Make all three pillars of a corporations’ financial management communicate. Involve procurement and its supply chain finance programs. Predict the future by analysing data. These three success factors have one thing in common: they all require some kind of fintech solution.
These are the words of Lars Beckman, CEO at Core Process that installs and supports the treasury system tm5 by Bellin, partners with Kantox for automation of FX risk management. Core Process also sell and support the digital solutions on working capital and dynamic discounting by Taulia. He talks about being in the midst of the fourth industrial revolution, with rapid changes as a consequence of digitalisation, automation and machine learning.
“If your corporation wants to be in pole position and keep succeeding, it is crucial you are a part of this giant transition by implementing new technology and new systems, thus benefit instead of being stressed and left behind.”
To be competitive in a near future (right now) corporates must become quicker, today, to be able to support its subsidiaries with easier and faster processes, in turn supporting quicker and more founded decisions. The basis for this is access to critical business data in order to keep competitors behind and quantify the financial risks.
“This is what it is all about: how you can gather data in a way that makes you understand not only what actually has happened, but also what will happen. The ability to predict the future by analysing data is the path to success in the fourth industrial revolution”, says Lars.
The three pillars of financial management
To evolve this ability, all three pillars of a corporations’ financial management must communicate and have same future-oriented ambitions. These pillars are:
- Group control.
- Group accounting.
- Group treasury.
“It is important that the group finance functions are considered as separate operations, each with its own responsibilities and limits. If one pillar gives away or is missing, the whole building collapses.”
Why you will need fintech solutions
As the world changes rapidly, the different functions must understand each other’s operations including both short- and long-term goals. To continuously gather data and turn group systems transparent and fast you will need one or more fintech solutions, Lars explains.
“Up-to-date, integrated and transparent treasury and supply chain management systems are essential parts and children of the fourth industrial revolution – bringing value instead of stress to your business. If you fail in this you will lose your business edge, risk financial leaks, fraud and different kind of penalties.”
Thrive by working together with all suppliers
Another important business area where digitalisation has a huge impact is supply chain finance. Today businesses tend to push out payment terms to improve days payable outstanding (DPO) figures. “This view can be short-sighted”, warns Lars. “Instead, by working together, businesses across the full length of the supply chain can thrive.”
Today, fintech’s can deliver solutions that cover all suppliers, not just the traditional 20 -100 top suppliers. “They can also provide more efficient KYC processes, which results in more suppliers enrolled in a shorter space of time”, says Lars and returns to the discussion on fintechs.
“Fintechs can achieve a seamless exchange of information and provide insights into how supply chain finance and treasury management programmes are performing.” He takes artificial intelligence as an example of the capability and potential in fintech solutions. “Artificial intelligence can predict supplier behavior and analyze financial and legal risks, based on a large amount of data.”
The cash flow and treasury revolution
This technology is changing internal relationships as well as external relationships. Finance, treasury and procurement can all work together towards common goals, all of which greatly improve company performance.
“This is the start of a cash flow and treasury revolution. Not only is this technology a game-changer in the way businesses think about cash flow, working capital and treasury management. It is also one of the keys to driving real business success in 2020 and beyond”, Lars Beckman concludes.