Take real-time payments, a technology that has become a reality in 45 countries including Australia, Singapore and HK. It’s very easy to see how instantaneous payments can help treasury manage liquidity and evolve the funding model to an intra-day or even an ‘interest per minute’ reality.
Just-in-time payments, shortened collection cycles, enhanced cash flow forecasting and dynamic hedging are easy to imagine. But the far greater opportunity - or threat - is the implication on business and operating models.
It’s up to treasury to harness cashflow data and be at the table on strategy as treasurers will be the recipients in real-time of transaction data on what - or where - is and isn’t selling.
Additionally, any previous limitations on the number of suppliers and distributors, driven by credit controls, could be virtually eliminated, through instant cash on delivery, in real-time payments enabled geographies.
This is a big opportunity to widen customer bases or build capacity. Likewise it is also a very real threat for many companies – and it should raise some very real existential issues the treasurer and CFO are best placed to challenge and recommend on.
It’s important to realise hard, conscious decisions should not require an existential threat to be considered. But if they do, those threats are in abundant supply - nearly nine in every 10 Fortune 500 companies in 1955 are gone, merged or contracted.
Where once it took Fortune 500 companies an average of 20 years to reach a billion-US-dollar valuation, today’s digital start-ups are getting there in four. Yet it is remarkable how long leaders can take to realise they are facing an existential threat and that they have to do something dramatically different.
Some industries such as retail and media have left it so late that they may have lost the financial flexibility to do anything meaningful to drive the change they need.
As the BCG report suggests, as treasurers operate in an increasingly uncertain environment, “half of the typical treasurer’s day [is] spent coping with day-to-day transactions, cash flow, and liquidity-related operations, and the other half spent addressing long-term strategic needs and business risks”.
It’s a time of change. However, that shift pales compared with the transformation currently in train for the decade ahead as treasurers and CFOs step up from an organisational perspective to the top table and navigate complexities and harness change.
Farhan Faruqui is Group Executive International at ANZ
This story is an edited version of a speech delivered at the 2018 ANZ Finance & Treasury Forum in Singapore.