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The problem with this is that some of the more traditional skills of the corporate treasurer have taken a back seat, perhaps none more so than the ability to manage a rising interest rate environment.

Dealing with interest and risk within the digital treasury

Dealing with interest is always a risky business. And it’s something that many millennial treasury professionals have never had to work within the manner it was required pre-2007.

Cheaper, more traditional capital market and funding tasks have been diminished given the prevalence of inexpensive overnight financing.

Although interest rates did actually fall in 2019, there is no guarantee that they will remain stabilised, so it’s always important that your teams are prepared for the worst.

Difficulties arise because many treasury professionals have never been properly equipped to deal with the challenges, never mind the new responsibilities added in since 2009.

How can you prepare your treasury team for uncertainty?

It used to be that treasury professionals just “had a nose” for this kind of task, but that’s not sufficient anymore. The board, along with the regulator, will want to see evidence-based investment strategies.

With a rising tide of challenges on the horizon, it’s time to change the approach. And the answer lies in automation and analytics.

A rising interest rate environment will create both risk and opportunity, so optimal treasury teams will need to be focused on value-added activities, meaning everything outside of this could and should be automated.

Automation adoption should focus on three key area to enable this to happen; Risk Management, Data Analysis and Concentration of Funds.

Risk management: The crisis shifted the focus from return on equity to liquidity. You can now automate your liquidity reporting based on pre-defined rules, exposures and limits. Reporting exceptions, now the treasurer is only called into action when an issue arises, leaving them more time to focus on returns in the market.

Data analysis: The crisis and low-interest rates meant that treasurers stopped chasing their ops teams as fiercely for early positions as there was no real incentive to deal in the market early in the day. As rates return, you don’t want analysts spending hours every morning gathering data on last night’s closing balance and generating a figure which is already out of date by the time it’s produced. What you want, is a definitive centralised cash position when you arrive at your desk in the morning.

Concentration of funds: Automated cash management tools will help treasury teams quickly and easily identify pockets of uninvested cash sat around the banking estate. With analytics highlighting dormant cash, treasurers are able highlight requirements for additional banking products and services such as notional pooling and cross-currency pooling and negotiate on bank charges.

There is little doubt that automation has the potential to unlock treasury resource and that this will only become more prominent as rates rise.

Cash and Liquidity Management Simplified

Automating the tasks of risk management, data analysis and the concentration of funds has never been easier, if you give your teams the right tool for the job.

The AccessPay platform has a full suite of automated cash management tools that allow your team to automate the likes of finance and treasury reporting and end of day reconciliation, whilst helping you achieve multi bank visibility across your entire banking estate.

Our platform acts as the integration layer between all of your banks and back-office systems meaning, through a single UI, you are able to create and automate seamless cash management workflows, irrespective of how many TMS, ERP and Banks you are working with.

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