What Does 2021 Look Like for Corporate Treasurers?

By Mathilde Sanson, the Chief Customer Officer at GTreasury, a treasury and risk management platform provider.

2020 proved just how quickly a crystal ball can get shaken like a snow globe and, unfortunately, the resulting upheaval is expected to affect treasury teams throughout 2021. But even as conditions begin to stabilize and the pandemic wanes, some seismic shifts are on tap for corporate treasurers. Here are five predictions of what is to come for corporate treasury in 2021:

1) Ongoing economic uncertainty will accelerate treasury teams’ pursuit of improved efficiencies.

The pandemic has largely enhanced the treasury team’s stature (and visibility) within their organizations. Treasury serves as the sharp-eyed lookout for companies navigating choppy financial waters and, at least in recent years, that role has never been more important than early on in the pandemic. As treasurers provided cash forecasting and risk assessments at a faster clip, companies consolidated global cash positions to the U.S. at an unprecedented scale and, at the same time, tapped lines of credit. Survey results from Strategic Treasurer’s Global Recovery Monitor continued to show this year that treasurers acted swiftly at the moment of peak uncertainty. The frequent cash visibility reporting that treasury teams provide proved essential in empowering executives to pursue data-driven courses of action capable of curtailing liquidity risks.

The new year will see this state of play continue – albeit with some key adjustments. The ongoing uncertainty is forcing treasury teams to become leaner, yet no less crucial. Organizations will necessarily respond by implementing solutions that offer greater automation and integration; in other words, enabling treasury to do more with less. The distributed workplaces resulting from the pandemic will also endure, even in its aftermath. To adapt to this new reality, companies will require treasury systems that provide seamless and remote 24/7 access to real-time information.

Expect treasury teams to increasingly adopt technology strategies that can provide a stronger and more integrated foundation for all treasury activities, including fast, accurate, and in-depth cash visibility. Companies with active digital automation projects will accelerate progress on those initiatives as well, in some cases introducing new capabilities in stages where appropriate. Regardless of the how the pandemic timeline plays out in the coming year, treasury automation and process optimization will be particularly high-value targets in 2021.

2) Cash visibility and forecasting remain an elevated priority.

Expect cash visibility and forecasting to be at the top of many treasury team agendas as sales and production continue to work toward full recovery. The frequency of cash forecasting will remain elevated, with many treasurers shifting from traditional quarterly or monthly reports to weekly or even daily forecasts to better account for volatility. Treasury departments with the desire to increase forecasting frequency will seek new tools and technology, and AI-based capabilities are expected to now be at the center of many implementations. In fact, many have already begun. As one director of treasury operations told me, “Introducing AI into treasury forecasting lowered our variances from 30% down to 3%; we’re believers and plan to continue to expand the role AI plays in our treasury operations throughout 2021.”

Mathilde Sanson

On balance, most corporate treasurers were early in predicting and preparing their organizations for the protracted pandemic recovery timeline they are now experiencing. Treasurers will continue to execute and iterate on those existing strategies for the duration of COVID-19 uncertainty. On a company-by-company basis, the impact of new pandemic spikes will depend on the preparedness and capabilities that treasury teams have previously implemented. Treasury teams that lack robust automation capabilities and effective treasury and risk management systems (TRMS) will be less likely to keep pace with required frequent cash reporting if the effects of the pandemic worsen. Teams in this position will also find it harder to transition away from manual processes, as cash visibility and forecasting demands absorb the extra bandwidth that would be necessary to successfully implement automation solutions. Expect treasurers to pursue relationships with software partners and adopt add-on tools that quickly introduce automation to help the treasury team continue to meet new demands.

3) Treasurers will pursue more cohesive technology ecosystems.

For treasurers, the ultimate technology objective is establishing frictionless data management and payments workflows. These processes must be enabled by a treasury and risk management system strategy capable of seamlessly integrating component cash, risk, and payments technologies into a single platform. Treasurers are also careful to select platforms that integrate harmoniously with all fintech solutions used across their ecosystems, from payments, FX, and fraud prevention tools to ERPs, business intelligence tools, and beyond.

Specifically, look for more treasurers to put these systems into place in 2021 as they pursue simplified connectivity to global banks and accounts, bank transfer automation, and the capabilities to send and receive information alongside payments. In the coming year, treasurers will similarly implement solutions that deliver strategic gains. This will include the abilities to drive CFO and treasurer decision-making, flexibility in adding new features, and ease-of-use and user experience improvements. By first eliminating friction among the various technologies crucial to treasury functions, these in-demand treasury system features will allow treasury teams to operate far more capably and efficiently in 2021.

4) Benchmark rate reform will be a top priority, with the deadline to switch to new rates looming after 2021.

After several years of news and headlines about the end of LIBOR, treasury professionals must pay close attention in 2021. Even with the LIBOR phase-out deadlines in flux, treasury teams need to accelerate their preparedness for the transition during the coming year. Companies that have already begun the process of aligning their existing loans and contracts with new benchmark rates will be strongly positioned for an easy transition, while those off the pace (perhaps delayed in their planning due to pandemic-fueled priorities in 2020) will need to increase their efforts.

2021 will see treasury teams reviewing their existing loans, credit, and investments connected to LIBOR, and negotiating with lenders and servicers to establish post-LIBOR replacement rates and fallback provisions. They will stay busy with training, as operating in an environment defined by new benchmark rates will require that all new contracts still incorporate adequate fallback provisions.

5) Mergers and acquisitions will increase in the pandemic’s aftermath.

As the effects of the pandemic begin to ease, the low cost of cash and the extra equity many companies have available to them will spur a surge of merger and acquisition activity. Treasury teams will need to play a crucial role in these efforts, ensuring the necessary cash is available to complete what is expected to be a flurry of transactions. Treasurers will be responsible for accurately vetting the cash positions, financial instruments, and risk profiles of the companies being acquired. Or on the flip side, if being acquired, the treasury team will need to provide the necessary data and reports to ease the transition.

Taken together, these predictions anticipate an active and demanding year for treasury teams, but also one in which those teams have the technologies in place to meet demands efficiently and effectively.

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