By John Hintze
Treasury Strategies discusses ways to put treasury on the path to tech optimization.
As a treasury executive, do you occasionally ask yourself, “Why am I still using Excel after our company spent a fortune on technology to make our lives easier and more efficient?”
Probably. Upwards of 80 percent of firms responding to a recent Treasury Strategies survey said they continue to use Excel, despite having treasury management systems (TMS), and two thirds said they were planning to improve their treasury technology infrastructures. Using the ubiquitous spreadsheet program is a clear indication that a treasury department is insufficiently automated. Other signs include stacks of paper, too much time spent creating reports manually, a lack of automated controls, and an extensive effort to collect and compile data.
“You just don’t feel you’re enjoying the benefits of automation that you had hoped for when the treasury system was implemented,” said Jeff Diorio, managing director at Treasury Strategies, at the start of a webinar earlier this fall, titled, “Optimizing Your Treasury Technology Investment.”
Mr. Diorio noted several reasons why that may be the case, including the project having never reached completion because treasury’s attention was diverted elsewhere, or certain functions are missing because they weren’t yet available when the system was implemented. Or it could be that flawed planning may have resulted in an insufficient budget allocation.
And not all the reasons are negative. Treasury may want to expand use of the technology in areas such as forecasting or shared service centers. In addition, organizational changes stemming from strong growth, acquisitions or other factors can also result in gaps or complications that necessitate changes. Or treasury may simply want to more proactively address new regulations.
But when corporate treasury executives are dissatisfied with their technology solutions, seeking to optimize the existing technology is often preferable to replacing it, Mr. Diorio said. Many treasury departments may be pleased with their systems overall but find certain elements lacking. And replacing systems typically requires significant budget resources and time, when simply fixing, adjusting or augmenting elements of a system can solve the problem.
Optimizing treasury technology can take several forms, including completing functionality that was left unfinished the first time around, and redoing certain processes because they had changed, evolved or never worked especially well. Improving straight through processing (STP) is another route, affecting functions such as bank communications, interfacing with internal systems for payment requests, forecasting, and accounting. “Just a small change to increase automation can make huge changes in operational efficiency,” Mr. Diorio said. He added that a fourth optimization approach is the “bolt on,” when a treasury has good technology but seeks to kick it up a notch by adding functionality in areas such as bank account management, FBAR analysis and forecasting.
The numerous benefits to optimizing treasury systems include maximizing existing investments, improving treasury processes, better integrating with accounting or other internal systems, and fully realizing the company’s original automation goals. Elaine Filus, principal at Treasury Strategies, noted three main phases in the process to optimize treasury solutions. First is a review of existing systems, starting with a gap analysis to define “what’s broken and what could be improved.”
Interviews of staff in operations, accounting and other relevant areas should be conducted to identify the time-consuming tasks they must perform that indicate a technology shortfall. In addition, find out what demands are made of them that could be significantly eased with better functioning technology, and ask the company’s auditors where they see a need for better controls. Finally, what new requirements may arise in the foreseeable future?
“Once treasury has defined what’s missing or what it wants, we recommend creating a strong definition of the desired future state—what’s different or better about it, and in what specific ways,” Ms. Filus said. She added that the more specific treasury is in defining its objectives, the more effectively it can pursue the roadmap phase: defining solutions and creating a plan.
“Treasury needs to consider all aspects: Workflow, controls, the interfaces that might be involved, and the reporting it wants to do,” Ms. Filus said.