growing more rapidly than treasury departments themselves, leading to overwhelmed staff and important tasks that no one has time for. Staff are forced to spend their time pulling bank statements and manually handling data and handoffs and are left with no time for forecasting, learning, and other high-level tasks that their organization desperately needs. Using a TMS to automate some of the most time-consuming processes can help your team move from “barely scraping by” to excellence. Additionally, leveraging this type of automation allows organizations to more gradually and gracefully add staff than those running a manual shop. You recognize the increased threat levels from fraud and have seen internal expectations for security rise. As the years go by, fraud becomes more frequently attempted, more often successful, and more costly to the victims. The corporate need for defense and payment security is constantly rising and changing as the criminals roll out new tactics. Both sides are learning to leverage technology more to their advantage, and manual processes are becoming increasingly vulnerable. TMS vendors are constantly working to ensure that their solutions are secure and able to counter the current threats, and automation by nature cuts down on manual handoffs by enforcing the controls inside the system. These enable better control of exposures by securing processes on an end-to-end basis. Your organization has an area or areas of specific intensity or volume, and you might need specialized tools. Cash management and visibility tools provide the foundational layer of TMS functionality, meeting the common needs of all treasury departments. Some, however, find themselves needing more specific tools to support their organization’s areas of intensity of activity or complexity, whether this is payments, debt and investments, compliance, or etc. For treasury departments in this situation, a TMS is likely still a good option, but you may require a “specialist” TMS or one that has additional capabilities or sophistication in your area of intensity. Why an Annual Report? Over the decades, various economic disruptions and crises have brought the importance of treasury into sharp relief. Expectations briefly spiked for treasury in these times, as corporate leadership realized the value of liquidity and risk management. After most of these events, however, the general attitudes towards treasury tended to slide back toward the mean as the sense of urgency faded. The 2008 financial crisis, like those before it, made treasury’s function top-of-mind for the rest of the finance world. However, whether due to its severity or some other factor, the heightened awareness and expectations surrounding treasury did not diminish at the same rate as before. Expectations remained high. Additionally, any sense of urgency that may have been lost has snapped back with COVID-19’s liquidity crisis. The industry will have to monitor emerging trends and expectations that may result as firms recover and seek to bolster themselves against newly felt risks. While the steadier awareness of treasury’s vital function among corporate leadership is encouraging, the accompanying increase in demands placed upon the department comes as a challenge. Treasury professionals no longer have the flexibility of spending their time on inefficient, manual processes. With real-time or near real-time analysis and insight demanded of them, practitioners must find ways of streamlining and automating processes so that they can focus their own time on the higher-level tasks now required. These higher demands placed on treasury trickle down into higher expectations for treasury technology. Without specialized tools, the levels of accuracy, efficiency, integration and automation necessary to equip treasury for its growing expectations cannot be reached. Modern treasury departments of mid-size and larger companies, then, cannot excel in their function without a modern technology stack. Steady Principles and Changing Tech With data doubling every two years (40% growth rate) and computer processing power increasing even more rapidly (doubling every 18 months), technology and its use in the financial realm are relentlessly changing. For many elements of treasury technology, the information ages rapidly and dramatically. What were state of the art solutions a decade ago are legacy systems today, and methods of ensuring open treasury have developed rapidly as new technology has emerged. In such an environment, making technology decisions based on information from just a few years ago is akin to making investing decisions based on last month’s market data. It is also worth noting, however, that many principles of technology usage either stay the same or shift rarely and gradually. Manual processes and manual handoffs, for example, cause defects. This problem and the resulting wisdom of implementing digital handoffs, validation, and confirmation are consistent principles of treasury management that have seen very little change over the years. Similarly, treasury’s need to interface with both internal and external sources is a consistent principle, as is the fact that new payment formats are added to old formats rather than replacing them, leading to a forward-looking but backwards-compatible aspect to the tech, and certainly to the data of treasury. This report seeks to encompass both the changing and stable aspects by explaining the consistent principles and guiding the reader through current information on technology and its uses in treasury and finance. We publish this report annually largely for this purpose: providing the industry with data and ideas that will serve them today and tomorrow, not yesterday. More Power and Availability, Less Cost When we consider the consumer space in the twentieth and early twenty-first centuries, examples abound of what we call the “democratization” of technology. By this term, we mean the progression of certain technologies from prohibitively expensive for all but the topmost strata of society to an everyday item available to nearly everyone. Technology starts bulky, expensive, limited in functionality, and difficult to use and maintain, but it moves to sleek, convenient, more powerful, and affordable. Only a few decades ago, televisions and microwaves, mainstays of the twenty-first century home, were modern marvels afforded only by the wealthy. One generation was able to watch the computer itself go from taking up an entire room to fitting in our pockets at a miniscule fraction of the price and yet still boasting more power. The corporate world moves more slowly, but just as steadily in the same direction. When TMS were first developed in the 1980s, their high cost and the internal technological resources required to host them naturally made them exclusively available to the highest strata of large, multi-national corporations. Following the pattern of “democratization,” however, TMS have simultaneously become more robust and more affordable. Newer hosting models, such as SaaS, have accelerated this process and brought TMS to where they are today: powerful tools available to many firms with annual revenue under $500MM. As the democratization of treasury technology continues, these analyst reports become relevant to a broader group. Since organizations with limited resources are often no less in need of tools to help them manage complex liquidity issues, we are excited to watch this expansion of TMS availability empower many companies to expand and grow efficiently. Business Continuity and Work-from-Home With business continuity planning (BCP) seeing renewed attention and with many industries rapidly adapting to a work-from-home (WFH) environment, many treasury departments face concerns with remote access to their tools. While slow, manual processes and lack of version control are problematic in the office, these issues can become crippling as we look at office-closure contingencies in a WFH environment. A SaaS-based TMS can offer solutions to many of the WFH issues treasury departments struggle with and should be considered as a possibility as organizations seek to refresh and strengthen their BCP and potentially open the doors to long-term remote work. SaaS-based TMS are simple, secure solutions that are already in the cloud, allowing you to function in a secure domain whether users are in the office or at home. They drastically reduce manual, error-prone processes and handoffs and have built-in version control and audit features—all of which can be vital when dealing with the possibilities of sluggish home internet, overloaded VPNs, and other security and version-control concerns of remote work. TMS in Light of Disruption and Volatility As the managers of risk and guardians of organizational liquidity, treasurers spend much of their time preparing their organizations for the times of disruption and volatility they know will occur eventually. It can be easy to forget, however, to prepare the treasury department itself for such times. When disruption hits, treasury is busier than ever. Urgent and vital questions, often from C-suite executives, must be answered. Forecasts, hedging strategies, and nearly every activity of treasury must be adjusted to reflect new and rapidly changing information, often with an increased demand for speed. In these times of stress, while carefully watching their organizational liquidity margin, treasury itself needs margin. A TMS can offer that margin by cutting down manual processes and supporting flexibility, insight, visibility, efficiency, and control measures, freeing up staff to manage critical situations. The robust functionality and the possibilities of reaching real-time or closer to real-time visibility across accounts help equip treasury teams during a crisis as well. It may be tempting to help conserve resources by “making do” with manual systems, but treasury knows they need to be prepared, and that includes acquiring the tools that help provide margin during times of stability and times of crisis. We don’t know what will happen next, but we know something will happen. While the preparation and the equipment required will doubtless look quite different from one treasury department to another, all can agree on this principle: Do something about what you can anticipate and set up well for what you can’t. The Problems and the Solution The daily life of treasury professionals working on manual systems involves many, many discrete and repetitive steps in order to accomplish a single task. For treasury departments with only one bank, a small handful of accounts, and an otherwise simple organizational structure to deal with, these manual processes are likely to be perfectly sufficient. Consider a couple of examples of the challenges you should expect to see as a result of implementing a TMS: Data: Data exists in numerous places, in different formats and in different levels of completion and accuracy. Pulling more data together via technology will uncover problems with data quality. Where are the issues? What is the plan to fix the issues? Staff: Improving the technology will cause disruption to the people. Some will thrive on the change, some will resist, and others may be unable to adapt sufficiently and may need to transition to another area of the organization. Consider: How will your choice of technology affect your ability to recruit new talent? How will your team need to adapt? How will the make-up of your team also need to adapt? What roles will you need? Once an organization develops complexity beyond this level, however, treasury’s repetitive, manual tasks start to cause as many problems as they were initially intended to solve. Tasks grow out of hand and become too extensive for timely completion. The inefficiency drives up cost while driving out too little risk. Staff are rushing and operating under stress. With so many manual steps, errors are inevitable. Less urgent tasks, no matter how important in the long run, are pushed off in favor of keeping up with the most urgent functions of treasury. As a whole, the treasury department’s function of managing risk and protecting liquid assets devolves into a stopgap function of trying to protect a larger base of assets while its error-prone manual processes end up costing far more than a more mature automated solution. To put it simply, a TMS solution responds to this problem by changing the treasury staff’s job from primarily performing manual tasks into primarily exception management of automated processes, allowing staff to focus their attention where it’s most needed. The TMS offers the lights on the car dashboard, so to speak, alerting the driver that the tires need air or the engine should be checked. This conversion of processes from painstaking and manual to automated and exception-oriented can revolutionize the efficiency, effectiveness, and scalability of a treasury department. Treasury departments considering the purchase of a TMS should be careful, however, to keep their expectations realistic and not to view the solution as a panacea with no side-effects. When you upgrade your systems, you upgrade both your problems and your benefits. A TMS will bring up additional issues that must be taken into account no matter how many issues it also solves. We don’t highlight this fact to discourage the use of TMS. On the contrary, we believe the benefits vastly outweigh the problems, but it’s still important to prepare and set realistic expectations. To draw a comparison, you don’t have to worry about diesel with a shovel, but a Bobcat® certainly moves a lot more dirt. It just helps to anticipate both the good and the bad and to realize ahead of time that the diesel will be necessary. There are many similar challenges that a TMS might bring you. However, most would agree that these challenges are much more manageable than the problems you face when you need a TMS and do not have one. In the following sections, we will cover a few areas where treasury departments often face difficulty and will discuss how a TMS can help. Increasing Fraud and the Need for Consistency and Scalability While criminals are adding attack vectors and growing in sophistication, we ourselves add to the complexity of the defense. In our efforts and our organizations’ efforts to make moves that will better staff and further the organizational mission, complexity naturally accrues. New regulations are proposed, our organizations acquire new businesses, and with these things come new systems, new accounts, and new processes to guard and protect. As mixtures of old and new technology weave their way through our processes, and as those processes often seem to snowball larger and larger, our points of exposure multiply. Treasury Technology Security Components The complex defense required by this exposure cannot be solved simply with more people and more compensating controls, as this is both difficult to accomplish and inadequate in its effects. Instead, treasury must work to drive the complexity into consistent and efficient processes. This is where the TMS can step in. It gives a single, secure environment through which payments can be executed and approved and data can be protected both in transit and at rest. Rather than having credentials for multiple employees for every bank, staff can view banking information through the TMS with a single login for each user. By minimizing what can be stolen and gathering it all together in a single, secured environment, a TMS already simplifies the defense enormously, but perhaps even more important is this: when payments are processed through a system such as a TMS, the controls are built in. One of the most significant points of exposure in manual, “messy” payment processes results from certain actions being forbidden but still possible. These are “controls” that do not actually control anything. Whether from malicious motives (fraudulent) or from innocent but misled motives (trying to get a payment processed in time and being unable to get in touch with the second signer, for example), controls can be bypassed. Regardless of motive, this voids the control and creates exposure. When payment processes have been consolidated into one platform, controls can be enforced. The TMS can be set to prevent a payment from proceeding without the proper steps being taken by the proper users. Two ids may have to approve a payment before the system will kick it to the next step, and transactions meeting certain criteria, such as those over certain amounts, may automatically generate notifications or the need for additional approvals. With the ability to digitally enforce controls, payments cannot be forced through inappropriately, thus drastically lowering points of exposure on a complex payment front. This consistency is necessary on the front-end before an organization can safely grow. The security— not to mention efficiency—of driving all payment processes into a single, consistent system or process allows firms to scale their business without scaling their exposure. Since many treasury departments are short on manpower but still aim to equip their organizations for growth, a TMS with robust security and easily scaled and integrated payments can solve both time and risk management problems. Treasury Staffing and the Need for Efficiency The treasury staffing situation and treasury technology have, for some time, developed in tandem and mutually affected each other. Insufficient staffing creates demand for technology, and the use of technology within treasury influences the skills required of modern treasury staff. How large is your global treasury organization staff, including analysts? That said, staffing is increasing at a slower rate than the demands placed on treasury. As noted on page 7 in “Why an Annual Report,” we see the expectations for treasury rising as firms experience disruption and volatility and recognize the importance of risk and liquidity management functions. This recognition is good news, both for treasury as an industry and for corporations as a whole. It does, however, create a challenge for treasury, since staffing increases alone cannot keep up with the heightened demands. As treasury departments scramble, constantly trying to accomplish more with larger quantities of data in less time—all while holding off fraud—treasury technology can come as a welcome relief. With more efficiency, however, more challenges arrive. A TMS offers treasury departments the leverage to gain significantly more bandwidth. The relief from overwhelm is welcome, but for some, this may bring fears of staffing cuts when certain tasks are automated. There’s no sugarcoating here: Without doubt, certain roles within treasury are dwindling. However, the human element is not less needed—it simply needs redirection to either technology-oriented or high-level tasks. Rather than seeing technology as an object blocking our path and preventing us from moving forward with our careers, treasury might view it as a leg up, an object we can use to reach higher ground. Ultimately, a TMS added into the equation of a small treasury staff supporting a complex organization can act as a key, unlocking treasury’s ability to provide not only adequate, but exceptional, strategic liquidity management and advisory support to their organizations. This support, in turn, can act as a key to the organization’s ongoing success. The problem treasury staff face, then, is not how to oppose technology out of fear of becoming irrelevant, but how to develop the many skills that are increasingly vital to a technologically advanced treasury department. These skills include tech savvy, of course, but they also include being a strategic business partner, advisor, and proactive supporter of the larger organizational mission. Become an expert in how to leverage technology to your organization’s advantage, and your relevance will only increase as technology advances. TERMS TO KNOW DATA LAKES Allows for storage of structured, semi-structed, and unstructured data. Hierarchically stored and optimized for business intelligence work and reporting. BLOB Binary Large OBject database—Non-hierarchical storage of structured, semi-structured, and unstructured data. Everything is stored in “containers.” Note: A blob is more like the junk drawer in the kitchen, as opposed to a data lake, which is more analogous to a file cabinet. It is easier to set up a blob than a data lake, but you will need a data lake if you’re setting up massively large datasets. DATA WAREHOUSE Organized storage, prepositioned and optimized for reporting. DIRECTORY Location on corporate network, either physically present or in the cloud. Data and Analytics Mindset: Supporting the Single Source of Truth As companies grow and encounter new challenges, various departments build out new processes and integrate new technology. Rarely is this done with an eye to STP (straight-through processing) and inter-departmental collaboration. Instead, processes are calibrated to optimize only one department’s goals, new systems are never fully integrated, and each department gathers and stores up its own data. The detriments of this siloed data management structure are familiar to most: repurchased data, financial and customer service problems arising from data that certain departments can’t access, errors and multiple versions, storage issues, the breeding of ill-will amongst departments that should be cooperating, and so on and so forth. No organization-wide inefficiency comes without ill effects. Few areas demonstrate so clearly as data silos both those ill effects and the ease with which inefficiency can slip in unnoticed if not prevented. All the data is important to treasury. They use most of it themselves, and understaffed treasury departments know they can’t afford the inefficiencies of siloed data. Data management at large falls within treasury’s purposes in driving organizational efficiency, managing risk, owning cash, and supporting the organization’s overall mission. Treasury should work, then, to be an advocate for the “single source of truth” and the removal of data silos. Getting rid of data silos is easier said than done, however. We all know they are to be avoided, and yet they seem to grow like weeds unless we actively work to root them out. To prove effective in the long run, this active work must involve proposing and enforcing an integrated data flow and a consistent organizational mindset aiming for STP. Since just one system that doesn’t integrate well with the rest can kink the hose and prevent STP, technology must be an area of focus for those seeking to remove and prevent data silos. For treasury’s part, selecting a TMS that “plays well with others” and securely stores, manages, and allows the smooth exchange of data is key to solving the silo problem. Within a properly selected and implemented TMS, a single instance of data can be used across all modules for every function treasury performs. Silos do not represent the only issue with data in the modern corporation, however. Once the silos are torn down and the hoses unkinked, treasury must be prepared to make use of the massive amounts of data flowing in. This can also be difficult to do without a TMS. “Big Data” is both a blessing and a curse to the modern financial world, and in order to maximize the blessing and cancel out the curse, treasury will need robust, hyper-efficient tools. The solution must be appropriately focused and must have every ounce of functionality necessary if treasury is to properly and efficiently manage these levels of data. A Glance at a Sample Technology Infrastructure Front-office and Back-office Integration and STP Frequently, the front, middle, and back offices find themselves at the core of a silo problem. The functions of all three surround finance, but they each approach it from a different angle. The front office is where the trades are made, the middle office helps settle and confirm, and the back office handles accounting and reporting. Since the three are so tightly related, each needing the same information to perform their functions, seamless integration and STP are vital. In most firms, however, each office has found a set of solutions to suit its own needs over the years, and the solutions often integrate either poorly or not at all. The results are inefficiency, headaches, frustration, and even the breeding of resentment between offices who desperately need to cooperate. To solve this problem, front, middle, and back offices must work together to find a single, core solution that suits all three. The core system, a role for which TMS are well suited, need not necessarily cover every area of technological need. In general, it is true that having more systems adds complexity in any organization, since additional handoffs need to be supported. Rationalizing the number of systems down is a reasonable operating principle. However, specialization can also be a significant advantage for many companies and can provide the needed rationale for an added platform. This rationale for adding specialized systems become easier to find when we look at “open treasury” capabilities, which allow for separate systems to more easily connect with one another, reducing the primary obstacle to multiple systems. Best of breed, specialized systems for aggregation, supply chain finance (SCF), business intelligence (BI), and other elements can prove extremely useful alongside the core system. The imperative is only that all systems must integrate. Most TMS options can, however, cover the front, middle, and back office’s central functions in addition to integrating with best of breed for more peripheral or specialized capabilities. Certainly, having all three offices running primarily on a single system when possible can aid in building cohesiveness into the workflow, relationships, data, language, and perspectives, but excellent integration takes priority over finding an all-in-one solution. Streamlining External Connectivity Treasury’s needs for connectivity are unique. Not only does it require deep integration with other internal departments, but it also requires a vast web of external connections to partners such as banks, SWIFT, FX portals, and market data providers. In an environment of Big Data and global expansion, the external connections can become overwhelming for treasury staff if not properly facilitated by technology. What types of payment technologies do you intend to invest significantly in over the next 12 motnhs? For many years now, TMS have come with built-in connections to many of the most commonly needed platforms and sources. APIs (application programming interfaces), however, are bringing significant impacts to connectivity as they become more and more prevalent. (See the section on APIs in the Treasury Technology Landscape on page 17 for more information on APIs and their uses.) “Open banking,” a movement to make banking information easier to pull and integrate without compromising security, has been followed closely by “open treasury,” a call to similarly streamline internal corporate financial connectivity. With widespread implementation of APIs, open banking and open treasury are both in the process of shifting from ideas on the horizon to current best practices. The process is far from over, however, as open treasury especially still holds significant untapped potential. Whether another innovation appears, or API management continues to improve the mechanism for achieving openness, the basic model of a central, core system (typically a TMS) that can integrate with other systems as needed will be here for the long haul. Treasury Technology Landscape Over the next few years, we expect TMS—especially SaaS-based systems—to see significant adoption. However, we expect different types and rates of adoption among large and small companies. Do you have a treasury system besides Excel? In the past, TMS have seen much higher use rates among large organizations than among smaller organizations. Large organizations are defined for these purposes as those with annual revenue over $1B. Adoption has historically been slower among smaller companies (those with annual revenue under $1B), with well over half of these organizations still using only Excel for their treasury operations. However, as rising complexity drives automation, and as solutions become more scalable and more accessible to smaller companies, TMS have begun to see their most rapid adoption rates among these groups. We expect the use of TMS among smaller organizations to exceed 50% by 2025. While most large organizations already have a TMS, there is growth in this sector as well. In addition to those buying a TMS for the first time, of which there are still quite a few, many of these large firms were early adopters of TMS, and as such, their solutions may be old and out-of-date. We expect that 75% of those with an installed system are likely to replace them with a SaaS-based solution within five years. Tech Democratization and Open Treasury As we discussed in More Power and Availability, Less Cost on page 8 of this report, treasury technology has its own history of democratization. Its progression runs from resource-demanding, expensive installed solutions all the way to the affordable, scalable, and powerful cloud-based solutions of today. The development of the open treasury model traces a parallel path to democratization, with its roots in the shift to cloud-based systems and its continued progression in the technological architecture and connectivity allowing best-of-breed solutions to integrate seamlessly. Between differences in industries and individual corporate situations, treasury departments vary wildly from one another in their circumstances, areas of intensity, and needs. Accordingly, a “one size fits all” approach to treasury technology is difficult to achieve. Instead, most vendors make their TMS scalable, with optional functionality that can be purchased if needed. In turn, many modern treasury departments opt for a best-of-breed approach in architecting their technology stack, finding specialized, standalone tools for their more unique needs and building them out around their core TMS. The configuration of the technology stack can increasingly be customized, as democratization results in more options at lower costs. However, in order to implement best-of-breed and open treasury models with any level of success, treasury departments must acknowledge and follow one foundational principle: connectivity. All components of the stack must integrate with one another, as well as with accounting systems, BI systems, and of course external sources. Even a single component failing to integrate can produce unnecessary headaches, errors, and breakdowns in the workflow. The TMS, as the most multi-purpose, core usage system in most treasury departments’ technology stacks, has a foundational role. As such, it must have a robust and flexible ability to connect to any other systems in the treasury ecosystem. All treasury’s data will be used and transformed within the TMS, so it’s vital that it be capable of bringing in all necessary data, as well as capable of allowing that data to flow into other systems for other purposes afterwards. Ensuring your TMS can integrate smoothly with all current and future components is one of the most fundamental steps to reaching open treasury. TERMS TO KNOW MACHINE LEARNING (ML) Computer algorithms that "learn" by trial and error. These algorithms are given targets and adjust to meet them as they run iterations of data. ARTIFICIAL NEURAL NETWORK (ANN) A subset of ML and closely related to deep learning, neural networks are a way of determining patterns through complex sets of data. DEEP LEARNING A subset of ML, typically indicating the use of large neural networks geared towards image recognition tasks. NATURAL LANGUAGE PROCESSING (NLP) A field of artificial intelligence and linguistics focused on developing the abilities of computers to process human language. OPTICAL CHARACTER RECOGNITION (OCR) The conversion of images of text into electronically recognized and processed text. Emerging Technology and Its Context In terms of technology, the consumer space informs the corporate space. People have grown used to rapid improvement, sleek user interfaces, and robust functionality for the applications they use in their personal lives, and they expect the applications they use at work to be of a similar quality. Technology for use in the corporate environment, however, is slowed in its development by the need for sufficient protection and by complexities such as employee turnover and MFA (multi-factor authentication) with multiple users. Nonetheless, slow adoption does not mean no adoption. Even while emerging technology’s corporate use may seem to lag significantly behind the take-up rate in the consumer space, once certain issues are solved, corporate adoption will scale. If we don’t want ourselves or our departments to be left behind or caught off guard, we need to learn about emerging technologies. We must begin to consider how they apply or will apply to the treasury function in general and to our departments’ situations in particular. For example, while ML (machine learning) and RPA (robotic process automation) may sound similar at first blush, their positions within treasury’s technology stack are quite different. While both are tools that expand technology’s automation of tasks, the edges they expand are different. ML is built into the TMS, enhancing accuracy and efficiency in areas such as forecasting and error-checking. RPA, on the other hand, sits outside the TMS and facilitates digital handoffs between systems. Understanding and considering the position an emerging technology would occupy in relation to your other systems can help you plan ahead and architect an efficient, modern technology stack that appreciates over time instead of losing value. Artificial Intelligence and Machine Learning While the definitions of AI (artificial intelligence), ML, and their relationship to each other vary, we will speak of them in this report as related concepts. We accept the definition that shows that Machine Learning is one type of Artificial Intelligence. This category of technology is rapidly advancing, and as it advances, it narrows the field of activities that require significant human involvement. ML, in particular, has seen quick development and multiplied uses in finance technology recently, and its applications within treasury are set to equip the industry with far more efficient processes and previously unreached accuracy. Are there currently any responsibilities that you don't have time to perform? What are these responsibilities? Machine learning includes various ways in which computers can be programmed to learn on their own (forecasting based upon history; identifying anomalous activity for security purposes or quality control functions). Typically, the computer is given a goal, parameters, or examples, and by historical information or running scenarios it learns how to better complete its designated task. This may include identifying activities that sit outside of the normal bands in a sample set (likely error) or identify the correlation between dependent and independent variables and distribution in order to improve the accuracy of a forecast. This activity may also be predictive, which highlights one of the most important ways the technology can help in treasury. Cash forecasting and liquidity modeling is a vital part of the treasury function, but also a part that many departments struggle to keep up with. It’s also been an area where treasury technology has struggled, as the number and type of factors to be accounted for when creating an accurate forecast create complications in programming. With machine learning, a computer can be fed data from prior time periods and can learn how to predict data for future periods. Significant amounts of prior company financial data must be available for this, and the program must be tested carefully with varied datasets for accuracy before its predictions should be relied on. That said, ML cash forecasting is rapidly developing into an incredibly efficient solution, allowing treasury access to highly accurate forecasts with very little manual work. Multiple vendors are already developing or testing ML in their forecasting modules with good success. Some are expanding the use with customers in a live (non-test) setting. Machine learning is good for more than just forecasting, however. Other uses within treasury include quality control and error-checking, and anomaly detection for security and fraud. Both areas involve the computer learning how to identify expected ranges and parameters. When something falls outside the normal range, the program sends an alert requesting human intervention or confirmation. Efficiency is the main driver for the quality control and error-checking side of this, with the machine enabling the user to focus on exception management instead of manual processes. The anomaly detection side is driven by security, with alerts triggered when a value surpasses a normal limit or when certain values coincide that rarely should, such as: When a payment is made outside of normal business hours, When a vendor master record is edited and a wire payment is created within a short period of time, or When more than 150% of the normal level of records are accessed within a 5-minute timeframe. Think for a minute about how many defects such quality control measures could catch before they move too far downstream in a process. While many uses of machine learning are still in development, vendors have already seen enough success with it that it seems highly likely to become an integral part of many TMS modules. This is one area of emerging technology where treasury professionals would do quite well to build some familiarity and consider how it might integrate with and affect their current technological ecosystem and workflows. Application Programming Interface Driven by PSD2, a regulation requiring European banks to make their data available, the use of APIs to facilitate open banking has seen rapid adoption in Europe. While regulations in other regions do not yet require the use of APIs, the influence of European banking has spread the adoption worldwide. Seeing the usefulness of APIs, vendors and firms are finding more ways to apply them, including between internal systems as a way of achieving open treasury. APIs run between systems, fetching and delivering data as requested. They are used extensively within consumer applications to integrate multiple functions into a single app, as the Uber app integrates data from maps, from Uber itself, and from payment services into a single platform for consumer convenience. Similarly, APIs help treasury achieve STP by providing smooth integration between systems, whether internal or external. This erases the need for manual fetching of data and creates a seamless experience in which treasury can perform its function within a single system. A user can press a button in their TMS, and an API can fetch data from a bank or ERP system and present it without the user ever having to switch interfaces. APIs are, in many ways, the keys to open banking and to open treasury. However, the use of APIs is not limited solely to facilitating digital handoffs between traditional systems. Some vendors have explored alternative uses, with one offering what is essentially an entire TMS contained within a company’s ERP system. This is made possible by a powerful set of API-enabled cash management applications embedded in the ERP. The API pulls data from the ERP, and the embedded cash management applications use that data to present treasury with TMS functionality. Since the applications are native to the ERP, this method results in highly efficient data management and integration, along with centralized security measures. A range of APIs exist, with most of those that treasury will encounter falling into one of two categories: Web services and RESTful APIs (sometimes referred to as simply “REST APIs”). Web services are highly functional applications, typically created by the software vendor, that allow for movement of information in and out of a system without using the primary user interface (UI) in a manual manner. Once the data is out of the system, it can be transferred to another Web services API, which can move and inject it into another system. This type of API is somewhat indirect but is broadly available. When available, the increasingly common RESTful API is generally preferable for many functions, since it can move data directly from one system to another without two or three extra transition locations. While manual handoffs are the most important to eliminate, ridding the system of unnecessary digital handoffs is also beneficial. Robotic Process Automation As with many of the uses of machine learning, the use of RPA (robotic process automation) within treasury is driven by the need for efficiency in understaffed treasury departments. Put simply, RPAs give treasury a way to automate the handoffs between systems and “cheat” their way to STP. Select the payment-related process you would be most interested in applying artificial intelligence (AI) and / or robotic process automation (RPA) to in order to reduce manual work and achieve related benefits - (Only top 5 choices shown) RPA has been piloted in many treasury departments over the past few years, but their use continues to expand and deepen. As the name implies, robotic process automation involves programming a bot to perform a formerly manual process automatically, usually by copying the actions taken by a human. Unlike most other automated processes, RPA sits outside the primary system in order to facilitate digital handoffs. Most commonly, RPA is used to automate processes such as downloading bank statements and cleansing data. They can also send exception alerts when issues arise or a process fails to complete correctly. Again, this moves the treasury staff to the much more efficient role of exception management and away from error-prone, time-consuming manual processes. It should be noted that, when available, APIs are a sleeker, more flexible solution to the digital handoff problem. Since an RPA simply emulates the manual process, it can be prone to issues such as broken links that need frequent manual repair. However, with so many external connections, treasury finds itself handling a tremendous amount of activity between systems and data sources, and APIs are not yet available for each necessary handoff. RPAs do an excellent job of filling in the gaps and replacing steps that would otherwise be grossly inefficient. Adjusting Mindset and Avoiding Pitfalls The process of purchasing and implementing a TMS is a massive, high-stakes undertaking. The outcome can either be decades of increased efficiency and leverage that help treasury and the organization reach their goals, or it can result in years of costly problems, inefficiencies, and blemished track records. The following sections cover several of the most vital and difficult pieces of the process. We’ll identify common pitfalls and ways to avoid them and will discuss finding the right mindset to help you approach each issue with an eye towards the ultimate goal. The Business Case When treasury identifies the need for new or upgraded technology, even the first step constitutes a significant roadblock. Competition for funding can be fierce, and it’s a competition that must be won before your project can move forward. Pitfall: Failing to Secure Buy-In Making the business case comes with one primary pitfall that is seemingly obvious and surprisingly treacherous: failing to secure buy-in. Unlike many of the other pitfalls we’ll discuss, this is something everyone knows they need to avoid. What’s less obvious, and what makes this pitfall so common, is how much work is necessary to prevent it. It’s easy for treasurers to clearly see the value of their project and to assume that others will see it too and support them rather naturally. Even if the supporters treasury is relying on also see the value, however, they may feel that another project is even more valuable, or they may have invested their political capital elsewhere already. Again, corporate competition for funding is fierce. This pitfall of assuming that buy-in is already in the bag—or can be easily or quickly obtained—and neglecting to perform the necessary heavy lifting kills many projects before they even begin. In order to garner grassroots support and communicate the true value of the planned purchase to decision-makers, treasury must plan ahead and look beyond itself, its own needs, and its own terminology: Make the Strategic Case Showing the value that a purchase will bring to key stakeholders is vital, and the most important “stakeholder,” so to speak, is the organization itself. While ROI calculations seek to demonstrate how a purchase will ultimately work for the good of the organization financially, it’s important as well to show how the planned spend will support the organizational mission on a more strategic level. Make sure you understand the firm’s overall goals and can articulate clearly how a TMS will support those goals. Get Other Stakeholders on Board A new TMS will affect more departments than just treasury. Accounting, IT, and many other departments are likely to have concerns about how the TMS might change things for them. While it may be tempting to view these departments as competitors for funding or potential opponents to your business case, they can also become some of your strongest allies. To make that happen, treasury must proactively engage with these stakeholders, listen to their concerns, and work together to find a solution that addresses their problems. Translate for Those Outside Treasury No matter how clearly you understand how your TMS will benefit all involved, it won’t do you any good unless you can put that understanding into terms that make sense to your audience. Some of those you need to convince may have very little understanding of what treasury even does. Even between the different financial departments, terms as fundamental as “cash” bear different meanings. Keeping all of this in mind, treasury must be careful to present its arguments in terms that make sense to those outside of and in other parts of finance. Underpromise, Overdeliver Resist the temptation to offer stakeholders a best-case scenario of your project outcomes, costs, and timelines in an attempt to get buy-in. Don’t sell your project short either, but realistically leave room in your promises for a few unexpected problems and delays, plus margin. If you can deliver ahead of schedule at a lower cost than expected, you build trust and develop a track record that will help you gain support for future projects. The Selection With funding secured, treasury can move its project forward and tackle the next phase: selecting the vendor and product. Much can be said about what to look for and how to sift through the options, but we’ll focus here simply on avoiding some of the most common problems. Pitfall 1: The Usual Suspects With so many options to choose from, treasurers know they need to narrow the list. For many, it’s tempting to do this by focusing on whichever vendors they already have in mind as the best or most common providers in the market. Whether due to anecdotal evidence of good experiences or because a good and long track record in a vendor creates an impression of stability and excellence, these “usual suspects” can sometimes end up being the only ones carefully considered. A good customer review, a good reputation, and a good track record are all valuable things to look for when choosing a vendor. However, they aren’t the only things to look for, and often, the information we have in our heads is out of date. Maybe the vendor that first comes to mind was truly the best several years ago, but that doesn’t mean they’ve kept up well with advances in technology and have continued to excel. Treasury’s technology vendor needs to be a long-term partner who will keep adapting and innovating as new problems and solutions appear over the years, and just because a vendor was good at solving yesterday’s problems doesn’t necessarily mean they will be good at solving today’s or tomorrow’s problems. Rather than prematurely narrowing your search to the usual suspects, keep an open mind and an open ear. Don’t cross a vendor off your list without giving them a fair shot, and don’t bump a familiar vendor to the top of the list unless they truly earn it. Pitfall 2: Too Much Time on Too Many Vendors While narrowing the list by jumping to conclusions is one pitfall, failing to narrow the list until too late in the game can also cause problems. Treasury can become bogged down in the options, spending too much time on every vendor rather than spending the most time with those most likely to be a good fit. How long did the implementation process take? (expectation vs reality) It’s important to spend as much time on each vendor as is necessary before crossing them off the list. However, it’s just as important to spend no more time than is necessary. Treasury must find good, accurate ways of properly narrowing down the search to the best and most likely options. This includes understanding your organization’s points of distinction and the ways in which particular vendors can provide a fit to your functional and relationship requirements. Once that short-list is compiled, treasury can devote the additional time to making the best selection from the most suitable vendors. The Implementation Technology implementations are riddled with pitfalls, leading to their reputation for taking too long, causing headaches for all involved, and ending in suboptimal results. However, for those who come well-prepared and aware of the pitfalls to avoid, implementations can be highly efficient and successful. Below we’ll cover some of the most common pitfalls and how to prevent them. Pitfall 1: Overaggressive Schedule Many firms realize that implementations can hit roadblocks, lose momentum, and stretch out for years. In an attempt to prevent this, they choose an aggressive implementation schedule. As understandable as wanting to get the implementation over with quickly may be, these “aggressive” schedules are usually overaggressive, and an unrealistic, an overly aggressive timeframe is actually counterproductive and even disastrous. Implementations simply take time. Many tasks (bank connection setup, for example) cannot be compressed regardless of manpower or determination. When insufficient time is allotted for various tasks, the entire project is often delayed, and treasury is left with a poorly implemented system, inadequately trained users, and a crushed reputation with those whom they told it would take only so long and cost only so much. If you’ve chosen to implement a TMS, understand—and make sure others understand—that this project will take a while. To make sure it takes as little time as possible while still yielding good results, put in the work to make a realistic, detailed plan that leaves ample time for each task. As mentioned in the business case section, the goal is to underpromise and overdeliver. With careful planning and sufficient margin, your implementation can run smoothly and help you build a track record of completing projects ahead of time at a lower cost than promised. Pitfall 2: Off the Side of Your Desk Often, in the hopes of cutting down on the cost of an implementation, treasury departments will try to take on the project on their own, without significant assistance from either the vendor or a third party. Most treasury departments, especially those motivated to implement a TMS, are understaffed and overwhelmed by their daily tasks already. Few if any of those daily tasks can be put on hold to make room for an implementation, and as noted in the first pitfall, implementations demand a great deal of time. Attempting to complete an implementation without help on top of a full schedule will typically lead to an excruciatingly long implementation and poor results. Get help with your project, and not necessarily just from the vendor. Partnering with a third party that assists with implementations gives you access to additional resources to support your team. Experience from those who have performed many implementations can help you reach your implementation targets more quickly by prioritizing the urgent and helping you navigate around the pitfalls. Pitfall 3: Trying to Get All the Functionality at Once The third pitfall common in implementations is the attempt to stand up all of the new system’s functionality at one time. Since each piece of functionality in a TMS is integrated and interrelated, this becomes complicated. One problem can lead to problems in every other area, resulting in a delays and unrealized benefits. The most effective method, at least for projects of the scale and type of a TMS implementation, is usually the phased approach. Focus on setting up critical path items first and stand up each piece of functionality one at a time, in logical order. Staffing and Workflow Changes While most of the problems in staffing and workflow crop up during the implementation, it’s a category worth attending to on its own. A TMS, like any new system, brings change. When well-selected and well-implemented, the vast majority of that change should be positive. Even with positive changes, however—and especially with neutral or small but negative changes—people struggle. Our own responses are not always best, and the responses of those we work with can catch us off-guard and cause additional issues. Pitfall 1: Failing to Plan for Change Management A TMS brings many significant changes to how tasks are performed, and treasury must work with many individuals and with other departments who will need to adjust to using the new system. Another department may be accustomed to having certain information sent to them periodically, and now they may receive their own login so they can access the data themselves. Be prepared for the need to teach these other departments to self-serve and to use new processes and a new system. In addition, remember that this communication and teaching is likely to be a process, not a single event, as other departments may not be able to adjust all at once. As for individuals, different people will react quite differently. Some shift and adjust rather naturally, for some it’s uncomfortable but quite doable, and for others the adjustment process can be a serious struggle. Those whose skillsets were grounded in manual processes may have the most difficult time, as they will have to perform an extensive overhaul on their skillset in order to remain relevant to the organization. After all, while a TMS does not make people irrelevant, it will render certain skillsets irrelevant. There will be plenty of work for staff, but to perform that work, they must be willing and able to learn the new skills required of them. Be prepared for the difficulties of this adjustment and help others prepare and learn. Pitfall 2: Not Adjusting Process to the System While TMS are customizable in many ways to the needs of different organizations, they will necessarily lock you in to certain processes for tasks. Many departments find this uncomfortable at first. They aren’t used to performing these tasks this way, and perhaps they had certain reasons for the old processes, and while there isn’t exactly anything wrong with the TMS process, they don’t like it. The temptation at this point is to try to customize or bypass the TMS’s built-in processes. This is a pitfall. You may enjoy the familiarity that results from forcing the system to comply with your historical processes, but you will not enjoy the inefficiency that inevitably seeps in as a result. Instead of trying to customize the system, customize yourself and your own processes a little, leveraging the system’s built-in processes to achieve greater overall efficiency. Works Cited Figure 1, Page 11: 2017 and 2020 Strategic Treasurer and TD Bank Treasury Perspectives Survey. Figure 2, Page 14: 2020 Strategic Treasurer and Bottomline Technologies B2B Payments Survey. Figure 3, Page 15: 2017 Strategic Treasurer and TD Bank Treasury Perspectives Survey. Figure 4 and 5, Page 17: 2020 Strategic Treasurer and TD Bank Treasury Perspectives Survey. Figure 6, Page 18: 2017 Strategic Treasurer and TreasuryXpress Treasury Technology Survey. Figure 7, Page 20: 2017 Strategic Treasurer and TreasuryXpress Treasury Technology Survey.

Kyriba’s Currency Impact Report (CIR), a comprehensive report detailing the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, revealed negative impact from currency volatility of $6.16...

Kyriba’s Currency Impact Report (CIR), a comprehensive report detailing the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, revealed negative impact from currency volatility of $6.16 billion.

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

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

The October 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q2 2020 earnings. The report serves as a key benchmarking tool for global corporations.

The October 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q2 2020 earnings. The report serves as a key benchmarking tool for global corporations.

The July 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q1 2020 earnings. The report serves as a key benchmarking tool for global corporations.

The July 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q1 2020 earnings. The report serves as a key benchmarking tool for global corporations.

The April 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q4 2019 earnings. The report serves as a key benchmarking tool for global corporations.

The April 2020 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q4 2019 earnings. The report serves as a key benchmarking tool for global corporations.

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

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

After a decade of uninterrupted economic expansion, this past summer saw a slowdown of growth in China and Europe, indications of a softer U.S. economy, the threat of protracted trade wars and a spike...

After a decade of uninterrupted economic expansion, this past summer saw a slowdown of growth in China and Europe, indications of a softer U.S. economy, the threat of protracted trade wars and a spike in energy prices. Together, these issues sent shivers through the financial markets and put a dent in corporate earnings. Given that the CFO’s job is to optimize enterprise financial performance in good times and bad, the shift in the business environment did not catch many by surprise. Foreseeing earnings pressures, financial executives identified margin improvement, not growth, as their company’s predominant financial objective for 2019, a big switch from 2018, when growth was top of mind (Fig. 1).1 FIG. 1 Top financial objective Source: Key Issues Study, The Hackett Group, 2019 Concerns about margin compression led companies and finance executives to emphasize cost reduction on their agendas for this year. In late 2018, when we asked finance executives which enterprise objectives they would be asked to support in 2019, 91% cited cost reduction, which was tied for first place with enterprise digital transformation. The two are closely related because many finance organizations consider cost optimization as the lead business driver of digitization. However, cost takeout alone will not support continued enterprise success. Today, the business landscape is changing at an unmatched speed and giving birth to entirely new types of competition. Low cost cannot be the goal if it is achieved at the expense of product and service innovation. Today, low cost cannot be the goal if it is achieved at the expense of product and service innovation. The Four Ingredients of Strategic Liquidity Management Finance organizations can enable companies to straddle the two seemingly contradictory objectives of cost management and innovation. While they continue to support costreduction initiatives, they can also activate an often-underutilized asset – corporate cash – to fund continued investment while keeping borrowing costs down, improving the planning process, and more effectively protecting the company’s assets and revenues from financial risk. The strategic management of liquidity is comprised of four critical elements: Assigning end-to-end process ownership to orchestrate the flow of information across businesses, functions and processes. Creating 100% real-time visibility into current and expected cash across processes such as treasury management, accounts receivable (AR) and accounts payable (AP). Enhancing assets and revenue protection through better exposure identification and risk management. Integrating payment processes to improve coordination among functions and standardize fraud prevention and detection. Assigning end-to-end process ownership A holistic approach to managing liquidity, which combines upstream and downstream process elements across different areas in the company, requires a designated process owner. Otherwise, there is no clear accountability. In study after study, we have found that end-to-end process ownership is associated with greater process efficiency and effectiveness. For example, finance organizations with a higher degree of end-to-end process ownership (i.e., dubbed “enablement” in Fig. 2) spend 62% less on the overall finance process compared to ones with a lower level of end-to-end process ownership. The same is true for headcount and AP process costs, which are both significantly lower. FIG. 2 Outperformance due to end-to-end process ownership: Efficiency Source: The Hackett Group, 2018 End-to-end process ownership also cuts through information silos and reduces error rates and the amount of time analysts have to spend collecting and compiling data, while increasing the quality of the receivables portfolio. (Fig. 3). FIG. 3 Outperformance due to end-to-end process ownership: Effectiveness Source: The Hackett Group, 2018 Treasury is the most qualified department to assume the end-to-end ownership of the strategic liquidity management process. It already runs the cash management process and is electronically networked into the company’s financial ecosystem (e.g., banks and payment systems). Treasury also controls bank relationships and bank accounts. It can therefore leverage existing connectivity and account-structure oversight to achieve economies of scale in channeling all cash flows through a smaller group of providers, reducing settlement risk, and significantly lowering bank fees and transaction costs. By simplifying the global account structure, treasury can materially affect its process cost and effectiveness. Our analysis shows a strong correlation between the number of accounts and treasury process performance (Fig. 4). Cash-management cost and headcount are vastly lower at companies with fewer bank accounts, because it takes less time to establish the company’s cash position, transfer funds and pool liquidity for short- and long-term investment. Organizations with a lower number of bank accounts are also more effective: They produce better forecasts and are therefore 20% more likely to be perceived by management as highly reliable. FIG. 4 The effects of bank account proliferation on finance performance Source: The Hackett Group, 2018 Creating 100% real-time information transparency Complete visibility into all incoming and outgoing cash is a prerequisite for active management of liquidity. Without information about where cash is trapped and how much cash is scheduled to be received or paid out, treasury cannot paint a dynamic picture of the company’s global cash position. Consequently, it is unable to generate accurate reports or produce timely forecasts that provide management with insight to support resource allocation decisions. Achieving such transparency can be a formidable challenge when data is stored in disparate source systems. Most finance organizations still operate in a fractured core system environment.² Full system consolidation is expensive and can take a very long time, but there’s no need to wait. Modern data management architectures and cloudbased treasury management systems can dismantle information silos in order to provide greater accessibility to company-wide data. As a result, treasury can monitor and control the flow of cash regardless of the “pipeline.” Our research shows that finance currently runs 68% of its applications in the cloud, a level that executives anticipate will rise to 83% over the next 12-14 months (Fig. 5). FIG. 5 Cloud-based application adoption rates Source: Key Issues Study, The Hackett Group, 2019 Complete cash transparency gives treasury a clear line of sight into such details as the number of days payables outstanding (DPO) and days sales outstanding (DSO), so it can detect payment patterns and predict the aging of the receivables portfolio. As a result, treasury can greatly improve the accuracy of the cash forecast. For example, if a forecast is based on last year’s DSO (e.g., 30 days), but customers are actually paying in 45 days, the forecast will be off the mark. By continually updating the underlying forecast assumptions, treasury can more effectively support business planning decisions and offer more meaningful guidance to AP and AR on altering payment terms in order to meet established payment policies and improve the health of the receivables portfolio. Enhancing assets and revenue protection Correctly identifying the company’s exposure to fluctuations in currency markets has been a perennial challenge for treasury teams. An accurate view of current and anticipated risk is essential to insulating corporate earnings. Traditionally, treasury’s ability to capture the full extent of net exposures has been hampered by unreliable cash forecasts and incomplete visibility into sources of cash. If treasury hedges too much or too little, the difference between the value of the hedge instrument and the underlying exposure is captured in the FX gain/loss line of the income statement. This is particularly important during periods when the dollar is strong, because that means foreign-currencydenominated revenue will translate into fewer dollars when companies report results at quarter-end. Investor nervousness about a global economic slowdown, a protracted trade war with China and potential geopolitical shocks bolstered the dollar during the last quarter of 2018 and the first quarter of this year. U.S. assets are the traditional safe haven when markets are in turmoil. Kyriba, a vendor of a cloud-based treasury systems, calculates that a stronger dollar took a $26.70 billion bite out of U.S. and European companies’ earnings in the first quarter of 2019, and $23.92 billion in the last quarter of 2018; North American companies bore the brunt of the hit (Fig. 6). Better visibility into their FX exposures would permit companies to better manage their risks, and alleviate the negative effects of currency gyrations by setting a threshold rate for the translated value of FX-denominated revenues. While GAAP rules forbid companies from hedging earnings outright, cash flows are a good proxy. And a reliable view into the timing and magnitude of anticipated cash flows enables treasury to fine-tune its FX risk management program. FIG. 6 Quantified negative impact of FX change ($ billions) Source: Kyriba Integrating payment processes A critical enabler of strategic management of liquidity is the integration of financial and commercial payment flows. Consolidating this information not only improves visibility but ensures that everyone follows the same rules, so payment instructions are consistent, and fraud is easier to prevent and detect (see sidebar). By merging financial and commercial payment processes through a comprehensive liquidity management program, treasury can better orchestrate the interaction between AP and AR, becoming the glue that bonds the purchase-to-pay and customer-to-cash processes. In this role, treasury needs to work with both sides of the payment flow to determine optimum payment terms, analyze the tradeoffs of offering or taking advantage of discounts, and apply advanced analytics to evaluate customer credit quality. The latter is especially important as the economy downshifts. For example, treasury should work with purchase-to-pay process leaders to determine the right mix of payment terms to fit the company’s unique situation. Simply standardizing terms will not do, given industry and supply-chain disparities, so treasury must consider all moving parts and dependencies. In addition, companies that borrow funds to pay vendors must weigh the cost of borrowing against the benefit of taking the discount. Treasury should also calculate the right net payment terms (longer terms mean the company gets to hold onto cash longer as working capital) by taking into consideration the financial standing of its suppliers. In response to the current economic environment, buyers have been aggressively lengthening their payment terms, so a one-size-fits-all approach significantly increases supplier risk. Further, pushing critical and sensitive suppliers into financial distress can have serious repercussions for the buyer’s operations and reputation. At the same time, treasury should establish robust customer-credit review policies and procedures to prevent negative effects on the health of the receivables portfolio and thus working capital. Fig. 7 illustrates the wide difference in the quality of the receivables portfolio between organizations with top-performing customer-to-cash processes and more typical organizations (i.e., the “peer group”). Compared to top performers, peergroup organizations have more than double the percentage of receivables that are more than 60 days past due, and nearly 12 times higher gross bad-debt write-offs as a percentage of credit sales. FIG. 7 Leading indicators of receivables portfolio health Source: Credit and Collections Performance Study, The Hackett Group, 2019 Conclusion and Recommendations By more actively managing enterprise liquidity, treasury can complement costcutting efforts with a growth-oriented approach that leverages financial assets to fund continued investment and support the company’s competitive advantage. Access to cross-enterprise data and availability of integrated payment processes also helps treasury partner more effectively with internal stakeholders, as it elevates the quality of conversations among treasury, purchase-to-pay and customer-to-cash. To embrace an active approach to liquidity management: Broaden the mandate of treasury and assign clear process ownership: Strategic management of corporate liquidity is as much a change in mindset as a change in process. It requires close collaboration among several departments and a willingness to change the way things have always been done. Designate treasury as the agent of change and orchestrator of the new, holistic approach, with accountability not only for running the new process but also getting broad business buy-in. Dismantle data silos: Before treasury can manage liquidity as a corporate asset, it must have a clear line of sight into current and expected cash everywhere in the company. Without a granular level of information, it cannot develop reliable cash forecasts, which are critical for making decisions on how to fund the business and insulate it from foreign-currency risk. Adopt cloud-based systems and data platforms to unclog the information pipeline and store data in a single, easily accessible repository. Combine payment processes: Bringing all payment processes under the same roof allows treasury to build a strong link between AP and AR, and align policies and strategies with the company’s overall liquidity requirements. By standardizing processes, treasury can also better monitor and enforce fraud prevention and detection policies. Integrate financial and commercial payments and apply strong, consistent controls to both by leveraging cloud-based solutions and AI/cognitive computing to spot and stop suspicious activities. Related Hackett Group Research How CFOs Can Mitigate the Risk of Payment Fraud, March 2019 The CFO as Chief Growth Officer, July 2018 Becoming a Leading Treasury Organization, Part 1: Treasury Is Playing a More Strategic Role in the Enterprise, August 2017

The October 2019 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q2 2019 earnings. The report serves as a key benchmarking tool for global corporations.

The October 2019 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ Q2 2019 earnings. The report serves as a key benchmarking tool for global corporations.

The July 2019 Kyriba Currency Impact Report, compiled by FiREapps, a Kyriba Company, analyzes the reported effects of currencies to North American and European companies’ Q1 2019 earnings. The report serves as a key...

The July 2019 Kyriba Currency Impact Report, compiled by FiREapps, a Kyriba Company, analyzes the reported effects of currencies to North American and European companies’ Q1 2019 earnings. The report serves as a key benchmarking tool for global corporations.

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

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

The May 2019 Kyriba Currency Impact Report, compiled by FiREapps, a Kyriba Company, analyzes the reported effects of currencies to North American and European companies’ Q4 2018 earnings. The report serves as a key...

The May 2019 Kyriba Currency Impact Report, compiled by FiREapps, a Kyriba Company, analyzes the reported effects of currencies to North American and European companies’ Q4 2018 earnings. The report serves as a key benchmarking tool for global corporations.

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

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

Executive Summary As custodians of the company’s monetary assets, CFOs are responsible for safeguarding the enterprise from threats to its financial health, especially those that can result from processes within the finance domain, such...

Executive Summary As custodians of the company’s monetary assets, CFOs are responsible for safeguarding the enterprise from threats to its financial health, especially those that can result from processes within the finance domain, such as accounts payable and treasury. According to market research, payments fraud is rising. It is therefore critical that CFOs adopt effective strategies to alleviate the potential hit to the bottom line and investor confidence. We have identified five approaches that can help minimize fraud risk: Comprehensive and enforceable payment policies and rules. Embedded fraud prevention and detection procedures. Automated/digitized payment processes. Consolidated payments workflow. Mandated education for employees about fraud prevention and detection Introduction Businesses are falling victim to payments fraud at an increasing rate. In the U.S., this is in part because of the still-dominant use of paper checks as a payment medium. At the same time, and at a global level, the situation is exacerbated by fast, new electronic payment options, such as same-day automated clearing house (ACH) service. In the January 2018 edition of the Kroll Global Fraud & Risk Report, 84% of global business executives reported that their companies experienced at least one instance of fraud in the previous 12 months, up from 74% in 2017. According to statistics collected by Kyriba, a treasury system vendor, 52% of treasury teams were victims of fraud in 2018. Yet nearly one-quarter of companies have done nothing new to combat fraud risk in the past 12 months. Payments fraud occurs when an account is compromised through a counterfeit check, unauthorized ACH transaction or electronic/wire transfer. While treasury payments are at risk, the largest exposure is in executing supplier payments due to the high volume of transactions, potentially large dollar amounts, as well as often-decentralized workflow. This is especially true for large organizations with different methods for paying vendors, complex contractual agreements, and multiple locations, business units and payment centers. The potential for fraud is compounded by rapid company growth, acquisitions and the migration of more finance activities to global business services organizations (GBS). Most research shows that fraudulent payments are initiated by non-employees through counterfeit checks or company checks with forged signatures; unauthorized wire transfers or ACH transactions; the interception and redirection of confidential financial information through cyberattacks; forged or stolen procurement cards; and business email compromise (BEC). The latter is a sophisticated and increasingly pervasive scam targeting businesses working with foreign suppliers and businesses that regularly execute wire transfers. BEC scammers use official company emails to send seemingly valid payment instructions that direct unauthorized transfers of funds. Of course, insiders commit fraud, too. For example, an accounts payable employee may issue checks to fictitious payees and mail them to a post-office box, where they are picked up and cashed or quickly transferred to an offshore account. Five Steps to Limit Phony Payments As discussed above, finance is experiencing an escalation in payments fraud incidents. There are several steps finance can take to minimizing their occurrence and effects. 1. Develop comprehensive and enforceable payments policies and rules: Anti-fraud policies should consider the array of potential sources of fraud and prioritize those with greatest potential impact on the business. For example, there should be stringent controls around payments made to parties in high-risk countries. At organizations with a large and dynamic supplier base, policies must govern the handling of newly established and recently modified accounts, and include screening rules that prescribe how to enforce those policies (Fig. 1). As an organization’s payments environment and operations evolve and become more complex, it is important to periodically review and update payments policies and detection mechanisms. FIG. 1 Linking policies to screening rules Payment policy Screening rule Payments should only go to approved suppliers in approved countries. All payments to non-approved countries must be stopped. Payments initiated by accounts payable in the ERP must be approved by the treasury department. Any payments that are modified after import must be stopped. Single or multiple payments to the same beneficiary may not exceed a specified limit. Hold for review any payments that cumulatively exceed specified limit per day/week/month. All payments to a new bank account must be reviewed by the treasurer. The first payment to a new or modified bank account must be held for review. Source: The Hackett Group Exceptions create opportunities for fraud. Therefore, finance must stringently limit the number of irregular payments. Even payments requests from the highest levels of the organization must be channeled through defined controls and approval processes. Sometimes, asking corporate officers to personally verify unusual requests can be the quickest way to stop bogus payments. Finally, the organization must reinforce an environment of zero tolerance for fraud by unambiguously communicating its consequences, e.g., fraud incidents will be reported to the relevant legal authority and guilty parties will be punished to the full extent allowed by law. 2. Employ best-of-breed fraud prevention and detection practices: Screening and detection are critical elements of the payments workflow. They ensure compliance with established rules and identify and quarantine suspicious activity. Today, tools including AI and robotic process automation can automate the screening process. It is also important that approvers watch out for red flags. For example: Cases in which there are two or more vendors with the same address and/or phone number. When vendors have names that are similar but not identical to those of familiar partners of the organization. Vendor accounts with no phone number, an unlisted phone number, a non-business phone number such as a mobile phone, or a number that is always answered by a machine or voicemail. Situations when the address is a post office box or mail drop, or when the address is the same as the home address of an employee. Incidents when a vendor’s master data records have not been updated in a year or more. Invoice abnormalities, e.g., two or more invoices with the same ID number, or that are from the same vendor but are not sequentially numbered, photocopied or scanned. Duplicate payment requests. Payments that vary from historical levels in dollar amount and/or volume of invoices. Invoices for amounts that are just below the threshold that requires additional review. Vendors presenting a large number (or higher-than-average percentage) of invoices with rounded dollar amounts. 3. Deploy smart automation to permit real-time screening and detection: As payments volumes increase, employees cannot be the only line of defense for identifying and stopping suspicious activities. Rather, finance leaders must enhance protections by automating payments processes while streamlining different activities into a single, well-governed workflow. Digital transformation may increase the speed with which fraud can occur and open fresh avenues for infiltrating the payments process, but companies can also wield digital technology to fight back, integrating payments and automatically scanning all activity using both defined and open parameters. Most respondents to The Hackett Group’s Purchase-to-Pay Performance Study report that they already have systems to conduct specific activities, for example, to quickly identify and stop payments for identical invoice numbers for the same supplier (84%), as well as track payments against a purchase order (77%). However, less than half conduct an automated post-payment review to analyze returned checks that represent duplicate payments (Fig. 2). FIG. 2 Practices for managing compliance across accounts payable Percentage of respondents System edits prevent identical invoice numbers for the same supplier, even when the invoice dates are different 84% System controls track payments against a purchase order 77% Perform post-payment review to identify root cause of returned checks that represent duplicate payments 46% Process controls require original invoices; copies and faxes permitted only when necessary to resolve a late-payment issue 43% Source: Purchase-to-Pay Performance Study, The Hackett Group, 2015 The same study revealed that top-performing purchase-to-pay organizations are leading the transition to more advanced solutions for fraud prevention and error detection, including payments analysis tools, enabling more core ERP functionalities, and implementing an ongoing compliance monitoring solution (Fig. 3). FIG. 3 System functionality to detect and report recovery/error/fraud risks Source: Purchase-to-Pay Performance Study, The Hackett Group, 2015 Our research and work with clients also show that companies are increasingly deploying customer-facing technologies, which also play a role in preventing payment fraud. For example, supplier portals require vendors to enter and maintain all of their master data records (e.g., name, address, tax ID and bank routing information) so that information can be automatically verified by comparing the details to external databases. Meanwhile, e-invoicing solutions build an additional barrier by eliminating paper invoices and facilitating three-way matching of purchase orders, receipts and invoices. Both supplier portals and e-invoicing enable organizations to block unauthorized users upfront, and eliminate risks inherent in less codified processes such as triggering payments through internal email communications. The digital transformation of the payments process can also simplify the interface with financial institutions, by creating a common payments format and approval procedures. Finance must educate its bank partners about its internal policies and always keep and share its updated list of authorized users. 4. Consolidate the payments workflow: Many organizations maintain separate processes and oversight for treasury payments and accounts payable, and even within AP in different regions. To strengthen controls without hampering efficiency, finance needs to overhaul currently siloed practices to merge payments workflows using virtual payment factories, which pull all transactions from the ERP (AP) and treasury into a single processing engine equipped with the latest fraud prevention and detection capabilities. By consolidating workflows, finance can standardize fraud prevention and detection practices that cover payment requests, initiation, approval, documentation and transmission. Further, by combining all payment activities, best-practice payments policies and procedures can be applied consistently across all forms of payment, in all geographies, by all staff involved in payments processes, and within specific payments systems. At the same time, finance can adapt more quickly to evolving bank interchange requirements, such as compliance with the Foreign Corrupt Practices Act and Know Your Customer regulations. In addition, the payments process output can be reformatted to meet global banking requirements like those issued by SWIFT dealing with bank-to-bank and corporate-to-bank connectivity. 5. Employee education on fraud prevention and detection: Staff involved in the payments workflow must receive training on payments policies and procedures. That requirement should extend to employees responsible for recording vendor data in the company system. The curriculum should include practical information about when employees should escalate the incident before processing a payment. It should also encourage them to ask questions, for example when a vendor is unwilling to provide complete information (e.g., address or phone). Given that fraud risk and policies are constantly evolving, training should be conducted at least once a year. To be fully aligned with finance payments policies and procedures, employees must understand that fraud can originate from a variety of sources, for example, bogus but official-looking email instructions, which come from a web-based email account. It’s important to verify that the company’s domain is used in company personnel emails, and take a second look at domain names that are similar, but not identical, to the company’s official name. The “reply” option should never be used when authenticating emailed payment requests; rather, staff should be required to forward the request by typing in the address or selecting from an official company address list. Staff should never share passwords, user names, authentication credentials, or account information when contacted by employees or individuals pretending to work at a partner bank or a vendor. Conclusion and Recommendations Too often, payments fraud is not painful enough for companies to do something about it. In fact, some may not even realize it has even occurred. Nevertheless, as risks and costs rise, CFOs must be prepared to prove that fraud prevention controls are embedded in their governance structure and are in line with internal compliance and risk policies. Here are three actions to minimize the risk of payments fraud: 1. Finance should not wait for a fraud incident or assume the organization is fully sheltered from fraud risk: Past actions to halt payments emanating from a specific fraud type may not suffice in other areas. Thus, finance must continuously update its controls and adapt to new fraud patterns. As cyber risk grows, collaborate with the IT organization to deploy new defenses. 2. Finance should conduct a baseline assessment of its payments fraud defenses, develop a list of future/desired capabilities, and prioritize new initiatives: These include process redesign, consolidation of payments activities, and adoption of smart technologies and tools. 3. Finance must apply common fraud prevention policies and procedures across the enterprise and for different payment types: A big step in this direction is consolidating activities in a payments hub or the company’s GBS organization and deploying smart technologies to standardize workflows and controls.   Interested in learning how to build out 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.

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

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

Kyriba, the #1 global provider of cloud treasury and financial management solutions, today announced it has been named as a “Leader” in the IDC MarketScape Worldwide SaaS and Cloud-Enabled Treasury and Risk Management Applications...

Kyriba, the #1 global provider of cloud treasury and financial management solutions, today announced it has been named as a “Leader” in the IDC MarketScape Worldwide SaaS and Cloud-Enabled Treasury and Risk Management Applications 2017–2018 Vendor Assessment.