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Blocked! Obstacles faced in making treasury automation a reality

The speed of digital transition in the recent years has been unprecedented, with a few technology leaders accomplishing 18-month transformation plans in almost over a weekend. There are still plenty who are nostalgic for the good old undigitized times. That said, when it comes to survival and growth, a digital future supported by automation is not only inevitable but necessary.

Automations, unlike humans, enable your processes to function 24/7 with real-time visibility and 100% accuracy. Companies all over the world are realizing efficiencies to be gained through automation – cutting costs, eliminating manual tasks, and allowing employees to focus on higher-value responsibilities and such. According to a survey, 78% of business leaders posit that automation can free up to 3 work hours a day.

The case for ERP connectivity and automation in treasury

Treasury departments too need to harness the power of automation. The starting point for this transformation is automating the connectivity to Enterprise Resource Planning (ERP) systems. Currently, treasurers use disparate ERP systems to get data and for repetitive tasks such as manual data entry. This data is used for critical functions including cash management, cash forecasting, working capital management and treasury risk management. Automating ERP will help treasurers save time and effort. It’s a gateway to centralized data that allows the business to have a single source of truth for decision-making.

Obstacles to achieving automation in corporate treasuries

When considering treasury automation solutions, treasurers might face these barriers:

1. Getting IT resources

To get IT resources greenlit, treasury teams are tasked with justifying the need for ERP automation. This means that the team needs to make a strong business case as to why automation in ERP is crucial for them. It’s also important to research on what exactly is needed to get in the treasury automation going in a way that works for the business. In most cases, teams will realize that they don’t need system overhauls but instead can make-do with connectors in the form of Application Programming Interface (APIs).

2. New and unfamiliar technologies

Not all treasury teams are familiar with the latest technology trends. Tech jargon like ‘AI’, ‘Machine Learning’ or ‘API’ might make the team feel like they’re out of their depth and become a barrier to finding the right solution to help their ERP connectivity needs.

3. Resistance to change

Some teams might have an “if it ain’t broke, why fix it?” attitude. Meaning, creating any change in processes is met with a lot of resistance because the old way works just fine. Here, teams are willing to pay the price of inefficiency while keeping employees trapped in repetitive tasks rather than elevating them to strategic roles.

Why ERP connectivity is key to treasury automation

The path to seamless treasury automation lies in ERP connectivity. APIs can act as modern automation software which helps enhance treasury processes. Using APIs, disparate ERP systems can be connected in a way that provides treasury teams with much needed visibility and on-demand connectivity.

Examples of ERP connectivity helping treasury functions:

Accurate cash forecasts

Raw data stored in ERP systems such as sales orders, purchase orders, general ledger account balances, and outstanding invoices organized in a structured way makes data extraction easier. To get the most out of the cash forecasting process, it is essential to constantly compare forecasted values against transactional data by performing variance analysis, which improves the accuracy of the forecast.

Quicker bank reconciliation

Bank statements can be compared with commitments and projections received from ERP, to detect anomalies.

Consolidated view of working capital

Poor global working capital management due to disparate systems can lead to massive cash trapping in dead assets and other issues. Data pulled from ERP and fed into a cloud platform will allow treasurers to get a consolidated view of working capital and optimize cash conversion cycle.

Conclusion

It’s essential to understand how automation can truly benefit teams working in treasury management. This knowledge can help the team overcome obstacles and obtain ERP connectivity for a successful treasury automation. Watch this space for our latest e-book to get an in-depth understanding of how treasury automation can be enabled with seamless ERP connectivity.

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The hidden cost of relying on legacy CTRM

“Old is gold” is not always the best adage, and in a world where technology becomes obsolete every second, it becomes a non sequitur. Especially when talking about CTRM systems, enterprises that rely on legacy commodity trading and risk management models would be in for a rude shock to know how absolutely inefficient the system can be. Here is why a legacy CTRM solution is unreliable:

Costly implementation

As a risk management platform, legacy CTRM is implemented on-premise and has tedious implementation requirements. They also need a lot of IT involvement, adding to the upfront cost of implementation. Businesses need to be vigilant while opting for CTRM solutions, because even when the product is claimed to be ‘cloud-based’ it still requires long implementations to integrate systems.

Cloud platform advantage: A true digital commodity management platform like Eka provides a simple, cloud-based implementation with prebuilt connectors. It requires limited IT involvement and can be taken live in just a few weeks, at a fraction of the time and cost of legacy CTRM systems.

All-or-nothing framework

With legacy CTRM, you end up buying more than you need. This is because in legacy CTRM and ETRM systems you purchase the system and pay for the functionality whether you need it or not.

Cloud platform advantage: In comparison, Eka has an app-based platform. This helps you customize according to your requirement. You can buy just what you need, and don’t need to purchase anything more. You can also add functionality quickly and easily later as you grow.

Poor data integration

In a legacy CTRM platform, data is manually incorporated from external systems. This leads to a dual issue. Firstly, manually collecting data can be time-consuming. Since markets are volatile and fast-paced, the lost time can translate into lost profits. Secondly, there is room for human error in manual data aggregation. These errors can in turn result in making bad trades.

Cloud platform advantage: Digital CTRM platforms provide automated data aggregation. This takes seconds, making it efficient. Since the system is completely automated, there is no scope for human errors or mistakes.

Sub-optimal decision-making

It’s essential to have up-to-date data to make good business decisions. However, relying on legacy CTRM software means that the data that could be several days old. This does not work in rapidly changing markets. By the time the data has been analyzed and decisions are made, the market has changed again.

Cloud platform advantage: Businesses need to be able to match the pace of the markets. True digital solutions like Eka provide you with real-time data that results in opportunities.

Conclusion

To sum up, legacy CTRM systems are inflexible and add to- instead of reducing- the woes of commodity companies. This impacts decision making and productivity. Enterprises need a robust cloud commodity management platform. In order to be efficient, agile, and scalable; it is essential to look towards digital CTRM platforms like Eka. Click here to ask for a demo!

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All you need to know about carbon offsets

For businesses looking at achieving net-zero goals, carbon offset is a boon. It provides them with an option to offset unavoidable emissions while staying on track with their goals to achieve

net-zero status

. Compared to carbon reduction strategies that eliminate internal emissions, carbon offsets work by funding Greenhouse Gases (GHG) reduction projects.That said, like everything else in the world, opting for carbon offsets has its pros and cons. Let us take a deep dive into some of these down the section.

What is a carbon offset?

A carbon offset is a reduction or removal of emissions (carbon dioxide or other greenhouse gases) from the atmosphere and traded as part of a commercial scheme.

Typically, offsets are measured in tons of carbon dioxide – equivalent (CO2e). To obtain a carbon offset, one ton of carbon dioxide or its equivalent in other greenhouse gases must be reduced or removed.

Why carbon offset is important?

Carbon offsets let businesses reduce GHG emissions while increasing carbon storage to make up for unavoidable emissions from their operations. These offsets can be tailored to said company’s environmental and governance plan and help reduce their carbon footprint.

The pros and cons of carbon offsets

Carbon offsets play a crucial role in helping businesses achieve net-zero goals. To effectively implement offsets into a company’s decarbonization strategy, it is necessary to know its benefits and limitations. Hopefully, this information will help you select the most effective strategy when it comes to decarbonization.

What are the benefits of carbon offsets?

Offsetting can benefit enterprises not just by helping them reduce their carbon footprint, but also secure funding for environmental projects. Let’s elaborate on some of these benefits:

1. Reducing carbon footprint

Carbon offset allows businesses to minimize their carbon footprint while supporting relevant projects aimed at reducing carbon emissions. For instance, Alphabet, Google’s parent company, has been purchasing quality carbon offsets for a long time. Most recently, they successfully eliminated its entire lifetime carbon footprint solely with the help of carbon offsets.

2. Enforcing environmental policies

Environmental policies have become increasingly complex and demanding in response to environmental challenges across geographies. This is where opting for carbon offsets makes sense as it allows enterprises to stay compliant with different environmental policies, avoid penalties and comply with local standards at the same time.

3. Claiming carbon neutrality status simplified

Offsetting allows businesses to bestow a ‘carbon neutral’ status to certain aspects or projects of their enterprise. The ‘carbon neutral’ status helps enhance a company’s reputation that lets them attract new investors and conscious customers.

4. Providing resources for projects

Many initiatives are often overlooked due to lack of funds, but with offsetting, enterprises can choose relevant projects that help boost their net-zero initiatives. Once a project is successful, similar follow-up projects then attract more funding opportunities.

Limitations of carbon offsets

Carbon offsets may be an effective way to reduce carbon emissions, but they come with a series of challenges that enterprises should know about. We discuss some of these below:

1. Not the only option

Offsetting is a tool, not the ultimate answer for companies who want to reduce their carbon impact. Decarbonization is a lengthy process that requires businesses to alter their internal and external strategy to include more sustainable practices. Only after applying different methods – from switching to renewable or clean energy sources to implementing carbon accounting, should an enterprise focus on offsetting.

2. It is expensive

Cost is a key concern with carbon offsetting. It can range lower than $1 or over $50 per ton. The ROI on these investments, however, may not be concrete as they only mitigate CO2 emissions. That is why enterprises need to first focus on sustainability initiatives such as solar or wind installations, switching to LED lights, and explore energy saving alternatives for commuting to workplace. Why? Because these activities generate return-on-investment over time. Moreover, offsetting costs may get passed to the end consumer, who might switch to alternative products with lower prices and lower GHG intensities.

3. Setting targets

Another drawback with carbon offsets is that they can only be used to offset carbon emissions to meet Scope 2 emissions. SBTi for instance does not allow businesses to leverage offsets. It is because they are allowed to make operational changes only once for Scope 1 emissions. Businesses cannot use these offsets for internal strategies and are marketed for carbon-neutrality, but they must meet specifications set by SBTi targets.

4. Teeming with controversies

Several media reports suggest businesses polluting the environment and purchasing offsets rather than improving their efficiency. Enterprises can avoid this and protect their reputation by ensuring their shareholders view purchasing offsets as a tool to reduce emissions with operational changes, unavoidable emissions, implementing internal target setting strategies, and offsetting historical emissions.

Cost of carbon offsetting

Currently, the cost of carbon offsetting remains low due to a surplus of voluntary offset market credits over many years. On an average, the price stand at $3-5 per metric ton of CO2 but experts fear that these prices are far below the required level to unlock significant investment.

A research by Trove Research and University College London (UCL) states that the present surplus of carbon offset credits could be swiftly eroded with expected demand to increase fivefold or tenfold companies strive to meet their net-zero commitments. This means that enterprises need to plan for substantially higher carbon credit prices and make educated trade-offs between reducing emissions and buying credits.

Final thoughts

To summarize, carbon offsets are widely utilized for decarbonization given their benefits, narrative building, and unique use-cases. As carbon offsets provide direct finance to different projects, CFOs must ensure that their enterprise selects specific projects registered with trusted registries. Long-term initiatives based on offsets may be endangered by a fast-evolving regulatory climate.

Carbon offsets need to be viewed as one of the options from a larger toolbox for reducing greenhouse gas emissions. The primary tool or strategy however must focus on long-term emission reduction strategies. When combined with renewable energy certificates, power purchase agreements, and operational changes, it can be a powerful tool to reach carbon neutrality

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Streamlining direct materials sourcing in agriculture through automation

Direct material procurement of agricultural materials is an inherently complicated process since it involves multiple stakeholders and complex specifications. Factors such as climate change, food security concerns, and geopolitical volatility bring in an additional layer of uncertainty.

Legacy systems used by agribusinesses are often ill-equipped to handle this level of complexity. Siloed systems result in a lack of transparency as information is buried across multiple systems. Supplier collaboration happens primarily through emails, phone calls, and messages, making it extremely tedious. Purchase cycle times tend to be higher due to inefficient collaboration and manual reconciliations. Decision-making is slow and sub-optimal since manual status updates lead to data errors and latency.

Addressing cumbersome processes and sub-optimal decision-making

Take the case of one of our customers, a leading agri-trading business, one of the world’s largest. The company found itself weighed down by disparate processes resulting from legacy technologies, spreadsheets and multiple point solutions acquired over time that don’t talk to each other.

Minimal buying support meant that the company’s buyers spent 15-20% of their time negotiating, setting prices, and answering queries on payments, schedules, invoices, and shipments. There were multiple portals and systems to interact with farmers, acquirers, and demand customers. As operations began to scale, managing with a network of disconnected legacy systems, while collaborating over emails, calls and faxes, was proving increasingly cumbersome. This was problematic given that the success of an Agri-trading company lies in its ability to make the best possible deals when engaging with farmers and suppliers.

Eka’s source-to-pay (S2P) solution replaced the customer’s erstwhile manual supplier collaboration process with pre-built, industry-specific workflows to digitalize the entire process of price discovery, contract creation, document exchange and other critical workflows. This enables seamless collaboration between buyers and partners along with demand customers for easy exchange of information and faster decision making. As a result, the company can effortlessly manage 60,000 tickets, 30,000 contracts, 1,000 growers, 750 customers, and 150 acquirers. It also accrued cost savings by reducing transactional processing costs by up to 60% and reducing spending by 18% through optimizing maverick spends. Automation of accounts payables reduced the workload of the department by 30%.

Attributes of a truly effective S2P solution for agriculture

An effective and efficient solution for sourcing direct materials for agriculture should ideally have the following attributes:

Automation Successful automation of price discovery can allow Agri-businesses access to market prices on-demand and in real-time. This equips them to deliver consistent approvals and manage documents faster with barely any manual intervention. Eka’s S2P solution enables a 3-way match, intelligently matching the PO, receipts and invoices for automated reconciliation and invoice finalization. It is also equipped to manage exceptions and trigger automated ‘Ok to pay’ messages to ERP/payment systems.

Streamlined and integrated processes A ccentralized S2P portal can link all stakeholders – farmers, demand customers, acquirers, truckers, and users – in one place for seamless collaboration. Supplier onboarding also becomes faster. Bids management is easier since all negotiations, acceptance/rejection of bids, contract creation, purchase orders, invoicing, and payment processes, are managed effortlessly through one portal. Eka’s solution allows for a seamless ‘bid and offers’ process with decision support on market pricing personalized to the user. It can also handle spot buys enabling businesses to accept, counter or reject offers from counterparties immediately. Prebuilt connectors with leading ERPs and open APIs play an important role in faster time to market.

Real-time visibility With analytics weaved into each step of the process, Eka’s S2P solution enables real-time visibility and insights into processes and performance, including supplier performance and ratings. Integrations with internal systems and APIs to connect third-party systems can help significantly reduce the latency of information sharing as all parties have a single view of data and visibility into live customer data. This is useful to maintain comprehensive audit trails throughout the supply chain.

Ease of use Low-code / no-code architecture that uses intuitive rule-based workflows can allow for extensive self-service capabilities by making it easy to customize new features and configure new processes on the platform. Even processes such as supplier registration can be performed in minutes irrespective of location.

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These capabilities can not only enable faster scaling with efficient supplier collaboration and improved productivity, but they can also help cut down operational costs through automation. It also eliminates the bulk of manual processes such as paperwork, emails, phone calls and messages, freeing up time and resources. Robust reporting and enhanced visibility across multiple systems also promote better decision-making.

Eka’s S2P is a cloud-based intelligent solution that helps businesses digitally transform the sourcing and procurement processes of direct material. Since it is built to address specific needs, it is equipped to handle complexities related to direct material sourcing in industry segments such as agriculture, metals, mining, and manufacturing.

Read more about the solution here.

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ConclusionFOMO: Is the CPG industry ‘missing out’ on a unified data view?

Achieving excellence in CPG trading and risk management

Digitalizing procurement for Consumer Packaged Goods (CPG) industry might just be the best idea since sliced bread. Why?

The speed at which the COVID-19 pandemic caused supply chain disruptions is not just hypothetical. From toilet paper to sanitizers to packaged food – procurement and supply were disrupted for all as demand sky-rocketed thanks to panic buying. Such shocks and the ‘new normal’ are reason enough to overhaul legacy systems.

Current scenario in the CPG industry

Currently, procurement teams are facing a host of challenges in the procurement process. According to a recent Oxford Economics study of CPG executives:

49% say that procurement processes are mostly or completely done manually

46% reported poor visibility into their inbound shipment status

37% weren’t able to predict supplier’s ability to meet demand

Only 23% could effectively collaborate with suppliers

These challenges primarily stem from operating in a web of legacy, disjointed systems and spreadsheets that hinder timely visibility into the operations. To achieve excellence in trading and risk management, a unified data view of is critical for CPG companies.

Gaining visibility in CPG business through unified view of risk

Let’s take the example of a leading CPG company known for its ketchup. There’s no denying that they’ve found the secret sauce to success. The brand is among the top five largest Food & Beverage companies in the world, with a dedicated workforce in over 40 countries. The company owns eight brands making 1 billion dollars in business. Their net sales in 2020 alone was $26 billion.

Even though the brand has a worldwide presence and is exemplary as a CPG business, they still relied on disparate systems for their operations, and it was slowing them down. They spent significant time manually extracting data from multiple systems and using spreadsheets for critical business processes and analyses – financial trades (derivatives), settlements, close out, and P&L were handled in one system, while position and mark-to-market accounting was handled in a different system.

Their teams were manually extracting this data from each system and were using spreadsheets to manage their vast procurement and risk requirements, including spend and coverage against forecasted volumes, price risk for business units, hedge strategies and its effectiveness. This information was then manually fed into an accounting system for further processing.

Like all CPG companies, the ketchup king too forecasted volumes of raw material to be procured a year in advance. This allows them to manage costs more efficiently. Despite a huge turnover, there is still ample potential to maximize profits if they focus on having a unified view of their business.

What a day in the life of a unified CPO office looks like

To understand why procurement teams would benefit from a unified view of data, here’s a typical scenario:

1. The executives set strategies and run macro simulations. New trades are entered into the system by the front office.

2. The middle office manager, named Louis, receives an email alert on trade breaching position limit.

3. Louis checks the position report and identifies the impact.

4. Louis posts a comment to Mike, head of front office, using the chat feature.

5. Mike from the front office makes the corrections immediately.

6. The back office reconciles the transaction and runs the report

Thanks to the unified data view, Mike and Louis from the procurement team are able to work together with other offices. This provides them with enhanced efficiency, control and timely action.

Enabling better business outcomes with technology for CPG companies

Finding the right technological infrastructure to support CPG trading and risk management is imperative. Investing in cloud-driven solutions can help procurement teams in CPG companies get a unified view of their risk. These solutions can successfully break the data silos that companies face and can help in gaining a holistic and an accurate view of their risk at one place.

With cloud-driven solutions, it’s also possible for leadership to access critical insights through sophisticated analytical dashboards in desired format at any point in time, using role-based logins. With the right solution, companies can get the benefits of risk monitoring, customized reporting, derivative trading and position & mark to market under the same umbrella.

Conclusion

To sum up, CPG businesses can greatly benefit from digitizing their procurement operations. Modernizing their technological infrastructure can help in a broader operational-improvement effort. The Eka platform definitely aces these parameters and could be the right cloud-driven solution to support the needs of the CPG business and provide a unified view into data, acting as a real-game changer.

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Top 5 questions on sustainability and ESG reporting answered Sustainability has gained a lot of traction in recent times, but with little clarity. As businesses strive to incorporate more environmentally conscious strategies and reporting into their operations, they seek visibility into this ever-evolving process.To help bridge this gap, our sustainability experts have answered the top five questions for enterprises worldwide. These questions shed light on several aspects of sustainability, ranging from carbon credits to starting sustainability and ESG reporting.

Question 1: Are carbon credits a credible way of saving the environment?

To achieve net-zero status, enterprises typically collaborate with various partners for initiatives to help balance business and environmental needs. One of the popular options is to use carbon credits – which is essentially neutralizing emissions by purchasing carbon offsets — credits generated by projects that are reducing carbon emissions elsewhere. This option is considered an easy fix and can often come across as a ‘greenwashing’ initiative.

In an ideal scenario, purchasing carbon credit should be one of the options and not the only one for enterprises to meet their net-zero goals. To make a meaningful contribution to fight climate change, businesses must focus on reducing their emissions and promote operational efficiency across all processes. Once these objectives are met, is when businesses should purchase carbon credits to offset excess emissions.

Some countries are taking a direct approach and have imposed restrictions to this end. Indonesia for instance has banned the purchase of carbon credits to encourage enterprises to focus on activities that go beyond greenwashing. China, on the other hand, levies heavy carbon taxes. These measures are aimed at urging businesses to explore more sustainable ways of reducing emissions within the realm of their operations before opting for carbon credits purchases or other offsetting mechanisms.

In the end, adopting a more holistic approach and implementing sustainable practices across all operations is what will benefit enterprises in the long run than a one-off exercise.

Question 2: How does analytics help facilitate carbon trading?

Carbon trading is the process of purchasing and selling credits that allow businesses some leeway to emit carbon dioxide or other greenhouse gases within certain limits.

Leveraging data and analytics to make carbon trading easier in operations, policies and systems, is important to make a positive contribution to climate change and becoming carbon neutral. For enterprises focusing on carbon trading, carbon market activity is driven in two forms. The first is through Compliance carbon markets (CCMs) which are government-led efforts to regulate emissions through cap-and-trade schemes. The second is Voluntary carbon markets (VCMs), which is a nascent but expanding scheme that allows companies and individuals both to buy carbon credits that fund carbon neutralization projects. In both scenarios, enterprises require analytics to identify projects in sync with larger business goals.

Carbon prices are also subjected to significant volatility resulting from international politics and negotiations. When trading in carbon markets, businesses need to leverage sophisticated analytics to be on the right side of a price trend to avoid increasing expenses. Scenario forecasting is another area where analytics play a critical role by enabling users to understand risk exposure of carbon trades, helping them trade ahead of the curve. Anticipating trends and making decisions backed by data are some of the other key benefits too.

Question 3: The European Union focuses on a non-financial report from businesses after COP26. What are the parameters and approaches for enterprises to consider in this report?

The European Union focuses more on non-financial reports from businesses because sustainability risks, although accessed as non-financial or non-economic risks, turn to operational and financial risks eventually.

For instance, if an enterprise does not have the necessary human rights compliance or waste management strategies in place, it cannot report accurately on specific disclosure metrics. This non-compliance often leads to reputational loss and mutates into financial risk given its impact on the bottom line. It’s also the reason why in most enterprises, it’s the CFOs who are held accountable in this aspect.

With non-financial reports gaining importance, organizations must first track and measure their focus areas with the help of materiality analysis. Taking on this exercise helps illuminate areas of priority across the environment, social and governance.

Data is crucial here. Having the right data, at the right time provides enterprises the visibility into the current state of affairs, adherence or lack of it which then allows them to take necessary action.

For instance, if a business wishes to start its sustainability and ESG reporting journey, it must first gather data for its Scope 1 and Scope 2 emissions. Once collated, this data will be crucial in measuring present emission rates and forecast future emission rates based on historical performance. These insights help enterprises arrive at strategies to bring in more efficiency and achieve their net-zero goals.

Tune in to the complete AMA session here.

Question 4: How can chemical industries benchmark themselves based on the ESG performance?

Over the past three years, some of the major chemical companies lost shares amounting to as high as $80 billion. C&EN reported that chemical company shares ranking high in ESG indexes outperformed companies with low ESG ranking by 4.8% per year. This data suggests that ESG reporting and benchmarking are essential for any chemical company’s growth.

Enterprises such as BASF, Shell BP and LyondellBasell have programs in place to reduce their carbon footprint and plastic waste.

To get started on the ESG path, the initial focus for businesses should be to consolidate all relevant data scattered across spreadsheets and disparate systems. This allows businesses to conduct a materiality analysis to identify and rank critical issues in sync with organization and stakeholder expectations. Enterprises can either collaborate with internal teams or partner with vendors externally to create an ESG report compliant with various frameworks.

Sustainability data is vast and intimidating given its sheer volumes. There is significant effort required to transform this data into actionable insights. Cloud-driven solutions let businesses connect data from all sources, spreadsheets included, that help reduce manual efforts and increase efficiency by automating repetitive tasks. Further, layering this data with sophisticated analytics and visualization tools makes it possible to arrive at sound decisions backed by data and not instinct.

Question 5: What steps should organizations undertake if they are interested in reporting and forecasting for Scope 1 and 2 emissions?

An organization in its nascent stage of reporting and forecasting for Scope 1 and 2 emissions should start with measures to manage large volumes of data necessary for GHG inventory.

The next step would be to evaluate reduction targets based on Scope 1 and Scope 2 emissions after calculating activity and emission data. Executing this manually with spreadsheets is not only cumbersome but takes significant man hours. It also presents a high risk of data miscalculation and mishandling.

Eka’s cloud-driven ESG and Sustainability reporting solution addresses this by connecting Scope 1 and 2 emission data from disparate sources and then transforming it into clear visual representations that help users unearth critical insights. These insights allow an enterprise to identify risk and anticipate future emissions based on the past GHG inventory.

With the environment taking center stage, enterprises that embrace a holistic sustainable transformation across all aspects of business and leverage sophisticated cloud-driven sustainability and ESG solutions will stand a better chance of building a long-term, sustainable business for generations to come.

To learn about creating a sustainability report for your enterprise, click here.

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Analytics-first commodity management is possible with a platform approach

Did you know that analysts spend up to 90% of their time just doing data aggregation and normalization of data? (Source) Yes, even analysts aren’t immune to manual work, although there are ways to circumvent it. When it comes to commodity management deriving critical insights and actionable information is necessary to succeed in these challenging and constantly evolving markets.That said, without sophisticated analytics to convert that data to timely, relevant and actionable market and operational insights (i.e. early warnings of potential supply bottlenecks or inventory changes, timely identification of shifts in your intraday P&L, non-optimized physical assets and more), the flood of data arriving at your doorstep will overwhelm your resources.What’s stopping commodity management companies from harnessing the power of analytics?Challenges in data analytics in commodity management businesses

Data confusion

Commodity businesses might have a lot of data, but the question remains- is everyone in the business working on the same data? If there are different versions of data, there can be different versions of truth. It’s not hard to imagine why this would cause data confusion.

Example: According to a survey of over 100 medium to large manufacturers, 92% of companies use complex pricing structures and 100% of them manage pricing fully or partially in spreadsheets. Working with disparate spreadsheets can lead to inaccurate data, data duplication and old data usage.

Data delays

In this one case, slow and steady does not win the race. Real-time data provides minute-to-minute updates that can otherwise get missed. In commodity management businesses, real-time data is extremely valuable.

Example: The Russia-Ukraine conflict impacted the commodity business in a multitude of ways. If you are buying or selling commodities in Russia or Ukraine, this information will impact your business now. You cannot afford to wait days or weeks to analyze the impact of geopolitical instability, that is impacting commodity prices and accessibility in real-time.

Benefits of analytics-first platform approach to commodity management

Built on one source of data: The platform is built on one shared source of data – all the data your company needs to run its business. Every application has full access to all this data in real time, on demand, whenever you need it.

Reduced manual work and improved visibility: The power of one data source provides an accurate view of your business. Everyone uses the most recent data, so no analyses occur with outdated data. Everyone is analyzing the same data, so all departments are aligned. Days of effort are saved because the data is all integrated. That reconciliation process in the example above now takes just seconds, not days.

Reduced manual work and improved visibility: The power of one data source provides an accurate view of your business. Everyone uses the most recent data, so no analyses occur with outdated data. Everyone is analyzing the same data, so all departments are aligned. Days of effort are saved because the data is all integrated. That reconciliation process in the example above now takes just seconds, not days.

Looking for a platform-based solution that provides better analytics capabilities? With the Eka cloud platform, it’s possible to analyze operations and logistics, purchasing, potential trades and more in one go. Eliminate delays and manual processes and get the most value from your data today. Learn more about the powerful analytics in the Eka Cloud Platform for Commodity Management.

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Money matters: why bank connectivity is a boon for treasurers

Any good treasurer knows that the ball is always rolling. As an engaged treasurer, it’s essential to keep tabs on the company’s financial health anytime, anywhere. A treasurer’s scope of work includes cash visibility, cash management, liquidity, cash positioning, monitoring risks, provisioning for working capital requirements and more. Keeping an eye on and monitoring all the financial activity isn’t an easy task. With the help of seamless bank connectivity, treasurers can get an accurate picture of finances.

Bank connectivity is an everyday problem that all sizes of companies face. Some see it as a hassle, while for others it’s taking time away from more important strategic tasks. Whether or not a business uses the jargon, they are probably employing some form of ‘bank connectivity’. That lack of seamless connectivity with banks is like a pebble in the shoe, and somewhere along the walk, it will start hurting.

Signs that your business needs to re-think bank connectivity

Manual data entry

It’s common knowledge that manual processes can be tedious and time-consuming. For over a decade, computer-driven solutions have been replacing manual tasks, yet it’s surprising that a sizeable number of businesses still haven’t made the switch. Accessing account statements or processing cheques manually is not an optimal use of time for treasury teams. It adds to their load for no reason, time which could be utilized in strategic initiatives.This could be better used in strategic initiatives to grow the firm.

Limited visibility

Between managing accounts, data entry and checking balances; cash visibility goes for a toss. Other treasury management efforts like cash forecasting or cash positioning require the team to burn the midnight oil. Manually processing data can lead to error-prone or outdated data, which doesn’t give the true picture of the company’s balances. Surely, there is a better way to do things?

Unsecure data sharing

Keeping data safe is a priority for any business. As the money center of the business, any treasury related activity needs safeguarding. Encrypting data transfers is key to keeping fraudulent activities at bay. Treasury-specific threats include payment fraud, supplier fraud, business email compromise, imposter fraud, rogue treasurers, ransomware, account takeover, and fake invoices and purchase orders.

Complicated bank account structures

Generally, businesses have multiple bank accounts through which transactions are made. Given an enterprise’s operations in different geographies, payments are often in different currencies and follow different regulations. The mode of business transaction may also differ as they could be over a wire transfer, cash, cheque or any other way.

Although there are different options available in the market, a cloud-driven Treasury Management System (TMS) solution is the best bet for a treasury team to unify critical transactional data with seamless bank connectivity.

Benefits of a cloud-driven bank connectivity capability for treasurers

Save time with automation

Opting for an appropriate bank connectivity tool can help the treasury department save precious time and focus on strategic decision making. For instance, accessing 30 banks on various banking platforms at least thrice a week can take up half a working day with multiple log-ins, downloads and consolidation of all the data into one place. Ideally, all this work should be automated simply because it can be. There is no real need for human intervention.

Real-time visibility into company’s financial health

Since data is automated and it’s also possible to run analysis and get reports via the cloud solution, it becomes easier to see the bigger picture of a company’s financial health. This critical data is necessary to forge ahead in terms of cash forecasting, liquidity management, cash visibility and more.

Data is protected

By automating data transfers, fraudulent activity becomes unlikely. Since the data isn’t collected manually, it reduces the chance of hampering the company’s payment data before sending it to the bank partners.

Managing complexities

Juggling 19 banks, 100 accounts, 20 currencies, 22 entities in 30 currencies for financial services just became a cinch. Since all banks are able to ‘talk to’ each other regardless of mode, regulation, channel, format- treasurers don’t have to be overburdened with these processes. With multi-bank connectivity, these complexities can be managed with ease.

As a treasurer, it’s essential to smoothen processes wherever possible so that time can be dedicated towards core treasury activities. Though bank connectivity might seem like a small tool, it can prove to be extremely helpful in the long run, especially when it comes to reducing manual work needed from treasury teams. For better global bank connectivity, it is possible to switch to a cloud-based bank connectivity solution that will provide better performance and security for your organization. Watch this space for more

[eka-software-solutions]

Trading in the time of war:

What commodity businesses can expect from the ongoing disruption in trading and risk management caused by the Russia-Ukraine conflict

The ongoing Russia-Ukraine conflict left the world stunned. The swift ‘military operation’ sent shockwaves through the markets with stocks tripping and oil prices soaring. This just goes to show how in geopolitics, things can change at a moment’s notice.

Political uncertainty and volatility affect economic activity. This means the conflict will have the double-impact of slowing economic activity and rising commodity prices, the latter is already in motion. In this blog, we underline the developing situation and how commodity businesses can protect themselves in the ensuing market mayhem.

The effect on commodity businesses:

Brent crude oil soars past $100/a barrel

Global stock markets crashed

Russia, a significant player in energy markets, reduces crucial natural gas exports resulting in spikes and higher energy prices throughout Europe

Upcoming grain shortage as Ukraine and Russia are the world’s largest suppliers of wheat and corn

Sanctions on Russia increasing by the day, freezing its assets, halting its banks’ access to European financial markets

Constant changes and disruptions on an hour-to-hour basis

Disruptions have become a norm and occurring at a higher frequency than ever before. A singular event can shake up the entire market as we know it, and that’s just on a regular day. That said, is it possible for commodity businesses to protect themselves from the speed at which market changes when hit with such geopolitical events or disruptions at large?

Absorbing disruptive events to effectively handle trading and risk management will require businesses to gain timely, relevant and actionable market and operational insights across their entire supply chain. This will include mapping early warnings of potential supply bottlenecks, inventory changes, timely identification of shifts in intraday P&L, non-optimized physical assets and such.

Without sophisticated cloud solutions, managing the flood of data arriving at your doorstep could overwhelm resources. Going by the speed at which markets are moving, manually consolidating this information could result in commercial decisions based on data of increasing vintage.

The best bet to stay on top of market disruptions is digitalization. Forward looking companies that invested in the cloud are in a better position to consolidate relevant data on time, analyze, predict, and make better decisions to manage disruptions.

Here’s how commodity businesses can manage disruptions:

1. Analyzing risk better with accurate hedging:

Commodity prices have gone berserk due to conflict in the black sea region. To make spur-of-the-moment decisions, businesses shouldn’t rely on their gut, but on data.

Here’s a scenario: Traders need global insights and information, and the sources of data and information are virtually limitless. Conventionally, when hedging derivatives, businesses would earlier manually look at fluctuating prices on spreadsheets. This is a tedious and time-consuming task. Markets are nervous, and everyone’s on the edge watching frequent intraday price movements of 10-15%. In fast moving markets, fluctuating prices need to be analyzed at a granular level, and with higher frequency – it isn’t something you can accomplish via legacy systems or spreadsheets for that matter.

Cloud solutions not only let you connect necessary data from external price sources, but also disparate systems and spreadsheets, and it’s an instant connection in most cases. Combined with analytics with built-in commodity specific nuances, you gain accelerated insights from huge data sets stemming from multiple systems and data sources – allowing the earliest possible identification of market moves, emergent opportunities and impending risks.

2. Forecast better with simulations:

In war, there is no telling how markets will perform without analyzing historical data. You want to look at how markets or the company’s portfolio performed last time there was a conflict of this level. You want to simulate ‘what-if’ scenarios on the current position to understand both best- and worst-case scenarios – and then prepare for the worst-case.

Increasingly, analysts relying on spreadsheets are realizing that they are barely able to keep up with frequent shifts in markets. Yes, simulations and what-if scenarios can also be baked into a spreadsheet. Let’s remember though, these involve complicated calculations and manually updating data is always prone to human error – nobody wants to get it wrong, especially in situations like this.

Here’s a scenario: Suppose tomorrow the price of crude oil is increased by 10%, or if the war ends in three months, prices of commodities such as grain or crude oil will be 50% higher, businesses with incorrect predictions will suffer a loss on a significant chunk of their portfolio. Eka’s Position and Mark-to-market solution not only connect to all disparate data sources -external and internal – and consolidated relevant data so you have that one true picture into your position, but it also lets you execute scenario-based analysis at the click of a button on that data.

3. Make critical business pivots faster with configurable solutions:

Being able to quickly pivot and create new business entities is essential for commodities businesses.

Here’s a scenario: Turkey and Egypt are the biggest wheat importers. Suppose an agriculture firm based out of Egypt is used to bulk of its imports coming from Russia. With sanctions in place, importing from Russia will not be an option for a while. Now, the business needs to quickly pivot and identify new regions to procure grains from – it could be Brazil or even Australia considering the latter’s bumper crop year. This will involve adding region specific rules, shipment routes, vendors and so much more. You need a solution that allows you the flexibility to add all this to your existing tech infrastructure so that you don’t resort to using spreadsheets. Investing in a point solution will not work in the longer run.

This is where platform-driven cloud solutions by Eka can help. Not only are the solutions rich in functional depth, cutting across multiple asset classes, but it’s also flexible and designed to enable businesses to add more users, geographies and more and not wait for months to get up and running.

Conclusion

Events such as the Russia-Ukraine conflict have the potential to send markets over the edge and commodity businesses need to be as quick as lightning to keep up. Businesses that invest in building resilience into their operations, like those provided by platform driven cloud solutions not only stand to gain from speed but also from the opportunity to make critical pivots necessary at the speed of markets.

[eka-software-solutions]

How can the metals and mining industry streamline direct material procurement?

Direct material procurement is complicated, especially for the metals and mining industry. Mining companies often deal with fluctuating prices and intense competition in addition to being highly capital intensive. The involvement of multiple stakeholders as well as the presence of complex  material specifications add to the challenge.

Managing  supplier collaboration is further complicated due to inefficient collaboration and manual reconciliations. Both suppliers and buyers find themselves wasting precious hours interacting over emails, phone calls, and messages. Since most companies still work with siloed information in different processes across multiple systems, there is a lack of transparency. Manual status updates bring in errors and latency leading to incorrect decisions.

A global metal company involved in mining, exploration, smelting and metals recycling that we worked with is a great case in point. The company’s manual processes meant buyers were spending 15-20% of their time negotiating, setting prices, and answering queries on payments, schedules, invoices, shipments, etc. taking time away from exploring new suppliers and opportunities. Manual processes also delayed service requests, order requests, invoicing, shipments, and settlements.

Their suppliers used email for all operational activities such as providing contract details, GMR summaries, GMR details, assay details, and payment and invoice information. So, the company had to deal with data from 200,000 emails from business partners each year, often with errors. Assay exchange was managed manually too. The entire system was inefficient, time consuming and error prone.

Unfortunately, this is a fairly typical scenario where sourcing materials in concerned in the metals and mining industry.

Finding an intelligent solution

Addressing the challenges of managing a complex purchase process such as sourcing of direct materials for metals and mining industries requires a digital transformation of the sourcing and procurement process. An intelligent cloud-based e-sourcing solution can drastically simplify supplier collaboration, optimize purchase orders, management of tolling agreements, and simplify the weighing and sampling processes. Some considerations while choosing a solution:

1. Cloud-based and self service: Given that suppliers are generally geographically dispersed, a cloud-based platform enables suppliers to update data instantly from multiple locations using multiple devices in real time. Also, a simple and intuitive interface is key to enable a smooth supplier registration process and hassle-free data updation on a day-to-day basis.

2. Tailored for industry and application Given the complexities related to direct material procurement, the solution be tailored to needs of the industry. In the case of the metals and mining industry, for example, the ability to capture the components of concentrates as well as their quality and pricing methodologies is important. Similarly, the solution must account for weighing and sampling to determine the pricing based on the quality of the samples as compared of what contract. Assaying is another key process to incorporate – both identifying the components and impurities within the concentrates as well as third party validations in case of supplier-buyer disagreements.

3.  Ease of configuration and integration

The solution must allow for easy customization and configuration of new processes. Ease of integration with ERPs and open APIs to integrate with other systems like D365, Infor, NetSuite, EPICOR can help achieve truly seamless communication.

4.  Reporting capabilities for better visibility

Easily configurable dashboards for real time insights into processes and performance can be extremely valuable. Proactive reporting and analysis can enable deeper insights into the supplier performance and status of the contracts and shipments. Getting a 360-degree view of the purchase orders and the suppliers can offer powerful insights on supplier performance, ratings etc.

Digitalization brings apparent benefits

We’ve found that digitalization can typically bring savings of approximately 7.5% for the procurement department. By enabling suppliers to update information independently, transactional processing cost can reduce by up to 60%. Automation of accounts payables can reduce the team’s workload by as much as 30%. In addition, an intelligent solution can help optimize maverick spends, reducing spending by about 18%.

In the case of the global metal company that we referenced earlier, adopting an intelligent solution has enabled:

Greater efficiency: By enabling real-time analysis, calculation and publishing of price information, the solution helps address some inherent inefficiencies that exist with large, complex pricing strategies.

Autonomy for business partners: Business partners can update, upload or view documents and transaction histories (orders and balances). They can also conduct negotiations online, making it easier for them to do business with the company.

Faster communication: Since automation of processes decreases time spent communicating with suppliers, it eliminates the latency of information sharing and speeds up the entire process.

Ability to prioritize high value activities: Rather than chasing down information through multiple emails and phone calls, teams can focus on higher value activities such as evaluating new suppliers, better serving existing suppliers, and improving contracts.

Real-time collaboration: Since the company and its suppliers have a single, shared view of information, including alerts and notifications when disruptions occur, inter-company interactions are simplified. They can negotiate in real time, working through contracts and pricing instantly instead of waiting hours or days for return phone calls or emails.

Sourcing and procuring direct material is intrinsically a complex process, especially in metals and mining, given the specific nuances of operating in these industries. An intelligent solution that can provide a 360-degree insights, connect data, and automate manual processes for a timely and unified view is valuable.

[eka-software-solutions]

Cash visibility: Emerging technology trends for 2022 and beyond

Cash management is one of the core functions of treasury. In simple terms, it means the process of collecting and managing cash flows to ensure optimum liquidity and maximized returns for business.

However, many organizations are yet to comprehend its significance due to which their treasuries fail to benefit from effective cash management. The reasons could be varied: poor understanding of cash conversion cycle, ineffective and disjointed banking structures, lack of global cash visibility and such. Improving cash visibility is perhaps one of the top-most priorities for treasurers today. More so, with the crisis following the pandemic, when organizations witnessed their cash resources getting hit hard. As market liquidity weakened, it became more a question of survival with only internally generated cash.

As organizations chart their path to recovery post pandemic, following a set of best practices (for both processes and technology) that ensure prudent cash/liquidity management, is treasury’s prime agenda in 2022.

What are the top tech trends in treasury digitization we see emerging this year

Treasuries need a single point of visibility over their global cash position to be able to make judicious financial decisions. A 360-degree, transparent cash visibility will lead to accurate and reliable cash forecasting, quick reporting and optimal working capital utilization. Though it’s a necessity, it’s not easily accomplished and remains an ongoing challenge for most treasurers worldwide. That said, treasurers today have more access to some of the best technology available to mitigate these challenges.

Treasury digitization

A. Cash management processes – for better cash visibility

Treasury digitalization is key to opening up a plethora of opportunities for treasurers.

Traditionally, treasurers faced significant challenges across tedious and manual processes, limited cash visibility, compromised security, non-integrated systems and departments – stumbling blocks that can be addressed successfully by digitalization. Businesses that empower themselves with cloud-driven, centralized and holistic solutions, stand to gain better visibility and control over cash resources.

While the extent of digitizing cash management function will depend upon the organization’s size and degree of treasury centralization, here are few of the top emerging technology trends for automation of three most important sub functions in cash management:

1. Cash flow forecasting

Cash flow forecasting is one of the most essential treasury processes. Accurate forecasts help accelerate growth and improve the bottom line by enabling treasurers to make sound, strategic financial and investment decisions. Additionally, with the high volume of global transactions/payments, it’s necessary to have a robust automated cash flow forecasting tool that provides treasurers with real-time and an accurate, single view of cash on demand.

Implementing Artificial Intelligence (AI): AI has revolutionized cash flow forecasting and cash visibility in turn. Several aspects of AI-driven technologies are being leveraged in platforms to facilitate intuitive interactions with data. At the forefront are Machine Learning (ML) models that leverage historical data to predict future cash flows. One of its main components is finding an appropriate ML algorithm with the lowest probability of error out of many available for instance: ARIMA, CNN-QR, Deep-AR, ETS, NPTS, Prophet and such. For cash forecasting, the process begins with entering historical data into the model, grouping of inflows and outflows at a more granular level and investigating data outliers. Models are trained via algorithms that apply rules and run the tests. Finally, model results (forecasts) are compared with the actual manual results, to test its efficacy.

2. Bank Reconciliation

Bank reconciliation is an indispensable financial control tool that not only highlights fraudulent activities but also helps ensure that the cash shown in the company’s ledger is actually available in the bank account. For treasurers using spreadsheets for bank reconciliation, it is an arduous task, with a low probability of 100% accuracy considering the volumes of bank accounts and types, multiple branches/payment types and complexities/time zones/disconnected systems/no real-time information.

Implementing Robotic Process Automation (RPA) – Spreadsheet macros are limited in capability as they neither offer scalability nor end-to-end straight through processing. Juxtapose this with RPA that leverage an intelligent document processing solution with inbuilt cognitive capabilities such as OCR, RPA, and AI. These technologies are built to analyze large volumes of data and automate repetitive tasks accurately with zero errors. Essentially, an RPA works by extracting relevant documents and then matches data at a transaction level to identify mismatches or discrepancies. It then investigates the reconciling items and fixes errors. It results in speed, accuracy and better cash visibility for treasurers on a real-time basis.

3. Bank Connectivity and Cash/Bank Balance Reporting

Accessing multiple bank accounts for geographically dispersed entities is a tiresome and manual process for treasurers. Not having automated real time bank connectivity could mean loss of 360-degree cash visibility. Also, not having clean cash visibility could mean delayed or inaccurate cash reporting, both to internal and external stakeholders.

Implementing Application programming interface (API’s) – APIs essentially allow two computer applications to talk to each other over a network, using a common language. With APIs, multiple banks can be connected in real time with treasury’s ERP/TMS system, thus facilitating 360-degree connectivity and fast data exchange.

APIs not only help convert batch processing into real-time processing but can also bring in huge benefits in terms of – enhanced speed, reduction in human errors, scalability to manage large volumes, real-time alerts and more. Treasurers are empowered to take quick cash management decisions due to better cash visibility with receipts/payment data available in real-time. With APIs, banks can also feed real-time key insights and analytics into ERP systems, thereby eliminating manual data analysis for treasurers.

With the adoption of PSD2 in Europe, APIs will play a significant role in future too. APIs can also convert weekly/monthly reporting into real-time reporting. While BAI or MT reporting forces treasurers to search bank portals for continuous updates, APIs can offer instant reporting on Ebam processes and payments.

B. Cloud computing and no-code and low-code

Another key emerging technology trend in 2022 are no-code and low-code platforms. Low code platforms enable users to design and create applications with little to no code, allowing non-developers to build their own business applications. Cloud computing helped accelerate the recent low-code explosion. Treasurers will now no longer only recommend solutions, but be the ones developing them as their business requirements evolve.

Forrester Research predicts that in 2021, 75% of application development would be on low-code platforms and in 2022, there will be a 15% rise in the low code market. Cloud computing seems to be the perfect complement to low-code development. While low code is expected to provide enhanced productivity, cost savings, and quicker development, cloud computing essentially delivers similar benefits for deployment, especially for virtual teams. Cloud computing and low code go hand in hand to provide both agility and scalability. A fast-growing treasury must include both cloud and low code in its future technology strategy.

C. Real time cash flow dashboard

One of the advanced tools available to treasurers today is a real time customizable cash flow dashboard. The inbuilt DIY capability allows treasurers to derive key business insights by creating intuitive visualizations on their own, with interactive feed/reports – thus, enabling real time cash visibility.

Conclusion

Implementing suitable technology to empower treasury could be a complete game changer for an organization. Successfully harnessing the power of API, AI, RPA, Cloud Computing, No-Code, Low-Code, DIY and customizable dashboards could really prove to be the step forward needed in the direction of enabling real time cash visibility for treasurers. It would also promote agile and fast decision making, thereby enabling treasurers keep up as the expectations from their role evolves.

[eka-software-solutions]

9 Questions to help find the one right CTRM solution

So, you’ve decided to overhaul or upgrade your CTRM solution. Your previous solution served you well, but there’s something more that you need now. Determining what this “more” is could mean the difference between a great commodity trading and risk management software and one that doesn’t fit the bill.

If you do a web search for CTRM software vendors, you’ll find enough options to make your head spin. There are plenty of options and selecting the right vendor for CTRM software solutions can be a tough choice. The wrong choice could lead to additional costs for your company, worse you will be back to searching for a new vendor soon enough.

Fret not, we’re here to assist you with identifying key differentiators that will ultimately help you choose the right CTRM solution. We’ll find the needle in the haystack of commodity trading risk management platforms. Answering these 9 questions will help you find your gem!

1. What exactly do I need?  

Vendors use the term CM and CTRM interchangeably. That’s why when looking for a commodity trading risk management software it’s important to stay vigilant. Defining what your need is can help you shortlist the right vendors.

Example: If your business needs activities such as procurement, producer relations/communications, processing/ transformation, recipe management, selling and pricing/fixation; you’ve to find a software solution vendor who covers all these requirements.

2. Why do I need it?

List out the cons of your current vendor in relation to the CTRM platform. This will help you understand ‘fixes’ and you’ll be able to pin-point why the current vendor doesn’t work for your requirements anymore.

Example: Imagine your current vendor delays bug fixes, fails to adapt to the latest real-time technology trends or doesn’t follow through with their commitment. This means that your key differentiator is product support. Make sure to look for a CTRM software vendor with a good reputation and track record of successful implementations in your market(s).

3. What are my tech mandates?

Does your company have any tech mandates that need to be followed? If so, then the vendor you bring on needs to be in compliance with them as well.

Example: If you’re looking for a web or cloud delivery for your risk management solution platform, then that would filter out CTRM software vendors that don’t provide a cloud-driven CTRM solution.

4. Which commodities am I looking at?

Some commodity trading companies trade with a single commodity while others deal with multiple. If it’s the latter, it is ideal to choose a vendor that provides one solution to handle multiple commodities or asset classes. Sometimes, even a single commodity requires a complex CTRM solution.

Example: Trading in a soft commodity like cotton needs a higher capability system. The reason for this is that cotton has more than twelve distinct quality characteristics that impact its pricing. One would need a commodity trading system with the flexibility to capture, track and value cotton transactions accurately and seamlessly.

5. What markets am I operating in?

Choosing a potential CTRM solution is also market dependent.

Example: If your business has operations in multiple countries, chances are that it requires knowledge of currency conversions, unit conversions and multiple languages. If so, your new commodity trading and risk management system may need to address specific reporting or documentation requirements within those countries.

6. What are my critical function requirements?

Figure out the critical and differentiating capabilities that are needed by your business in a new CTRM solution.

Example: Historically, tools for CTRM did not have great analytic capabilities or decision-making tools. However, with technological advancements in commodities markets, vendors are now providing improved and sophisticated analytics capabilities. You need to look for a CTRM solution that comes with commodity specific nuances seeded into its architecture, so you do not end up using spreadsheets for cumbersome manual calculations.

7. What systems does it need to integrate with?

Don’t be under the assumption that all CTRM systems are built in a way to seamlessly integrate with your existing tech infrastructure. It is critical to identify the depth and types of data that need to be integrated with the new system.

Example: Integrating with an ERP system can be extremely complex depending on the nature of the information that needs to pass from the CTRM solution or ERP solution to the CTRM system. Look for solution providers that have a successful track record of integrating data from various systems and not just an ERP.

8. Which should I choose - cloud or legacy systems?

The right approach depends on the tech mandates in your organization. Traditional solutions are given preference in industries that are prone to breaches in cyber security and those that are hesitant in allowing proprietary data and information to pass outside their firewalls.

Cloud-native solutions, on the other hand, cost you a fraction of traditional on-premise or cloud-hosted solutions, can be implemented faster and remotely seamlessly, and come with the advantage of near-limitless scalability giving you a better ROI. In a cloud CTRM solution, one can opt for hosted or multi-tenanted.

9. Which is better - Traditional monolithic solutions or modular, platform-driven solutions?

Traditional CTRM systems incur higher costs in the form of maintenance and upgrade. In comparison, a modern platform CTRM solution can provide higher levels of scalability and agility, at a much lower initial cost.

Example: Eka provides modular and nimble yet powerful CTRM solutions in the form of applications. In essence, with Eka you only pay for what you need. No need to implement features that come locked in with monolithic systems. If your needs change in the future, adding more capabilities is simple because the Eka CTRM solution comes seeded with years of deep domain knowledge in the form of pre-built workflows and connectors that makes it easier and faster to implement.

Conclusion

Analyzing the above capabilities and characteristics against the available pool of CTRM software vendors can help you make the right decision! So, choose wisely.

[eka-software-solutions]

What you did not know about carbon accounting: IPCC’s Sixth Assessment Report confirmed that global temperatures may rise beyond 1.5˚C, unless there is a serious, collective intent to reduce GHG emissions. Nations and organizations are being called upon to adapt sustainable practices that can positively impact the environment. Carbon accounting in this context will be crucial.

1. What is carbon accounting? 

Carbon accounting helps organizations measure their greenhouse gas emissions, which enables them to meet emission goals and gain a better understanding of their impact on the environment. It requires companies to set goals within a framework of three scopes:

Scope 1: Emissions from activities like fuel combustion in factories.

Scope 2: Emissions from purchased energy for heating, cooling, electricity.

Scope 3: Emissions from operations like purchasing goods or transportation. As per GHG Protocol, much of corporate emissions flow from Scope 3 sources, making it a key area of focus for carbon accounting.

2. Why is carbon accounting important?

Beyond estimating emissions, carbon accounting or GHG accounting offers several business benefits –

Cost-saving

Just by measuring their environmental performance, enterprises stand to improve on cost savings. It helps minimize investors’ scrutiny and bring in more resilient investments. Oakdene Hollins for Defra’s research states that the UK saved £18bn on water reduction, £4bn on energy use, and £1bn on water use by just measuring its usage.

Talent recruitment and retention

According to Fast Company, millennials are more sustainable conscious with:

40% willing to take a significant pay cut to work for an environmentally responsible company

70% wish to work at a company with a robust environmental agenda

30% noted that they left a job due to the company’s lack of a sustainability plan

Companies with a robust environmental agenda help attract and retain talent and ensure employees are motivated to be around for the long haul.

Meeting regulatory compliance

Organizations must follow environmental regulations imposed by governments or face penalties in the form of exorbitant fines or negative publicity. Businesses committed to maintaining transparency in their operations and demonstrating it through necessary carbon or GHG reporting have a better chance of gaining faster approvals and certifications that enable faster growth.

Enabling business growth

Professional services firm WYG reported that marketing and sales opportunities motivate enterprises to enhance their carbon accounting. This is because enterprises create market differentiation that helps attract more customers. Even investors demanding detailed environmental information in annual reports are inclined to those companies with detailed carbon accounting reports.

3. What are the corporate carbon accounting challenges?

Enterprises are focusing more on carbon accounting in response to climate change and global warming. This shift is driven by worldwide demand and value creation consideration. However, businesses face roadblocks along the way. We have curated some of the common challenges faced by corporates.

Inconsistent data

Data enables organizations to understand their emissions and curb them, provided there is uniformity in it. This data sits in multiple sources such as processed emissions, purchased electricity and more. Gathering this emission data manually is not only cumbersome, but error prone and lacks standardization. Without a sophisticated reporting solution, companies will not be able to extract, standardize and present the data.

Complicated regulatory frameworks

Reporting standards help increase decision-usefulness of reports. That said, sustainability reporting frameworks are complex given the unique purpose and multiple frameworks that appear confusing and conflicting. Compounding the challenge are varying metrics, definitions, and priorities.

Inaccurate reporting and analysis

Most companies are fairly accurate about emissions they directly produce (Scope 1 of carbon accounting), but accuracy reduces when they account for emissions from supply chain or sold goods (Scope 3 of carbon accounting). This means most carbon reporting goes wrong due to a long list of assumptions. The Weather Channel suggests in the USA, with strong regulations on emission reporting, oil and gas companies tend to underreport their methane emissions. This compounds the issue as we get a false picture of their carbon impact.

4. How can corporate carbon accounting challenges be addressed? 

Carbon offsetting

Carbon accounting helps businesses understand their impact on the environment and make informed decisions to reduce it. Enterprises can identify ways to either limit their carbon emissions or offset it with a clearer picture. Carbon offset schemes let organizations invest in critical environmental projects worldwide. This allows companies to balance their carbon footprints.

ESG benchmarking, ratings & risk score

ESG benchmarking helps companies compare their ESG performance against their competitors within an industry. It helps gather crucial insights and improve plans to accomplish net-zero status. ESG ratings help a company measure its exposure to long-term environmental, social, and governance risks that pose a financial risk. The ESG Risk Ratings are categorized across five risk levels: negligible (0-10), low (10-20), medium (20-30), high (30-40), and severe (40+). Together, they reinforce climate change commitments while adhering to industry standards.

Better reporting

To achieve carbon neutral goals, companies must identify relevant frameworks and adhere to them. Two approaches that facilitate businesses to understand their carbon emissions are:

Production-based accounting

Consumption-based accounting

Check flows of greenhouse gases such as carbon dioxide (CO2) and methane (CH4) in specific areas.

Helps assign carbon flows associated with various products or services like electricity, timber, to where people are using these products.

Besides frameworks, businesses need to focus on getting the right reporting solution that helps them represent data accurately and implement faster decisions.

To help enterprises achieve their goal towards carbon neutrality, Eka offers businesses a comprehensive cloud-driven ESG and Sustainability Reporting solution which works with pre-built frameworks like GRI, CDP, SASB, IR, SERC, SDG, BRSR, and others. Our solution will also help you increase your efficiency to achieve your net-zero goals. Visit our solution page to know more

[eka-software-solutions]

Global cash visibility becomes more critical than ever to build a real-time treasury

It goes without saying that clean, accurate and real-time data that helps treasurers gain 360 degrees’ cash visibility should be a top priority towards achieving a real-time efficient treasury.Going forward:

The old adage ‘Cash is king’ is probably losing its significance fast in the post-pandemic world as treasurers worldwide scramble to gain a clean, transparent and more accurate understanding of their cash positions globally. Undoubtedly, gaining ‘real time bottom up’ visibility of consolidated cash available in multiple bank accounts (across different geographies, currencies and organizational structures) is critical for efficient treasury cash management.

According to PwC Global Treasury Benchmarking Survey of treasurers, 26% of global cash is not visible to corporate treasury on a daily basis.

Quite often than not, treasurers are stuck with out-of-date, old cash positions leading to inaccurate forecasts, inefficient utilization of working capital, wrong hedging strategies and more.

End result – Loss of strategic opportunities for treasurer and a continuous cycle of short-sighted bad decisions at the CFO/Board level.

What’s stopping the treasures from having access to decision critical, real-time cash visibility?

Most organizations continue to function with decentralized treasuries operating on a disjointed ERP system model, with multiple banking relationships scattered across the globe.

Collating this huge volume of complex data and bringing it to a ‘unified point of reference’  with no standardized formats and limited third-party connectivity, is a highly arduous task for treasurers. In addition, overreliance on spreadsheets for manual forecasts and reporting means unwarranted consolidation errors and reconciliation delays.

End result – Inaccurate, incomplete data with severely compromised credibility and relevance.

What’s the actual need of the hour?

The immediate solution though appears to be technology, should ideally not be the first step.

To begin with, treasuries must focus on getting their organization’s internal processes in order. Moving from decentralized to centralized treasury in a phased manner is the need of the hour. Although there is no one size fits all approach to achieve phased centralization, it fundamentally starts from unifying critical treasury operations, processes and policies – the most critical one being cash and risk management.

Standardization and improved timeliness of underlying cash data will bring in huge benefits – real time global cash visibility, accurate cash flow forecasting and quick cash reporting due to real time bank reconciled cash position.

The second phase could focus on centralization of hedging, foreign exchange and interest rate risk management processes leading up to a fully centralized treasury.

The next step towards achieving global cash visibility can then focus on implementing a unified treasury management system which will help in:

Automation of several critical but repetitive operational tasks such as bank reconciliation, cash reporting and more, via Robotic process automation (RPA).

360 degrees interfacing with banks in real time via open API’s – including open banking API’s prevalent in Europe –  providing treasurers instant visibility into multiple accounts simultaneously. It will also help them drive intra-day reporting rather than cash positioning based on previous day reporting.

Predictive data analysis via algorithms driven by Artificial Intelligence (AI)/Machine Learning (ML) which will help with historical pattern identification necessary for accurate cash forecasting and payment anomaly detection.

Real-time dashboards capable of user defined enrichments for deriving key insights.

What new opportunities can open up for treasurers with real time cash visibility?

Access to real time cash visibility can be a real game changer as it helps empower treasurers with the freedom to explore strategic opportunities and improve ROI. Case in point:

Going forward:

To continue being a strategic advisor to the CFO and retain their seat at the table, especially as businesses strive to economically recover from the Covid-19 pandemic, it’s imperative that treasurers begin dealing with their limitations around cash visibility in a timely and phased manner.

It goes without saying that clean, accurate and real-time data that helps treasurers gain 360 degrees’ cash visibility should be a top priority towards achieving a real-time efficient treasury.

That said, going forward, knowing only global cash visibility in isolation will not be sufficient for treasurers to optimally mobilize and deploy cash resources. They will need a holistic picture with full visibility into the entire spectrum of working capital – banking credit lines, debt, foreign exchange, hedging, liquidity, payables and receivables which will only be possible when all the related treasury processes are centralized.

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Driving real time visibility and control for an agile treasury: Real time cash flow dashboard

As per GTreasury 2021 Cash Forecasting & Visibility Survey Report, the majority of treasurers are seeking global cash positions that can update on a real-time or intraday basis, but many report being stuck with weekly (or less frequent) updates. It becomes pertinent at this point to raise this important question:

As a treasurer, how often do you review your cash account and bank statements?

Does your organization have multiple geographical entities/bank accounts/business functions but no/limited visibility into cash position/forecast insights on a real-time basis?

If yes, it goes without saying that your business would have regularly suffered massive cash crunch(s), delayed supplier payments, misforecasted cash position etc., especially as Covid-19 pandemic eroded market liquidity very rapidly.

So, how were treasuries addressing the need to have real time cash/liquidity data so far?

Earlier, the treasurers widely used inefficient static dashboards/excel spreadsheets to assemble their cash flow positions – stitching together humongous data from multiple sources – nothing more than a garbled cash picture. Offering limited usage in studying historical/current cash trends, these tools were neither capable of advanced analytics nor could identify anomalies or variances on a real time basis. Unmistakably, a labor intensive & error prone process which completely disregarded the value of time-sensitivity of the cash position data.

Continuously updated in real-time, User customizable (DIY) cash flow dashboard

An embedded Business Intelligence dashboard displaying your business’ KPI’s related to cash flow, liquidity & working capital – in real time – with data imported from automated, real time cash reporting & forecasting systems – serving as a ‘single version of truth’ for all stakeholders.

Key features

Built in artificial intelligence of data mining with advanced analytics

User Customization supports a) multiple charting options b) Data slicing & dicing with custom user defined measures/calculated fields

DIY capability allows user to derive key business insights and a) create intuitive visualizations b) generate dynamic dashboards with interactive feed and reports

Cloud native technology: a) advantage of elasticity of cloud b) stateless c) multitenant model and d) quickly redirects traffic during low usage saving on costly downtimes

Machine-learning driven engine to identify anomalies, patterns, outliers & variances

360 degrees’ connectivity and integration with multiple internal/external data sources

Real time updates and alerts facilitates faster, more accurate decision making

Eliminates tedious manual error prone processes

Key performance indicators on a cash flow dashboard

Depending upon the nature and size of the business, an organization’s preferred KPI’s on their cash flow dashboard may vary. However, the most significant metrics would still be:

1. Net Consolidated Cash Position – Actual and Forecast:

It allows treasurers to have a headline view of consolidated cash position in a single base currency which can be drilled down further across products, geographies and currencies, both current and forecasts. They can view all the transactions (both inflows and outflows) impacting cash activity during a specific period of time. It also supports segmentation into activities: operating, investing and financing.

Overall, it helps in taking timely corrective measures to stop cash bleeding by:

2. Available Liquidity – Actual and Forecast:

During the pandemic when most of the organizations faced cash crush, having a real time view of available internal liquidity, in the form of cash reserves and working capital became imperative so that external liquidity can be quickly arranged. The real time forecasted position will help in identifying periods that may result in cash deficit uncovered by available sources of credit. Variance analysis between actual and forecast provides timely insights into factors/expenses needed to be controlled. Thus, enables business to maintain optimal liquidity at all times.

3. Working Capital Metrics – Cash Conversion Cycle, Accounts Receivables, Accounts Payables:

Tracking the cash conversion cycle is important for manufacturing companies facing significant delay in receiving payment from its customers which can in turn effect the payment cycle to its suppliers. Diligently monitoring CCC regularly can help in better control and management of company’s overall operations, A/R and A/R and credit control strategy.

4. External Debt, Financial Ratios:

Few of the other important indicators which will help in understanding current financial health better could be gross external debt, working capital limits/credit lines from banks available and utilized, financial ratios, covenant ratios etc. Inbuilt real time alerts and notifications about credit lines fully used, bank loan covenants breached, over leveraged position etc. can be very useful in taking timely corrective actions.

Conclusion

During the pandemic, treasuries having access to such a dashboard, got instant visibility of their consolidated current and projected cash/liquidity. The rapidly weakening market liquidity position made it extremely difficult for businesses to survive and stay afloat in the longer run. The dashboard empowered the treasurers to: quickly collect actionable KPI’s insights and adapt their cash & liquidity management strategy in time, through facilitating quick decision making at CFO/Board level.

It was during these difficult times that the true worth of a cash flow dashboard (which is easy to construct and user friendly) became sufficiently evident.

Thus, availability of real time, accurate cash/liquidity data has in fact become a necessity and not a luxury anymore, for an agile and intelligent treasury.

[eka-software-solutions]

The relevance of ESG in the post-pandemic world

One of the few positive impact of the pandemic has been that it gave the environment some respite. Reduced economic activity due to lockdowns led to global carbon emissions to plummet. Cities across the world experienced significantly improved air quality, reduced GHGs emission, lesser water pollution and noise.

A research report by OECD, energy-related emissions declined by 7%, agriculture-related environmental pressures by less (around 2%). The reduction in the use of non-metallic minerals, including construction materials, reached double digits.

However, as the world slowly gets back to gaining some sembleance of pre-pandemic era normalcy, the question remains can we sustain the positive impact we reached at the height of the pandemic in the world?

If anything, the pandemic demonstrated the potential for collective action and change when faced with a perceived emergency.

Post COP26 event in Glasgow, to address climate change, over 100 countries volunteered to slash methane emissions. Not to be left behind, private entities dived in too –

Jeff Bezos committed $2 billion to “restoring natural habitats and transforming food systems.”

The Rockefeller Foundation, the IKEA Foundation and the Bezos Earth Fund launched the Global Energy Alliance for People and the Planet to tackle access to renewable energy across Africa, Asia and Latin America during the next decade. The alliance will also include governments and world governing bodies such as the Asian Development Bank, the World Bank, Italy, the U.K. and Denmark. (Source: Axios: The major climate pledges made at COP26 so far).

More corporates are expected to follow suit in the coming year. That said, taking the pledge is one thing, and acting on it or is another.

If you can’t measure it, you can’t track it

For enterprises demonstrating their sustainability status will require reporting on several parameters. Some of the most fundamental areas where data needs to be captured are:

Environmental: air and water quality, levels of greenhouse gas emissions caused directly and indirectly by an organization

Social: company’s treatment of its employees, customers, partners, and society. This could include benefits such as a percentage of payroll expenses, annual charity contributions and such

Economic: specific economic indicators tracking the creation of value and reporting its distribution and reinvestment for future growth. For instance, research and development expenditures as a percentage of sales

Only when this information is in place is when the company can understand its baseline and set targets through programs and make projections towards accomplishing those targets.

Recording and collecting data for Sustainability is challenging

Collecting accurate, detailed, consistent, and comparable data is crucial, and this is where the challenge stems from. A tall order given the several interconnected factors – capturing data accurately across different business units and levels and then bringing it to one place for further reporting or analyses are some of the biggest challenges businesses face.

The quality of sustainability reporting data is determined by 4 factors – volume, velocity, variety, and veracity. Executing it manually means dedicating significant time and resources to ensure data is collected from all resources in all its shapes and sizes and then ensuring it is all transformed into one format. If you are an enterprise collecting emissions data from your suppliers, and you do not have the right tools, you will most likely receive this data in spreadsheets scattered in endless cells and rows, with each supplier following a different format of recording this data – there is yet to be any standardization in this area.

Lack of right infrastructure and processes has serious implications

Enterprises are conscious of the expectation to provide tangible and credible evidence of their sustainability status not just for the purpose of reputation but also because it makes business sense.

There have been several instances in the past where enterprises have faced penalties, devaluation of stock or had registrations revoked to conduct business in certain regions when they failed to comply with sustainability regulations. Less than ideal working conditions in factories in China and collapse of garment factories in Bangladesh led to serious repercussions for some of the biggest tech and fashion brands in the world, with stock value plummeting.

Building the right infrastructure

The increased pressure is leading chief sustainability and financial officers to look for ways to standardize relevant ESG data collection and reporting with robust solutions that will help them rise to the “big pledge” and measure performance against their sustainability goals.

Inaccurate or inadequate data collection negatively impacts the company. It leads to incorrect assessment of performance by key stakeholders – investors, rating agencies, communities, and suppliers all included.

Time spent on collecting inconsistent and inaccurate formats, validating them, and then further processing and reporting data, is considerably higher. At the same time, it takes a lot of effort to identify inaccuracies and correct them at a later stage.

One of the ways to accomplish sustainability goals will necessitate investments in the right area – particularly in a sophisticated ESG and Sustainability reporting solution that is designed to track an entire range of environmental, social, and governance-related data and report it in a way that is easy to understand for a variety of stakeholders.

A good ESG solution should go beyond the obvious and enable:

Data integration from multiple sources

Support to specific and varied sustainability functionalities

Communication and alerts for internal stakeholders

Easy and quick audit process

Data reporting data as per key reporting standards

Ability to scale with organization growth and ambitions

At Eka, we offer a cloud-driven Sustainability and ESG reporting solution that is highly configurable and enables companies across varied sectors to track, measure and report against relevant industry standards, regulations, and guidelines. The driven solution can be used as a stand-alone product or seamlessly integrated into the existing tech infrastructure that powers other critical business functions. If you need help in your Sustainability and ESG reporting, then reach out to us and speak with our Sustainability expert.

[eka-software-solutions]

Carbon X: Carbon neutrality or negativity – here’s how to achieve it

It might have taken Greta Thunberg to shake us up to climate change, but it sure didn’t take just COP26 to create more worldwide awareness of the limiting global temperature rise to 1.5° C.

Given how, countries, companies and individuals are driven to take strides in doing their bit towards combating climate change for a better world, here are a few broad steps on how to get started on the chosen path of Net Zero Emissions and further still – achieving Carbon Negativity.

To begin with, here is a quick understanding of the many terms and variants of climate action in circulation, so that one can use more accurate terminology when goal setting– across countries or companies largely-

Carbon neutrality - any CO2 released into the atmosphere from a company’s activities is balanced by an equivalent amount being removed over a specified period.

Carbon negative means that activity goes beyond achieving net-zero carbon emissions to create an environmental benefit by removing additional carbon dioxide from the atmosphere.

Climate positive is the same as Carbon Negative but is usually understood to include all GHG emissions and not just CO2.

One step at a time

Measuring and inventorying all your company’s emissions by Scope (1, 2 and 3), for CO2 and GHG emissions cannot be emphasised enough. Only when this information is in place is when the company is in a position to understand its baseline and set targets through climate sensitive programs and make projections towards accomplishing those targets.

Analyse data and build scenarios based on prospective programs for emissions reduction. This and the earlier step may require assistance from external agencies like consultants and/or carbon accountants if the company lacks internal expertise.

Set targets for the company based on the analysis and implement appropriate programs and operational changes.

Conduct stakeholder meetings and educational programs across the company for impact, recommendations, and action.

Operationalize systemic changes across the enterprise, this also includes the value chain. Without priming key stakeholders towards the impending change through an effective management approach, climate change is just an intent.

Standards for Carbon X

If your company wants to follow a standard and benefit from the guidance it provides, it can take up compliance with the world’s only independent standard for carbon neutrality i.e., ISO 14021.

Carbon offset examples

If carbon offsetting is on your mind, then investing in afforestation programs and renewable energy projects, is a good way to start. Buying carbon offsets to compensate for emissions made elsewhere or sequestration of carbon emitted in solid and dissolved forms are other options.

Pro-climate measures

There are several measures that businesses can adopt to further reduce their emissions. Here are a few –

Manufacturing products that do no emit CO2 at the end of their life, capturing and safe

Disposal of emissions captured at source such as effluents produced by the company

Using materials, infrastructure and methods that do not emit CO2 or GHGs

Back to the future

Given the current state of climate and the rate at which greenhouse effect continues to rise globally, the world needs more ambitious action than Net Zero Emissions. Businesses need to think beyond offsetting and sequestering carbon to spark a positive change.

Forward thinking companies such as Google, Bosch, Kickstarter, Angel Chang, EY, ITC and a few countries that are either carbon neutral or carbon negative are setting great examples on this front. They have paved the path and set examples, but it would take whole swaths of countries and a larger percentage of companies becoming carbon neutral or negative to impact the climate positively.

The urgency to mitigate the climate crisis is great enough to warrant it.