Published: January 01, 2000
Companies today have access to increasingly sophisticated banking technology, but all too often some of the most time saving functionalities these systems offer are overlooked and underutilised. Treasurers may feel that they do not have time to sit down and thoroughly understand the capabilities of their banking platforms – but these untapped tools can increase efficiency and convenience and thereby reduce the man-hours needed to carry out day-to-day treasury tasks.
It is widely acknowledged that transaction banking has become commoditised. In other words, the functionality and services that are offered by banks in this area are more or less the same across the industry. Any bank can provide its corporate clients with the ability to move funds, the ability to report on the movements of funds and the ability to provide investment opportunities.
Yet, with treasurers now having a more expanded role in the company, they find themselves with a range of responsibilities. As well as managing traditional treasury platforms (cash, receipts, payments, investments, and loans), treasurers may also be responsible for managing relationships with banks and investors, presenting data to the board of directors and providing advice when the company is considering a major acquisition. They may even be involved in conversations around potential new lines of business.
On the one hand, the commoditisation of banking products has led corporate clients to become somewhat numb to what their banking systems can actually provide them – and on the other, the increased scope of their role has left little time for treasurers to analyse the capabilities of these systems. But in reality, the technology resources that are not being tapped could save the treasurer a lot of time. The problem is that treasurers are so busy trying to stay afloat that they do not always have time to see the buoyancy aid right next to them. Consequently, many companies are not using their banking systems to their fullest potential.
Treasury teams do not operate in a vacuum: much of the financial reporting that they produce is intended not just for their own consumption but also to inform other groups within the organisation. Distributing this information is often time-consuming, even if the treasury has taken measures to streamline the process. Banks have become increasingly focused on the lifecycle of information coming through the treasury and have developed the systems to help.
For example, a company may have 25 registered users for its online banking platform, of which only five are members of the treasury team. By giving these non-treasury staff access to the platform, the treasury is seeking to enable self-service and thereby save time. But in reality this may lead to a battery of challenges. Far from saving time, the treasurer has taken on the role of systems administrator and often spends valuable time helping people with administrative queries such as resetting passwords. The treasurer also has to act as an educator and train people how to use the platform.
Understanding the bank’s online platform may reveal that it has built-in capabilities which can greatly streamline the process from a treasury point of view. It may be possible to provide all the relevant parties the information they need without having to give them access to the platform – and with minimal work from the treasury team.
In order to achieve this, the treasurer should review two considerations. Firstly, they have to take a step back and really look at their users. What information do they actually need, how often do they need it and in what format? Secondly, the treasurer should look at the tools available and ask if there is a better way of meeting the user’s needs.
Talking to your bank about its system functionality may reveal that it has the capability to automate reports so that different types of information can be distributed to many different individuals daily. For example, the system may be able to send Accounts Payable a file which lists all of the payments that have taken place that day, providing additional data on the different transaction types. The tax department, meanwhile, can receive a custom report listing all the locations in which tax has been paid on a quarterly or monthly basis. It may also be possible to send these reports in a variety of different formats, depending on the needs of the recipient.
By leveraging the banking system’s reporting tools more effectively, the treasury can send different departments the data they need without having 25 different users on the system. On a similar note, if the treasurer is out of the office or on vacation, the system can be programmed to send reports to people within the organisation during their absence. Setting up reporting functionality to address the needs of users within the company can significantly improve efficiency within the treasury, but in many cases the functionalities are not fully used or understood.[[[PAGE]]]
Another key benefit bank systems provide is alerts. Treasurers can often improve visibility over their cash and save time by using alerts more effectively. By leveraging this capability, treasurers should be able to set up alerts to notify them of incoming or outgoing transactions based on specific criteria that they have pre-defined. In some cases they may be able to get alerts about a transaction even before it has appeared on the system.
Banking systems may also have untapped capabilities which can support communication with external as well as internal parties. For example, it can be helpful to communicate more effectively with a trading partner about the status of a transaction. For a small supplier it can greatly enhance the trading relationship if the customer sends an email every time a payment is made, or is about to be made. In order to facilitate this communication the banking system may enable the company to send a PDF or Excel copy of the invoice that is being paid, along with the remittance message, thereby helping the supplier with the reconciliation process.
Internally, the system may also help the treasurer improve reconciliation within the corporation. When a payment is made, the banking system may be able to notify internal counterparts as well as external trading partners. Whereas external parties only need to be sent basic information about the status of the transaction, it may be helpful to send more detailed notifications to the treasurer’s colleagues in departments such as accounts payable, accounts receivable and tax. For a healthcare provider, for example, the policy number could be incorporated into the internal notification in order to facilitate reconciliation.
Another untapped resource relates to the treasury’s interaction with more senior people within the organisation tasked with certain approvals. Corporate treasuries typically have in place segregation of duty controls, whereby a senior executive is required to approve transactions over a certain dollar amount. While this process is important from a control standpoint, it can also be time-consuming and inconvenient. The process can lead to delays over time- sensitive transactions if the executive in question is in a meeting when a crucial payment needs to be approved.
Banking platforms may offer treasurers the ability to fulfil their segregation of duty requirements in a more convenient way. The senior executives approving the transactions are likely to have access to smartphones and tablet devices and if they are able to approve transactions using those devices the process becomes that much quicker and easier. Mobile technology can also be used by individuals close to the business, such as the assistant treasurer or associate controller, to avoid being tied to the desk while carrying out their daily activities.
This is particularly relevant in Latin America, where levels of smartphone adoption are higher than in many other regions, with 107 mobile phones per 100 people, according to data from the World Bank [1]. Indeed, research published by Gartner found that in 2010 there were over 560 million mobile connections within the region, including over 200 million in Brazil [2].
The widespread adoption of smartphones is driving a growing demand for mobile banking services. Another report by Pyramid Research predicted that the number of mobile banking users within Latin America could exceed 140 million by 2015. Meanwhile, research published by Deloitte argued that Brazil is a regional leader when it comes to mobile banking initiatives, with the largest banks prioritising this area.
The tools provided by banks continue to evolve. For example, banks which understand how heavily corporations use Excel for cash positioning and forecasting, particularly in Latin America, can automate the way in which information flows from the banking system into Excel. Companies can take advantage of this integration in order to avoid having to rekey data, thereby saving time and reducing the risk of inputting error.
The untapped resources a treasurer may be able to access are not limited to the ones outlined above. Efficiencies can be gained in the area of investments, for example, by automating the communication of maturing securities. Similarly, where credit is concerned treasurers may be able to gain increased visibility over their line of credit and analyse how the business will be funded without having to pick up the phone.
All companies, large or small, could benefit from reviewing the banking systems they have available to them with an eye toward using those systems more effectively. A good first step is to talk to the bank’s treasury services team. The bank should be in the best position to help the company gain efficiencies and manage its time more effectively. While the object of the exercise is to benefit from tools the company already has without incurring additional costs, an investment of time is needed in order to achieve this. However, it is very likely that this will be offset by the time savings which will result from the more effective use of the untapped resources available to treasury.
Notes
[1] Data from World Bank- powered by Google, 2012
[2] Mobile Connections, Latin America, Year-End 2010, Gartner, March 2011
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