KEY POINTS

  • Corporate treasury is the management of an enterprise's finances. The treasury department is typically responsible for payments, cash forecasting, foreign-exchange management, financing, compliance, and other areas. 
  • Corporate treasury management solutions have long been dominated by banks and legacy software vendors. Historically, these groups have faced little competition and therefore have had little incentive to update or improve their solutions. They have also typically been too expensive for smaller firms. At the same time, corporate treasurers are dealing with increasing compliance burdens and growing operational complexity from centralized treasury functions and international growth. This means that many firms' treasury infrastructure is no longer adequate, and many smaller companies have no software solution at all. 
  • The result has been that corporate treasury analysis and reporting is performed with an ad hoc mixture of software and manual processes. This is time-consuming for treasury staff, and can significantly increase operational risk due the possibility of human error or fraud. 
  • This has created an opportunity for B2B fintechs. There's an increasing number of B2B fintechs that specialize in helping firms with treasury management. They provide solutions that connect easily to multiple existing systems to access data and then automatically create budgets, forecasts, and visualize data. They can also continuously sync data and automatically create alerts if they find an issue. Others use new business models like P2P lending to reduce the cost of providing services, making them more accessible than historical solutions.   
  • B2B fintechs offering solutions to help with treasury management solve different problems for different segments. This is largely related to firm size, because while larger firms may experience similar problems to smaller firms, they have very different requirements of their vendors as well as available resources. 
    • Larger firms are struggling with multiple systems. Larger firms typically have at least one corporate treasury software solution in place, but many require ad hoc support from other programs or manual processes to meet the requirements of the changing and expanding role of treasury. Incompatibility between systems and inadequate functionality are typically the biggest problems faced by larger firms. 
    • Small and mid-size firms have historically been unable to afford automated treasury management solutions. Now digitization is driving down the price of software solutions across the board. This includes accounting systems, the increasing adoption of which among both small and mid-size firms is key to [...]