Article10 Nov 2023

What is on treasury’s radar?

Five themes for 2024

The attention of treasury professionals is turning to 2024 and the challenges and opportunities that lie in store. The macroeconomic and geopolitical outlook remains uncertain and treasury is aware of the need to be prepared for external shocks. But there is broad optimism among many mid-sized companies about the potential of technology to improve efficiency, enhance visibility and control, and support the evolution of treasury.

Below we identify some of the key themes for treasury in 2024, based on conversations with Citi Commercial Bank clients in recent months and some of the discussions and debates that took place at AFP 2023, held in San Diego in October.

1. Automation is the route to simplification and efficiency

Treasury is laser focused on improving operational efficiency and simplifying processes with the goal of becoming more nimble. Increasingly, automation is seen as key to these objectives. Mid-size companies should look to their banks for automated solutions that can help them achieve their goals.

Banks are also the custodians of huge volumes of data that can be used internally for better informed decision-making; companies can work with their bank to harness this data to improve treasury efficiency. For instance, Citi Commercial Bank can harness clients’ data (including from third-party bank accounts), deploy analytics to compare clients’ treasury structures to industry best practice, and suggest practical changes that deliver tangible results.

2. Financial functions are converging

Treasury, Accounting and Financial Planning and Analysis (FP&A) teams are increasingly integrated, with many mid-sized companies creating a more collaborative and strategic finance approach within organizations. By combining their expertise, these teams can provide more comprehensive and insightful financial analysis. This can be used to support better informed strategic decision-making relating to resource allocation, capital investments, and organic and inorganic growth strategies.

As the role of treasury evolves and accounting and FP&A are added to its ecosystem, these financial functions need to leverage the synergies that come from bringing their capabilities together. To do this, they need access to tools that support proactive business intelligence and predictive analytics so that they can provide insights to the business based on data rather than intuition.

3. AI is a leapfrog technology for treasury

Artificial Intelligence (AI) has captured the world’s imagination in recent months, and treasury is no exception. AI and Machine Learning (ML) will increasingly be used as part of efforts to automate processes within treasury. For example, ML can facilitate more effective matching of incoming payments with remittance information, making reconciliation easier and accelerating the speed of cash within the organization.

Many companies are looking to AI to boost cybersecurity. Banks are likely to explore using the technology to accelerate onboarding and ERP integration.  Banks are working to use AI to identify efficiency gains in a company’s liquidity structures based on regulations in specific markets, enabling greater consolidation of cash and potentially higher returns from short-term investments.

4. Security and controls are strategically important

Mid-size companies are increasingly reliant on digital technologies for their operations, including customer relationship management, financial systems, and collaboration tools. While digitization of operations and interactions with customers delivers efficiency benefits, this increased reliance on digital systems makes companies more vulnerable to cyberattacks and fraud.

Security controls to tackle fraud and protect financial data are attracting increased regulatory scrutiny and – given the potentially huge economic and reputational losses – are no longer concerns solely for Accounts Payable or IT teams. Instead, they have become board-level priorities and assumed strategic importance for many organizations.

5. ESG moves up the agenda

Environmental, social and governance (ESG) issues have gained increased prominence for mid-size companies over the past decade – albeit at a different pace in different regions and with a varying emphasis on ‘E’, ‘S’ and ‘G’ objectives.

Companies are increasingly incorporating ESG considerations into business strategy and are also seeking treasury solutions that reflect their sustainability commitment and focus, while still aligning with broader treasury goals.

For example, commercial cards can build awareness of ESG issues across the organization and act as a statement of intent. A portion of a company’s rebates from spend can be donated to an ESG objective, such as a reforestation program. At the same time, the company benefits from a period of interest free credit that enhances its working capital (which is a priority for many companies given the interest rate environment).

Similarly, sustainability-linked supply chain finance (SCF) programs can deliver attractively priced finance to suppliers in return for (independently verified) improvements in their ESG performance. This not only helps companies to achieve their ESG objectives but strengthens supplier relationships and bolsters supply chain resilience.

Banking support

As treasury capabilities evolve in 2024 and mid-size companies look to automation and new technologies such as AI to achieve their efficiency, visibility and control, working capital and other objectives, choosing the right banking partner has never been more important.

Citi has a network covering nearly 100 countries and consistently invests in new technologies to help clients do business worldwide. Whether companies are seeking to use ML to improve cash matching, implement sophisticated sustainability-linked SCF, or use advanced analytics to understand how treasury can play a more strategic role in the organization, Citi has the expertise and solutions to help companies prosper.




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