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Top Ten Reasons Why A Treasury Management System Is Necessary for Treasury’s Success

Obtaining the right amount of funds in the right currency at the right time at the right after tax cost is the hallmark of a successful treasury function; however, success can be extremely difficult to achieve if Treasury only possess "hand tools" (i.e. spreadsheets,multiple bank web sites, emails, etc).

Besides, spending all of treasury’s scarce resources just processing transactions leaves little time left over to even know if “success” was achieved.

What follows is a somewhat humorous look at the top 10 reasons why a multi national company should acquire a more powerful set of liquidity and risk technologies like those offered by several bank and non bank treasury technology vendors.

1. Man is a tool using animal; treasury technology is a tool that allows more work to be accomplished.

2. Properly used treasury technology allows treasury and non treasury users to operate in 3 dimensions simultaneously managing profitability, liquidity and risk.

3. Improperly used technology allows a company the opportunity to make its mistakes faster.

4. Today’s technology (spreadsheets, emails, multiply bank web systems) does not play well together leading to operational risk (e.g. failure to complete, unintentional errors or even intentional errors often known as fraud). Technology can provide global “visibility” to reduce operational risk especially in highly complex organisations with many inputs and outputs.

5. Technology allows treasury to create metrics needed to control balances and process transactions. Metrics can be associated with the “four flows”:

a. Workflows
b. Cash flows
c. Information flows
d. Accounting flows

6. Liquidity (i.e. operational cash + financial cash flows) is too important to be left solely to treasury to manage; users in all parts of the company should use the same technology to mange their portion of the “four flows” and allow the company to match sources and uses of funds within given risk parameters.

7. The best technology allows treasury to compare plan, actual and forecasts results when asked
the following questions by the CFO:

a. Its 9AM - where in the world is my cash and in what currency?? (cash position)
b. It is 11AM – Do I invest or borrow? (liquidity management)
c. End of the day – Will I be over borrowed, over exposed or under invested next period and how will I know? (risk management and proper use of metrics)

8. Time is a scarce resource; good technology allows treasury to become both:
Efficient – do what I do today better to control today’s risks
Effective – accomplish tomorrow’s tasks, the ones I do not do today, to minimise tomorrow’s risks

9. A well trained treasury staff is the secret ingredient that makes any technology work better regardless of a vendor’s claims about the features contained in their offering. In other words, treasury technology is not concerned about how many banks accounts are in use or what balances are in them, but the smart treasury department is concerned.

10. The old adage; “measure twice and cut once” applies; double check your technology needs, then execute them well and do not be afraid to ask for help as long as the “ask” makes business sense.