“I can’t think about the second half of 2020, I need to survive and ensure liquidity,” explains the chief financial officer (CFO) of a multinational technology company. In the current distressing and unnerving situation brought about by the Covid-19 outbreak, a comment like this represents only a modicum of the disruption the virus has inflicted on businesses across the globe.
Within treasury management space specifically, the virus has wreaked havoc on centralization and automation plans, causing a number of firms to look at pushing their project starts towards the latter part of 2020. Some of the distressing comments recently reported to the The Asset regarding treasury management disruption involve firms not being able to finalize financing agreements with banks, the cancelling of treasury workshops in Singapore, an inability of team members to implement various business solutions, and an overall concern for their products outside of China.
While the global pandemic has stressed supply chains and aggressively altered the way business is normally done, it is also a good opportunity for treasury management teams to pause and reassess the efficiencies of their operations and, in particular, investigate how digital solutions can reduce the need for face-to-face interaction.
For instance, in the trade finance world, companies could start adopting the digitalized presentation of documents like letters of credit or bills of lading through platforms like essDOCS or Bolero. This would not only reduce the turnaround time of processing these documents, but also allow for them to be approved remotely, eliminating the need for approvers to be in their offices.
The same idea of leveraging on digital channels can be applied when a company decides to create a supply finance programme. For instance, supplier onboarding, which often requires a wet signature, could in theory also be approved online. As well, the education of suppliers on the merits of a particular programme could be done via video conferencing rather than physical seminars. “We are trying to push for more online onboarding capacity as some clients are asking if they can use digital application forms,” explains a trade finance banker from an international bank.
Covid-19 could also be a wake-up call for CFOs and treasurers on the need for the automation of their systems. Rather than relying on people to process payments, these transactions can be automatically generated in an enterprise resource planning system, like the one created by SAP, and be approved remotely if need be.
Despite the economic pain arising from Covid-19, the virus could act as a catalyst for CFOs and treasurers to adopt digital channels and improve the efficiency of their treasury management processes.