Targets are getting aggressive in the mid-market space. After a tumultuous few years, stability is returning, even if that stability isn’t in the form of an economic boom. Even so, CFO’s at least have a landscape which allows them to set a path for the year that they can have some confidence in following.
It’s a situation that allows for some ambitious goal setting for the year, with a third of CFOs recently surveyed expecting double digit revenue growth in 2024. That’s despite significant headwinds in the form of increased pressure on expenses, skills shortages and gaps in technological capabilities. Savvy CFOs understand they need to implement new systems, and plan to achieve revenue growth with treasury tech.
‘Doing more, with less’ has become the cliche, because it’s the exact situation that almost every company in the world is finding themselves faced with. That’s especially true in finance teams, which are expected to become more strategic in their work, without a corresponding increase in headcount.
Many CFOs are aiming to bridge this gap through the increased use of technology and automation in their finance and cash management teams, with almost 39% expecting to undertake a major system implementation in 2024.
The question then becomes, which is the right technology to implement? Senior finance executives know the challenge that’s in front of them, but with a dizzying array of new technologies and new fintech providers on the scene, how do they decipher which is right for their business?
In this article we’re going to be explaining the key difference between legacy cash management systems and their modern, cloud-native counterparts, and how the right tools can help make double digit revenue growth a real possibility, rather than a pipe dream.
Check out our recent episode of Fintech Corner, as Founder & CEO of Trovata, Brett Turner, chats with Marie Elizabeth Aloisi, EVP of US Commercial Products and Acceptance at Mastercard. They explore how modern technology, such as AI and APIs, can empower the middle market to accelerate growth and fortify resilience in an increasingly digital landscape.
The Changing Role of Finance
As a CFO, treasurer or senior finance executive, you’re faced with expectations that have altered in recent times. The finance function has traditionally all been about tallying up historical data, and treasury’s main role has been to be able to answer the (seemingly, but not really) simple question of ‘how much cash do we have?’
As Deloitte puts it, “With business and operating dynamics shifting, today’s CFOs are required to become more strategic, moving away from the role as financial partner to a more strategic partner to the CEO”
That’s great, but it doesn’t mean there’s any less need to do the day to day work of reconciling transactions, maintaining liquidity and forecasting cash positions. The need for finance and treasury teams to become more strategic is in addition to the core function of the job, and yet we’re in an economic environment where there are limited resources that can be deployed to spread this increasing workload.
It’s not possible to simply double the size of your team to allow senior members complete freedom to focus purely on strategic value add.
Not only that, but developing strategic insight into the numbers isn’t only about having more time to do it. It’s also about finding ways to analyze, manipulate and review the data that makes pulling those insights easier and more efficient.
You know these are the challenges you’re facing. Experienced and knowledgeable finance executives can identify what the problems are, and broadly how to fix them, the challenge now is finding the specific practical solutions.
Technology is the general answer, but what technology? The first step is understanding how legacy TMS platforms stack up against modern treasury tech solutions, and specifically, the difference between cloud-based, and cloud-native software. This seemingly minor technical difference can have a significant impact on the success of tech integration across the finance function.
The Value Of Cloud-Native vs Cloud-Based Cash Management
There’s a common misconception that ‘the cloud is the cloud.’ Many legacy TMS systems will proudly boast that they operate ‘in the cloud,’ however many treasurers can feel let down with the implementation of this promise.
In most cases, these traditional software platforms have been designed to run on data centers on the physical premises, with cloud functionality nothing more than remote access tagged on later.
On the flipside, modern treasury tech has been built from the ground up to operate in the cloud, making it more agile, more flexible and more customizable.
In simple terms, legacy TMS programs are built as a single monolith. The software is designed to be static, and any changes require shutting down the system to implement the updates. Combine that with the need for extensive regression testing to reduce the potential of a new update breaking something else in the codebase, and you have an unwieldy beast that is difficult to move.
This means new features are slow to be added, with most legacy TMS platforms providing updates just twice per year and planned out far in advance.
On the flipside, modern treasury tech is built to avoid this. Instead of a single, complex program that operates as one piece, solutions like Trovata are built using a modular approach, with technology like APIs creating a web between each module to make it appear as one to the end user.
The example we like to use is that modern microservices architecture is like building with Lego. You can swap out a ‘yellow piece’ for a ‘blue piece,’ without having to rebuild your entire structure.
The result is software that can be updated on the fly with no downtime, and new features added far more regularly and problems fixed as soon as they’re identified. Instead of these new features being added twice a year, a common cadence for cloud-native treasury tech is every two weeks.
But the benefit of this approach doesn’t just mean cutting down the time between updates, it also means implementation into your finance team’s tech stack can happen far quicker too. There’s no need for a lengthy onboarding process that can take months.
With Trovata, finance and treasury teams can be up and running in days, gaining almost instant insight into their financial data. For mid-market treasurers and CFOs who need to hit the ground running to meet ambitious targets this year, that’s worth real money, not just in quicker access to the data, but less time wasted on implementation meetings and discussions.
Implementing Trovata was very straight-forward. With the great support from Trovata’s client success team, we connected [Trovata] with our three major bank partners and the figures came in right as we were talking-it was instantaneous.”
Nial Burke – Global Treasury Manager at Eventbrite
Deep Analytics And Agile Liquidity Management: The Added Benefits Of Modern Treasury Tech
Stable and agile cloud architecture is the foundation that your tech implementation is built on, but once that’s in place, finance leaders need to look at how the software layered on top of it is going to enable them to drive growth.
There are many different technologies that underpin modern treasury management software, but they can be broadly bundled into providing two key benefits:
Deep Analytics
The first is the gateway to more detailed analytics and gaining the ability to forecast, analyze and slice that data in just about any way imaginable.
This starts by having all of the data in one place. If your numbers are built on spreadsheets which are manually updated from a dozen different banking portals every day or week, the whole job becomes just keeping that information up to date and error free.
But through the use of open banking APIs, it’s possible to connect all of your banking portals and data sources directly into a centralized data lake such as Trovata. This gives CFOs and finance leaders real time access to all of their cash balances, transactions and metrics, in a single place, with no manual work required.
For teams looking to free up time, removing manual data entry (and the risk of typos, formula errors or using incorrect spreadsheet file versions) is some of the lowest hanging fruit there is. The implementation of a technology solution like Trovata does this seamlessly.
And of course once all the data is in one place, it opens up huge potential for detailed analysis. Using sophisticated scenario planning and financial forecasting tools, finance teams can quickly and easily adjust assumptions to see the potential impact of different strategic decisions.
With the integration of Trovata AI, users can also now put the skills of a highly experienced analyst in the hands of almost every member of the team. The AI functionality means users can interact with the data directly, asking it questions and setting it tasks such as the building of financial models, without having to code or use complex formulas to create bespoke models.
In short, open banking APIs, AI and cloud-native technologies are designed specifically to solve the problem mid-market treasurers and CFOs are facing. It takes manual, time consuming tasks away from your team and freeing them up to spend time on strategic work, driving value add and finding more opportunities to increase revenue.
Agile Liquidity Management
Of course the benefit of this data lake approach isn’t just the ability to analyze the data. At the fundamental level, it’s the ability to simply see it all in one place. For treasurers, that makes managing liquidity a far more efficient process.
The traditional method of getting a consolidated overview of a cash position involved hours of manual data consolidation across all existing cash sources. By the time the data was collected, it was already out of date, and gaining oversight of sources like Stripe added an extra layer of complexity.
But when all of this information is available on a single dashboard, in real time, decisions can be made on how best to manage the liquidity position on a basis of information that is current and accurate.
Of course there’s another major time suck for finance and treasury teams. The practical movement of cash. It’s great to be able to see a cash snapshot and dive deep into the data, but the end result of that analysis is that changes need to be made. Vendors need to be paid and cash needs to be reallocated.
Again, the traditional method is to manually log into each account, move the funds as required or make payments, before logging into the next account and repeating the whole process.
With open banking APIs, modern treasury solutions allow that to happen within the same place. In Trovata, finance and treasury teams can complete every step of their process within a single platform, from gathering and viewing the data, to analyzing and forecasting it, to moving it based on the strategic decisions that follow.
It’s time saving, efficient and agile.
Not only does this technology allow for more time spent on strategic tasks that have the potential to increase revenue, they have a more direct impact on the bottom line as well. By moving hours of manual work off the team’s plate, there’s no need to keep adding headcount to the finance and treasury team as your company grows.
How Trovata Helps Modernize Mid-Market Finance Teams
Double digit revenue growth isn’t easy at the best of times. But in a challenging market like the one we’re seeing now, CFOs and senior treasury executives need to be prepared to make bold decisions in order to achieve it. It’s why so many are looking to make sizable investments in automation and fintech in their workflow.
Trovata provides access to the latest in treasury technology in a single platform, connecting all of your financial data into a single data lake, in real-time, without any manual data processing. From there, Trovata offers a suite of sophisticated modeling and forecasting tools, helping your team answer all of the ‘What if’s’ that can possibly be thrown at them, at the click of a button.
And now with the arrival of Trovata AI, delving into your data has never been easier. As well as using it as an expert data analyst, Trovata AI can help you find individual transactions amongst millions of line items, pull insights and trends in your data that you need to be aware of, and even provide context and reasoning behind the numbers for your financial performance reporting.
It’s an all in one treasury solution that builds on the foundational benefits of a legacy TMS, but designed for modern finance teams.
