In order to maintain business continuity in the remote working environment, treasury departments have been forced to rapidly move towards digitalization, as noted in AFP’s latest Executive Guide, underwritten by CIT.

RAPID MIGRATION

Some large companies like Hilton were in good shape at the start of the COVID-19 crisis because they already had a lot of automated processes in place. Like all hospitality companies, Hilton has been heavily hit and has taken action on staffing, operating under a furlough for months. “Within treasury, we've been able to accommodate that thanks to the robust technology and workflow integration we’ve built in recent years and to the resiliency of our team members,” said Fred Schacknies, CTP, former senior vice president and treasurer for Hilton.

Of course, many companies hadn’t implemented such processes, and so it’s been up to the banks to help them migrate to new solutions. Bob McElyea, managing director of sales for CIT’s Treasury and Payment Services business, has observed varying degrees of adoption of digital electronification. “A lot of our large corporate clients and mid-sized clients have implemented electronic workflows and processes around some of those back-end financial responsibilities,” he said.

The bank has typically needed to take a more hands-on approach with middle-market clients to help them understand their options and how to get these processes implemented rapidly to meet the demands of a workforce that became remote almost overnight. For some companies, offices were shut down and checks were piling up with no way to process them.

“Banks have had to be flexible in adapting to client needs during this crisis by making more services available in a remote environment,” explained Joe Karkut, receivables and enterprise digital group product head for Treasury and Payment Services at CIT.  

Some treasurers, like AFP Chairman Bob Whitaker, CTP, senior vice president of corporate finance for DHL, believe this is the time for all companies to consider going electronic for payments. As he noted in AFP’s recent Treasury in Practice Guide on business continuity planning, there has been major concern over whether banks will still be able to process paper checks. At the moment, lockboxes have remained open. But if there is a major resurgence in COVID-19 cases later this year or early next year, as scientists have predicted, that may change. “Ultimately, when we come out of this, everybody needs to make an effort to push to electronic payments so that we can get rid of these checks,” he said.

OPTIMIZING BACK-END PROCESSES

In this environment, treasury departments have also been identifying any inefficiencies in their back-end processes to become more strategic.

Corporates who are well-versed in electronic solutions may need to revisit their systems. Eileen Schwed, vice president and senior product manager for Treasury and Payment Services for CIT, noted that while the bank’s corporate clients who use ACH and wire services operate well in a centralized environment, several have had some processing disruptions they were not prepared for while working remotely.

“I think this pandemic provides an opportunity for corporates to reexamine some of their internal controls and perhaps better utilize their ERP systems,” she said. “If they have not migrated to an integrated ERP system, they may want to advance that forward. This is a great opportunity for a lot of housecleaning to be done, on the bank side and the corporate side, to get internal processes optimized.”

Some companies like ABM have put ERP implementations on hold to handle immediate areas of focus during COVID-19, such as health and safety of employees, client attention and financial nimbleness.  As Susie Kim, treasurer and vice president of investor relations for ABM Industries explained it, her company has 140 thousand employees who use a variety of systems as they manage thousands of clients. While digital transformation may have been an area of focus pre-COVID, business continuity has been prioritized during these first few months of COVID.  “Because again, we're all working remotely, so that in and of itself is clearly challenging.”

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