Applying new technologies to working capital management (WCM) can offer many benefits. Advancements in areas such as artificial intelligence (AI) and robotics could change everything from the structure of WCM to everyday operations. Bruce Meuli from Bank of America Merrill Lynch explores.
1. NO MORE SILOS
More and better data can drive process enhancements, but siloed data creates issues of validity and accuracy for corporates. Consolidation can help, starting with improving data quality through centralization. This is often achieved using common platforms, architecture and cloud-based storage or professional data centers.
2. USE THE SOURCE
Greater confidence in data makes using multiple data sources within the business intelligence (BI) environment possible, and technological advances are providing access to previously “trapped” data. For example, in the case of receivables processing, advances in optimal character recognition allow text from different sources to be scanned and validated for processing, regardless of format. Web-bots can now connect to third-party sites and robotically harvest and augment records with missing remittance information, helping facilitate more efficient matching of receipts with open AR invoices. This is transforming processes where automation had previously seemed uneconomic.
3. ROBOTS ANDS AI
The power of automation is furthered by more advanced algorithms capable of "fuzzy" logic and learning to seek and process data. Advances in cognitive learning could push the boundaries even further, and are already being used to improve the accuracy and usefulness of cash forecasting. Arguably, the application of data and AI to more complex analytics and decisioning is a logical progression. It could lead to a real-time BI dashboard, allowing the treasurer to preview data flows from multiple sources and make business rule changes through an online interface.
4. OPTIMAL MODELING
Capital allocation modeling and cash forecasting is being deployed to better understand the management of enterprise working capital. Using advanced BI and analytics to give visibility to non-optimized or “trapped” cash, for example cash trapped in product held in stock, allows “what if” scenario modeling. Previously “trapped” cash can now be built back into costing. From here, real capital allocation modeling is possible, allowing treasurers to better manage and assign working capital.
5. PREDICT, DON'T REACT
Advanced technologies can potentially move treasury from a reactive to a more predictive function. For example, as more real-time payments are executed, it’s becoming necessary to implement checks and balances at the input level before a payment reaches the banking system. With rules-driven stop processes in place, AI-based learning can allow every process flow and exception to be re-routed to safety before an issue arises.
6. STP, BUT FASTER
With the arrival of safe real-time processing, the use of business rules-based workflow systems by treasury could soon see a move from batch to continuous processing. Linear progression of tasks will shift toward execution of multiple tasks simultaneously, from data input, to parallel processing, to system control, to output. Driving data flows and exceptions management in this way, or by using workflow tools as an overlay on other systems, facilitates faster, safer and cheaper completion of every end-to-end sequence.
7. START NOW
Automation investment is increasingly focused on more complex processes that require broad knowledge and cognitive capability. This will further evolve the role of the treasury, which has already changed significantly with the maturing of shared services and centralization. The key to success in this rapidly evolving landscape is developing the necessary skills and knowledge, and being part of the ongoing debate.
- New technologies like AI and robotics could transform working capital management
- Improving data through centralization is the first step toward effective automation of processes
- More advanced algos and logic mean better decision making and smarter planning, helping treasury become a more proactive force