Aston iTF and Le Nouvel Economiste – Corporate treasurers and fintechs, a golden role

“A company’s top priority, and therefore that of its treasurer or CFO, is to have cash in its account. Corporate financing, i.e. what banks lend to businesses on a short-term basis, amounts to just 180 billion euros, compared with 650 billion euros for inter-company credit. 25% of bankruptcies are caused by unpaid invoices, only 10% of invoices are covered by factoring, and only 12% are insured against the risk of non-payment.

Here again, fintechs simplify the treasurer’s task by making it easier and more fluid for cash to flow into the company’s account. “Our solution is deployed in four modules: the first is an online software application that automates the dunning-collection process; the second is a credit management module that enables you to manage the credit insurance policy of your choice online, and rate your corporate customers according to payment experience,” explains Amaury de la Lance, President of Aston ITF’s BtoB cash optimization platform. The third module also enables you to link up with all local factoring companies and have your invoices financed. Last but not least, our solution includes a fourth module for board-reporting of accounts receivable.” And once again, the treasurer’s daily, manual tasks (typically reminders) are automated.”

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Thanks to fintechs, the treasurer has gone from being the guarantor of the company’s liquidity to an anti-fraud bulwark and strategist.

Digitization and the solutions offered by fintechs are profoundly changing the role of the corporate treasurer. No more routine, manual tasks. Now it’s time for bank account aggregators and programs to secure companies’ financial flows. The treasurer is becoming the company’s last line of defence against fraud and corruption. Freed from the daily grind, he can concentrate on his core business: managing the company’s short- and medium-term liquidity.

par Fabien Humbert

The fintech revolution, a word born of the contraction of “finance” and “technology” to designate start-ups offering digital engineering to manage financial flows, is revolutionizing the treasury and cash management function within companies. “Thanks to fintech innovations and their applications in companies, the treasurer will no longer exist in the future… at least not as we know him today,” even predicts Ignacio Sanchez Miret, treasurer and risk manager at HMY Group, and chairman of the fintech commission of the French Association of Corporate Treasurers (AFTE). Digitization is profoundly changing the work of treasurers, making it more efficient and more secure.

“The first basic need of a company is to have a global view of its bank accounts, i.e. to know for the parent company and its subsidiaries the list of partner banks, the accounts opened, and of course the balance of these accounts.”

While there are still many paper documents and manual signatures to be made on a day-to-day basis, and in relations between treasurers and their financial partners, technology enables remote digital signing. Although the end of paper in business has been predicted for the last ten years or so, it’s clear that this prediction is taking shape a little more every day. But the disappearance of paper is far from being the only revolution in the treasurer’s role. “The first basic need of a company is to have a global view of its bank accounts, i.e. to know, for the parent company and its subsidiaries, the list of partner banks, the accounts opened, and of course the balance of these accounts”, analyzes Guillaume Lafarge, President of Exalog, a specialized software publisher. Many companies, even those that are not large, use several accounts, operate in an international context, have subsidiaries in other countries… Simply knowing that these accounts exist is therefore not self-evident. Neither is their management. Today’s treasurer still has to perform routine, manual tasks, such as checking the status of the company’s accounts and those of its subsidiaries, in France and abroad, on bank websites,” explains Ignacio Sanchez Miret. Fintech applications now make it possible to consolidate all this information in a single table, on a single screen, and to manage everything simply.”

In pursuit of liquidity

A company’s top priority, and therefore that of its treasurer or CFO, is to have cash in its account. Corporate financing, i.e. what banks lend to businesses on a short-term basis, amounts to just 180 billion euros, compared with 650 billion euros for inter-company credit. 25% of bankruptcies are caused by unpaid invoices, only 10% of invoices are covered by factoring, and only 12% are insured against the risk of non-payment.

Here again, fintechs simplify the treasurer’s task by making it easier and more fluid for cash to flow into the company’s account. “Our solution is deployed in four modules: the first is an online software application that automates the dunning-collection process; the second is a credit management module that enables you to manage the credit insurance policy of your choice online, and rate your corporate customers according to payment experience,” explains Amaury de la Lance, President of Aston ITF’s BtoB cash optimization platform. The third module also enables you to link up with all local factoring companies and have your invoices financed. Last but not least, our solution includes a fourth module for board-reporting of accounts receivable.” And once again, the treasurer’s daily, manual tasks (typically reminders) are automated.

Fraudsters’ delight

The fintech revolution will also make financial flows more secure, particularly between companies and their suppliers, and make fraud more difficult. “Following feedback from our customers, we are observing an increase in malpractice known as ‘president fraud’,” reveals Christophe Descos, Banque Populaire corporate market manager. Typically, a criminal poses as the president or an executive, and requests by telephone or e-mail a transfer to a fictitious supplier. Funds are often transferred first to a neighboring country, then to a more distant one. These frauds most often take place when the President is away on business, and has given an internal person the power to make transfers.

More often than not, too, the criminals insist on the urgent nature of the transfer request, to prevent the person who has the power to do so from thinking things through. Another type of fraud involves a criminal posing as a supplier to the company, claiming that their bank details have changed, and requesting payment on the new account. Of course, the money will never reach the supplier in question, but will go abroad. Another typical fraud: an outsider has taken information about the company, identifies employees, and telephones pretending to be the bank or software publisher, asking to test transfers. Here, we’re no longer in a hurry, as the manipulation can take several days, since the aim is to gain the target’s confidence and get him to make a transfer to an account held by the criminals.

The digital response

Banks and fintechs have developed strategies and best practices to prevent such fraud from hitting their customers. Guillaume Lafarge advises: “Of course, employees need to be made aware of the existence of such malpractices. But also set up a segregation of duties so that one person cannot make an end-to-end payment alone, and that there are at least two company employees in the decision-making chain.” In many cases, small and medium-sized businesses still accept transfer orders non-computerized, or even manually, as in the case of the “parapheur”. A company director who is often on the move leaves delegations, sometimes for substantial amounts, to his staff. Switching to digital technology and coordinated management of delegations are therefore among the best practices to be implemented. The same IT solutions that make treasurers’ lives easier by aggregating all the company’s accounts on a single screen, also enable them to combat such fraud. Each time a payment order is processed, the validation request is sent to the manager’s workstation and cell phone. President fraud often takes place when the executive is on the move, but even if he doesn’t have his computer with him, he’ll always have his phone, and in 99% of cases Internet access. He can therefore sign the transfer online, or refuse it.

“The same IT solutions that make treasurers’ lives easier by aggregating all the company’s accounts on a single screen also enable them to fight fraud.”

These account aggregators, which enable the management of signatures and payment delegations, are available by subscription from a few dozen euros per month. So, even though they are mainly used by large corporations, they are also available to SMEs. Banks also pay close attention to transfers to certain high-risk countries. “With Suite-Entreprise.com, it’s also possible for companies to restrict their credit transfers in advance to certain countries, or only within a certain zone: France, Europe. It is possible to modify these specifications, but the process is not immediate”, explains Christophe Descos.

The role of the treasurer is changing

The role of the corporate treasurer is changing dramatically with digitalization. Firstly, it needs to communicate more with other departments, especially IT. “The treasurer’s responsibility is to identify the major IT risks that he or she cannot deal with alone. For its part, IT won’t be able to qualify the risks, but it will be able to deal with them,” analyzes Bernard Drui, managing director of Protiviti. Together, they will be able to take measures to protect the company’s accounts and financial flows in the face of these risks.” And one of the eight measures required by the Anti-Money Laundering and Combating the Financing of Terrorism Act falls within the remit of the treasurer, since it is he who manages cash outflows. “Cash out is the last bastion of control over the steps taken within the company, and the fight against fraud and corruption is more than ever part of the treasurer’s remit”, says Bernard Drui.

“These account aggregators, which enable the management of signatures and payment delegations, are available by subscription from a few dozen euros per month.”

As a result, the treasurer’s role is increasingly focused on analyzing all this information, which is arriving en masse. “Thanks to big data and artificial intelligence, he will increasingly be called upon to devise the company’s medium- and long-term financial strategy,” predicts Ignacio Sanchez Miret. But he will still remain the king of the short term, thanks to new tools for investing funds.”