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Digitalization: Accounting vs. Treasury

Digitalization: Accounting vs. Treasury

Comparing the current state of digitalization in accounting and in corporate treasuries


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The empirical study performed by KPMG AG Wirtschaftsprüfungsgesellschaft and the Ludwig Maximilian University of Munich on the digitalization of accounting departments in 2018 shows a snapshot of the degree of digitalization in accounting and controlling departments at 172 surveyed companies in Germany, Austria and Switzerland. The study also focuses on current areas of development of accounting departments. The challenges these encounter may be found especially in regard to human capital and employees’ adequate knowledge of IT and technical aspects, on the one hand and inconsistent system landscapes and insufficient data quality on the other hand. We would like to compare the state of digitalization in accounting departments with the state of digitalization in treasury departments by comparing similar studies performed for the latter, thus exhaustively determining the state of digitalization in these departments and understanding the implications for corporate treasuries.

Current priorities in accounting departments

At this point, accounting departments are dealing mostly with technical homogeneity. Both the homogeneity in the systems used in accounting as well as the creation of a standardized data basis with which the accounting and controlling departments work have the highest priority because this lays the foundation for further digitalization steps.

In accounting, right now there is also a focus on the standardization of workflows as well as the quality of master data.

Accounting managers have also realized that they have to reinvent the roles of employees and that employees have to have another kind of knowledge and characteristics than before the age of digitalization. As such, an understanding of processes, an IT affinity as well as knowledge on data analysis are currently what accounting and controlling employees should be focusing on.

Digitalization as an advantage

The respondents in the study see the increase in efficiency and transparency as a significant advantage of digitalization.

In accounting, it is possible to augment efficiency by heavily automating many activities, such as the operational accounting, which consists of many transaction-based and standardized processes. What’s of significance here is the automated recording of business transactions using system-based and self-learning analyses of invoices and account statements in MT940 formats.

This could also be of interest to treasury departments, where operational activities could also gain in efficiency through automated standard processes, above all for transaction documentation and financial instruments accounting. This is backed up by the currently widespread need to process regulatory reports (e.g. according to EMIR) in an automated way and with documentation that stands up to an audit. In general, in the treasury department, the automation of regulatory reports is introduced at the same time as automated transaction documentation.

Whilst the clear advantage is that digitalization brings forth transparency and thus fewer mistakes and cases of fraud within repetitive processes, it also raises new questions around liability in regard to mistakes caused by the system. In conclusion, it should be said that digitalization brings forth more reliable data that is more relevant for decision-making; as such, the increase in transparency across all of financial types of risk therefore stands to reason.

Benchmarking digitalization

When looking at current developments in accounting, it quickly becomes evident that much of what they see as new is already well-implemented in treasury departments. Specifically the level of digitalization, measured by the degree of implementation of treasury management systems, was already rather high in previous years. This level could even be increased; certain studies even show that 80% of all respondents have a full or partial treasury management system, which is extremely high.

In KPMG’s study on digitalization in accounting departments only about a quarter of all respondents implemented a paper-less accounting as expression of a digital initiative. In comparison, corporate treasury departments consider the electronic Bank Account Management (eBAM) in order to digitalize this process as standard, thus making it paperless. Accounting respondents also mention the automated recording of bank account statements in the MT940 format as well as the payment-invoice matching as important developments in accounting. Treasuries have already been accessing bank account statements electronically for quite some time. Matching is another area where treasury is already automated – be it for external payments or for the system-based settling of transactions and their confirmation by the bank. Currently, we could observe a tendency in treasury to an increased no-touch rate as well as management by exception with a simultaneous development of autonomous and self-learning systems.

Human capital as success factor

In the medium term, the characteristics looked for in employees are things such as an understanding for processes, an affinity for IT systems as well as know-how on data analysis -- especially concerning mass data. Because, as mentioned in the beginning of this article, most companies can no longer perform processes efficiently without the support of treasury management systems, the above characteristics have already been developed and are thus present with treasury department employees. Interestingly, both departments are of the opinion that special knowledge on accounting and controlling as well as treasury is far from obsolete but will retain its importance as technology is by no means an end in itself.

However, digitalization seems to undermine the traditional organization of accounting departments and there seems to be a new trend where accounting, controlling and IT form interdisciplinary teams. Large companies are already living these interdisciplinary teams between IT and treasury departments, whilst smaller and some medium-sized companies still seem to be glued to traditional set-ups.

The biggest challenge: full automation and compliance

One of the conclusions seems to be that digital transformation in accounting as well as in treasury departments cannot be achieved through a single project and that it is important that the company’s own employees are involved in the transformation. Digitalization in treasury departments therefore is not achieved with disruption but by constantly changing and optimizing processes whilst maintaining solvency and complying with rules and regulations.

While accounting departments are still at the beginning of their digitalization journey, which means that the biggest challenge is the adequate training of human capital and the standardization of system landscapes, treasury departments already seem a step further ahead. Treasury departments already show a high degree of digitalization and treasury employees are generally well-trained through their use of system-based decision criteria on a daily basis, which is why treasury departments currently hope to streamline their processes by making the use of management-by-exception and automated processes the new normal.

In the current discussions the topics that get a lot of play seem to be fully automated compliance reports, self-monitoring systems in real time and building up resilience against cyber-crime, although questions revolving compliance and liability are also considered very important. Generally, in treasury departments digitalization is defined as the optimization of processes and methods through comprehensive data utilization, which is made possible by computer-assisted user interfaces and powerful software.

Treasury seems to be an ideal pioneer for the digital enterprise of the future. For a quick implementation of current ideas and projects, it remains sensible to involve persons knowledgeable in both regulatory and IT aspects to act as vanguards – they can also ensure that digitalization risks are marginalized.

Source: KPMG Corporate Treasury News, Edition 93, July - August 2019

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