When you attend a treasury conference, there is always an overarching theme that they try to convey in the title, the keynote speech and in the sessions. What I have noticed during my 13 years working in corporate treasury, occasionally attending such conferences is that the theme is almost always treasury becoming more strategic in the organization. After attending these conferences, the cynic in me wonders if we’ll reach our higher strategic standing and move on to a new topic. But the practitioner in me thinks that we will continually work to make treasury run efficiently so that we have the information needed for a seat at the table of our company’s strategic discussions.
Here is a brief history of my experience to give you some context about the opinions I share. After studying and doing some work exchanges in France, Switzerland, and Belgium and seeing the exciting FX trading desk of a bank in Brussels, I decided to get an MBA. Given my international experience I attended Thunderbird School of Global Management and later started my career at NationsBank and worked in a small but growing Latin America Investment Banking team in Miami. We pitched clients throughout Latin America and worked on M&A advisory, private equity, bank debt and capital markets. It was a great experience but I really wanted to get into corporate treasury so I started at DIRECTV Latin America and then moved on to Citrix Systems, Inc.. After five years at Citrix and 13 years in South Florida, I took an opportunity to join Walmart’s Global Treasury team and moved to Bentonville, AR, which by the way is a beautiful area and nice place to live. After four years at Walmart, my Citrix colleagues asked me to return and I couldn’t refuse because I love the people and tech culture.
“When a treasury system is implemented, often the choice is to match it with the ERP system”
Experience Put into Practice
In sharing my experience at difference companies and industries, my point is that I have seen many different treasury operations from small to very large. I have seen processes run in spreadsheets, spreadsheets enhanced with coding, databases managed by the treasury team, installed specialty treasury systems, installed treasury systems that are part of the ERP and Software as a Service (SaaS) solutions. I have also seen companies with no bank connectivity, host-to-host connections to individual banks and connectivity through a Swift Service Bureau (SSB).
There are three main trends that I have seen in the corporate treasury technology space:
1) Smaller companies—$3billion in revenues or less—still use a lot of spreadsheets and team-specific databases to do treasury work.
2) Many companies are moving to treasury systems that are part of their ERP system
3) Reporting is a challenge no matter what kind of treasury systems are implemented.
Even though everyone agrees that manual spreadsheets are not efficient and pose risks of producing errors, many companies still use them. For smaller companies, the challenge is often in getting the budget when there are competing projects that have to be done for regulatory or reporting purposes. So for better or for worse, treasury teams usually have some work on spreadsheets that in many cases are enhanced with coding or macros. And recognizing the limitations of spreadsheets, treasury teams also often create their own databases.
When they do add third-party treasury systems, smaller companies sometimes add in pieces because it’s easier to justify small solutions for specific challenges. For example, Citrix and companies with investment portfolios will typically use investment management software to consolidate reporting, accounting, compliance and analytics across all of their managers. At Citrix we also use a SaaS treasury solution for our FX cash flow and balance sheet hedging programs for hedge accounting, mark-to-market, accounting entries and analysis.
Without an all-encompassing treasury system, treasury teams at smaller companies try to leverage whatever technology is available at low cost. For example, at Citrix we use one of our main bank partners to consolidate bank account balance information from 85 percent over our accounts around the world. Other banks report to our main bank via Swift MT940 messages and we are able to see all of these balances in our main bank’s portal.
Integrating Treasury with ERP
The other main trend that I have witnessed at companies of all sizes is that when a treasury system is implemented, often the choice is to match it with the ERP system. In other words, companies are choosing the treasury module of their ERP provider instead of using another system. Many of these companies were moving away from a so-called specialty treasury system to their ERP-specific treasury module. There are two primary reasons for this: companies want to reduce the number of interfaces to/from their ERP and the treasury-specific modules of the ERP systems have improved enough to equal or surpass the specialty systems. I will add that the decision is not always an easy one because this solution can be much more expensive to implement, especially compared to a SaaS solution.
The third main trend in treasury is that no matter what systems are in place, reporting is usually a challenge. Even companies with large treasury systems still have data in different places so they cannot rely on the reporting in their treasury system. Even if a company has a single treasury system with all of their data in one place, treasury systems do not specialize in reporting.
The challenges in reporting are obvious. Even though you have a large treasury system, you may have to extract data, combine it with others and do your own reporting in a spreadsheet or database. There are third-party solutions to pull together disparate data from various sources so that you can create more automated reporting but it’s an added expense.
Even if you manage to have all of your relevant data in one system, the reporting tools in that system may not be adequate. I don’t recall seeing a treasury system of any kind whose reporting I actually liked or that was flexible enough to do what we needed. I don’t blame the providers. Their value is in the treasury system itself and while they put a lot of resources into making reporting better, it’s not their first goal.
For treasury practitioners, our challenge of mixing the right technology with limited budgets will continue. The providers and their solutions will continue to improve and give us more choices. And the treasury conferences will continue in their themes of treasury becoming more strategic within the company.