Welcome to the first Technology & Treasury Management Supplement Global Finance has published. We recognize that technology has always been a key enabler of treasury management, with treasury management workstations and enterprise resource planning (ERP) systems facilitating the everyday financing and accounting functions that underpin the running of most companies.
In the wake of the recent financial crisis, more corporate treasurers are focused on eking out even greater efficiencies in their treasury management processes via centralizing and automating key functions. One of the technologies that has received considerable attention in recent years is e-invoicing. It could potentially save companies millions if they are able to automate traditionally manual, paper-based processes and utilize e-invoicing to deliver greater efficiencies as part of a complete re-engineering of the order-to-pay process. As the invoice triggers payment, automating it can result in further working-capital efficiencies, particularly if it is tied into financial supply-chain offerings such as invoice discounting and supply-chain financing.
Despite the obvious benefits of e-invoicing, only 2% to 10% of total invoices are transmitted electronically. It has been difficult to get a critical mass of users for e-invoicing for a multitude of reasons—including different treatment by European Union tax authorities of electronic invoices and digital signatures and a lack of supplier uptake. Some of those firms that have engaged in e-invoicing projects have encountered difficulties scaling the system up, which has meant that, so far, few companies have taken the plunge. However, as IT payback cycles lengthen again and companies become more socially responsible in terms of reducing their environmental impact, e-invoicing has returned to the top of companies’ agendas again. Authorities are also realizing they need to work to reduce the complexities of different legal, tax and regulatory discrepancies around e-invoicing.
Another sweeping change in the area of technology and treasury management is growing user acceptance of treasury management modules within ERP systems. Historically, as the treasury management functionality within ERP systems was found to be wanting, treasurers opted for dedicated treasury management software applications from third-party software providers. However, as ERP vendors enhance their treasury management functionality in order to bring it up to speed with dedicated treasury management systems, treasurers are starting to look more seriously at what they already have. Most large treasuries have already invested in ERP systems, so the ability to re-use that technology is a more compelling argument than having to find resources to support a dedicated system.
In this supplement, we cover these issues and more.
Technology & Treasury Management