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No More Excuses: Invest, Implement and Innovate

by Helen Sanders, Editor

The past two years have thrown up some popular themes in treasury: manage risk, preserve liquidity, reduce costs and increase efficiency. But there need to be more than platitudes and policy revisions to achieve this: treasurers also need the tools to turn goals into reality.

Lack of technology is a frequent complaint amongst treasurers, with both banks and software vendors often bearing the brunt of client criticism. But are these complaints fair? In very many cases, I would say not. There are plenty of reasons why the tools a treasurer needs to tackle the particular challenges s/he faces may not be required. It may be that the functionality genuinely does not exist. Ten years, or even five years ago, this may have been a valid complaint, particularly when working with smaller banks or vendors. Today, I continue to be surprised at the number of treasurers who are not really aware of what the banking solution, treasury management system (TMS) or enterprise resource planning tool (ERP) that is sitting on their desk can actually do, or what other capabilities may be available from their banks or vendors. Instead of functionality simply not being available, there are more likely reasons that the functionality a treasurer needs is not accessible:

i) The necessary technology does exist, but not at a cost that can be justified for the volumes involved or priority of the requirement;

ii) The TMS or ERP has not been upgraded regularly, so a company cannot take advantage of more recent functionality;

iii) There is a lack of training and familiarity in the TMS or ERP capabilities;

iv) Systems have not been integrated in a way that enables data to be transferred efficiently, completely and correctly;

v) Treasurers have not updated or revised their processes, so they are not using the technology they have in an optimum way.

The most significant technology challenge for treasurers today is to reduce the total cost of ownership of their IT portfolio, whilst responding to changing dynamics within the business.

More with less

These are all significant issues, but they point to an important challenge that treasurers face. Putting the time and investment into treasury and financial supply chain technology is not always easy, and having made a considerable upfront investment in systems, finding resource and budget on an ongoing basis is difficult to prioritise. Just as buying a car without learning to drive it, fuelling it or looking after it, however, will ultimately result in a shiny monstrosity sitting on the driveway, buying technology without investing in it is a lost opportunity. However, life has changed since the lottery win-scale technology investments of the past. Treasurers are obliged to ‘do more with less’ with their technology as Ken Dummitt, President, Corporations, SunGard outlines,

“The most significant technology challenge for treasurers today is to reduce the total cost of ownership of their IT portfolio, whilst responding to changing dynamics within the business. For example, treasurers are seeking to maximise access to liquidity, both internally and externally. This includes tapping into alternative means of financing and unlocking receivables. While the trend until 2008 was to rationalise banking relationships, often to a single global bank, this trend has now reversed, and companies are seeking to work efficiently with a diversified panel of banking partners.”

There are a number of important points here. Firstly, as the domain of treasury has spread beyond the ivory tower of a group treasury department, technology needs have also extended across the business to facilitate centralised management of exposures, cash management and funding requirements. Many treasurers I speak to bemoan their lack of ability to communicate information efficiently with business units; however, web-based tools that provide treasury transaction, request and reporting capabilities to business units have been available for ten years from some suppliers (try singing ‘e-Treasury’ to the tune of ‘YMCA’ – it’ll be in your head all day!). The difference today is that internal communication and centralised management of cash, funding and risk has now become a business imperative rather than simply a feature on a vendor’s price list. Paul Wheeler, Managing Director, Wallstreet Treasury, Wall Street Systems exemplifies,

“One of the key challenges that corporate treasurers are seeking to address is how to automate communication between subsidiaries and group treasury. While treasury may have achieved considerable automation within the department, the transaction process is only as efficient as the weakest point. This is the concept behind eCash, which is an easy to deploy tool for two-way communication between treasury and business units, including netting, deal or payment requests, reporting etc.”

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