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Treasurer's stance on Supply Chain Finance

One of the key factors of managing entire economy of a country or rather global economy depends on how smart one is on managing supply chain linked to it’s trade domestically or internationally. If we drill down further, apart from Documentary Trade, Open Account Trade practices are much more accessible, acceptable, and far-fetched extendable in our world today. There must be space for matured argument but no place of doubt that indulging into Supply Chain Finance techniques are widely satisfactory. Further deep dive into the same, we find the Treasurers who actually and realistically getting involved in dealing the steps towards a sound economic health of an organization.

  • What does a treasurer need actually?
  • Is it to just have a system to handle financial administration by reviewing financial reporting and advising the board on financial strategy?
  • Next question would be, how do they enable themselves to find or propose the right financial strategy to their respective board?
  • What could have been the source anchoring all the answers?
  • How can modern technology help them in shaping up the source?

The answer of all the above or the source or the heart lies in “predictive cash flow visualization” along with state-of-the-art Reporting engine. Treasurers should be outfitted with a smart tool where they will be able to envisage clear picture of their company’s/department’s Account Receivables and Account Payables. And further this AR/AP visualization could have been transformed into an innovative dashboard enabled, user experience (UX) where based on supplier/buyer behavior on receivables or payables, future trend could have been predicted. AI (Artificial Intelligence) algorithms are there to take care of the behavioral pattern. Not only the next generation dashboard but following are also essential to fetch the accurate output enabling the treasurers to plan and manage.

Hence from Corporate Treasurer’s perspective, critical needs are to have

  1. Account Receivable and Account Payable centralization. It means the distribution is allowed over various departments/units of an organization but there must be a single space or window where all the details will be merged, and output would be a centralized view of real time cash flow
  2. The above would require mainly for distributed treasury system to have a collaboration among treasurers in other businesses as well
  3. Needless to mention about predictive techniques on cash flow management
  4. Association with procurement units will help to realize the full impact of underlying supply chain and plan accordingly
  5. The mechanism to build trust with other members mainly for non-bank supply chain financiers hence a proper embedded risk mitigation techniques
  6. Options to adjust payment terms or to allow pre-payment to inject liquidity or offer dynamic discounting
  7. Granular level data elements to empower the Treasurer’s to have a reporting engine so that recent FASB/IASB guidelines can also be adhered to 

Treasurer’s choice of Supply Chain Finance technology

  1. Gradual uptake of e-invoicing in many countries
  2. Integrated supply-chain finance platforms to enable collaborations between suppliers, distributors, etc. in one place
  3. Adoption of predictive and Big Data analytics to mitigate risk identifying potential supply-chain bottlenecks
  4. Usage of open APIs (Application Programming Interface) for identity management, KYC verification, limit maintenance and AML (Anti Money Laundering)
  5. Digital payments and Automatic reconciliation to enhance operational efficiency

Hence embracing a modern Supply Chain strategy equally armed with Treasurer’s perspective, is crucial to thrive in an increasingly fast paced, connected and smart new world of global trade and services. 

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Comments: (1)

A Finextra member
A Finextra member 01 September, 2023, 14:55Be the first to give this comment the thumbs up 0 likes

nice one, great thought

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