Episode 8

Highlights from the EACT Survey 2022

In this episode, Helen Sanders speaks with (below, left to right):

  • Jan Dirk van Beusekom, Head of Strategic Marketing BNP Paribas Cash Management & Trade Finance;

  • Christian Mnich, VP, Head of Solution Management, Treasury and Working Capital Management, SAP;

  • François Masquelier, Vice Chair, European Association of Corporate Treasurers (EACT); and

  • Didier Vandenhaute, Treasury Consulting Partner, PwC

as they reflect on the findings and explore the implications as treasurers seek to implement best practices and optimise the value they offer both to their own company and the wider ecosystem.

 

Highlights from the EACT Survey 2022

Three hundred treasury professionals responded to this year’s EACT Survey, an annual review of corporate treasurers’ major priorities, challenges and opportunities. While this was the first survey since Covid-19 restrictions started to ease (in some parts of the world), it took place at a time when treasurers were assessing the prospect of another period of renewed geopolitical and economic tensions and uncertainties. The survey results are therefore an interesting snapshot of the degree of change in treasurers’ priorities over this extended period of challenge and change.

‘Back to basics’ in treasurers’ priorities

Treasurers emphasised that cash flow forecasting and treasury digitisation are likely to remain their top two priorities over the coming 12-24 months, followed by bank relationships (figure 1). These concerns come as no surprise, given that they underpin treasurers’ efforts to manage liquidity and risk. This includes ensuring access to funding, optimising efficiency, and accessing the right information on which to make decisions.

Technology innovation

Related to these points, technology innovation in treasury continues to be important. Treasurers highlighted that  access to enhanced data analytics is their no. 1 priority to support decision-making (figure 2). The use of application programming interfaces (API’s) to better integrate data across applications, business functions and external stakeholders is second, driven in part by emerging digital business models which require more dynamic data and transactions. The use of robotic process automation (RPA), and artificial intelligence (AI) is also playing an important role to automate processes and improve data quality. While the ranking of these technologies has changed over recent years, treasurers remain committed to leveraging innovation to support the business as effectively and efficiently as possible.

Realising real-time

One of the outcomes of the shift towards digital business models across many industries is the growing need for real-time processes, information and transactions. Survey participants noted the value of real-time information, followed by real-time payments and collections, to manage the business during highly uncertain times, and support the evolving – increasingly digital – needs of the business. This trend is closely aligned with the earlier point about the emergence of APIs as a priority, enabling the dynamic, richer flow of data and transactions.

Increased digitisation, whether within treasury or more widely across - and beyond - the business, also exacerbates the importance, and potential impact, of risks such as fraud and cyber-risk. These remain essential priorities for treasurers, alongside colleagues across the business, but the value and sensitivity of data managed within treasury makes this a particularly significant consideration.

Treasurers’ role in the evolving business

As businesses in all industries and of all sizes expand their international footprint, and access new supplier and customer ecosystems, the need to manage working capital effectively has become a higher priority. The survey reveals that while half of treasurers have an influence over working capital, only a fifth are ultimately responsible. Working capital projects typically engage multiple business functions, but treasurers are uniquely positioned to provide oversight and ensure a cohesive approach to working capital across the business. They have the ability to provide oversight and evaluate the impact of working capital ‘levers’ such as payment and collection terms, and can drive initiatives such as supply chain finance that help to optimise working capital. The survey suggests that treasurers are taking a greater role in this area, with plans to make greater use of supply chain or invoice financing, cash flow forecasting solutions, accounts receivable automation, and digital payment methods in the coming year, as well as adjusting payment terms.

Emerging ESG

While treasurers are looking to play a more important role in working capital optimisation, another key area of focus is how they can influence and contribute to the company’s environmental, social and governance (ESG) agenda. Treasurers are becoming increasingly proactive in green bond issuance, sustainable investment instruments and digitisation to reduce paper-based processes. There is still progress to be made, however, and there is still a relatively high proportion – 17% - of treasurers who are not involved at all in the company’s ESG agenda.

Conclusions

The economic uncertainty and operational constraints forced by the pandemic reinforced the importance of effective liquidity and risk management, and digitised processes. While the most immediate effects of Covid-19 are largely subsiding, the ongoing geopolitical, economic and supply chain uncertainty means that efficient processes, tools to enable effective decision-making, and access to financing remain essential.

But the pandemic was also a catalyst of other priority shifts. Many companies have accelerated the move towards digital business models, which implies a shift to real-time data and transaction exchange. At the same time, the move to shore up and diversify supply chains requires a more proactive approach to working capital optimisation across supplier ecosystems. Treasurers have a major role to play in these areas, and as such, need to grasp the opportunity that these priorities present to increase the value they offer to the company. The growing importance of ESG as a fundamental strategic pillar also create the opportunity for treasurers to both drive and contribute to the ESG agenda, and position the company as a responsible financial and supply chain participant in the global commercial ecosystem.

In the next episode…

Sustainability through the lens of an MNC’s treasury…