As the role of the corporate treasurer continues to become increasingly complex, many are turning to automation and software in a bid to keep on top of day-to-day tasks. A common example is cash management software – a solution often turned to by time-pressed treasurers looking to improve efficiency, and security in an operating environment where organisations are facing cash management challenges daily.
Successful treasury cash management involves gaining clear visibility of the cash management situation so that the cash flow situation is known, liquidity can be enhanced, days in account receivables reduced, collection rates increased, and overall financial profitability boosted. All of the above can be helped with the right cash management solutions.
“According to 91% of corporate treasurers, lack of full visibility is a key challenge for effective global cash management and short-term liquidity management,” says Cliff Marshall, payments and cash management solution lead at Bottomline Technologies.
“Treasurers today are looking for comprehensive and flexible solutions. An effective cash management solution, or ‘payment factory’ enables an organisation to centralise, automate and streamline payments and cash management within business units or across an entire organisation. This results in improved operational efficiencies, mitigation of risk, greater cash visibility and reduction in costs.”
According to Craig Jeffery, managing partner of Strategic Treasurer, the benefits of cash management software fall into each of the elements of the FIVEC model: flexibility, insight, visibility, efficiency, and control. Some key examples provided by Jeffery include:
- Real-time visibility into your bank accounts anywhere in the world by country, currency, or bank. The best solutions offer connectivity to each of a client’s banks so that data can be pulled automatically from bank portals/systems as it becomes available and displayed centrally through a single interface.
- Flexible dashboards that let management and operations view a) items that require attention b) limits and policy compliance c) risk levels d) custom views. These dashboards commonly include “drilldown” functionality that allows users to view additional information on any items of interest.
- Automatic control of processes within the system; this can include security controls for reducing the risk of fraud, and control over specific workflows so that processes/dashboards/views can be customised to fit client preferences.
- Powerful accounting logic reducing time required to support the recording process and cutting back on errors. Many leading cash management solutions can also easily integrate with a client’s back-office systems, such as an ERP, for streamlined reporting and accounting workflows.
- Better risk management functionality – from gathering exposures, to executing trades and handling the reporting.
Selecting the right solution
The benefits of cash management systems are clear – so what steps can a company take to ensure they end up with the right software solution?
“Start with the ultimate business case and business goals and work backwards,” says Conor Deegan, managing director, Cash Analytics. “The features offered by cash management software can be quite broad and therefore the benefits provided will depend on the exact use case. So, clearly define the top one, two or three things the new software solution must do and engage with vendors who have a clearly demonstrated offering and track records in these areas. After this, you will want to see the product in action, understand how company specific requirements can be met while also getting an insight into how other clients of the vendor use the solution.
“A full suite cash management solution will have payment, bank reporting and cash flow forecasting capabilities. The market demand is for better and more advanced analytics solutions, from all vendors. Simply automating a process is no longer good enough. Companies now want vendors to help them do things dramatically better than done in the past, not just slightly better.
Jeffery adds: “For any company seriously considering the adoption of a cash management solution, there are two primary questions that must be answered.
“Firstly, what does my technology infrastructure need to look like so that my current requirements are met without jeopardising future developments and growth? This question requires treasury to consider both their current and future requirements. What functionalities and capabilities do I need now and in the foreseeable future, so we intentionally avoid creating systems that become obsolete in the short-term.
“Secondly, who are the major players in the space and how do the vendors themselves compare to one another? Once a firm has a solid understanding of both current and future state needs, they must then look at the vendor landscape and determine which solution provider is in the best position to meet their needs.
“For effective research it is important to include multiple points of analysis. For instance, factors in focus should include areas of functionality, customer service structure, number of current clients, financial strength, cost and the trajectory for future growth and R&D. The benefits of adopting a solution depends on more than just the solution itself. Researching various elements of the landscape can help identify the right provider and solution.”
- Secure sign-on and multi-factor authentication
- Centralised real-time/intra-day statement reporting. This is becoming a key pre-requisite for corporates as end of day reporting is insufficient for today’s treasury functions
- Multiple payment workflows – e.g. Bacs, local ACH, SEPA and connectivity to the various platforms.
- Seamless integration with external systems and the transformation of different types of data
- Cloud services – corporates are now looking for a complete outsourced service hosted on the vendors own infrastructure
- Robust multi-bank connectivity
- Full audit of all user/payment activities
- Risk and compliance – Cyber Fraud & Risk Management tools increase organisational security giving central visibility into user behaviour across an organisation. Strict control around the payments and processing functions will help to reduce fraud losses and data theft. Effective sanctions screening also helps to ensure compliance with sanctions and anti-money laundering requirements
As well as the features of the software solution, Deegan points out that it’s important for treasury departments to have access to effective ongoing support – and to look for this during the search for a suitable solution.
“Business hours phone and email support from a vendor provided to all users of a system is now the industry norm,” he explains. “Service has become a huge part of software offerings and companies now have very high expectations regarding the service provided by their software partners. From a technical perspective, Service Level Agreements (SLAs) should outline official response and resolution frameworks but in most instances, the customer should not need to reference an SLA due to the vendor taking a proactive approach to solving the problem.”
Marshall agrees and adds that “Clients should be provided with a dedicated support from the vendor during the implementation stage and once live in the form of a dedicated account manager, client support manager, project manager and the necessary technical contacts responsible for all aspects of their solution. Details of all support teams should be shared during the implementation process. There should be fully documented procedures and solution guides to assist in the day to day operation of the service. Support SLA’s will be in place to ensure the client obtains the level of support they expect.”
Ask the right questions
Marshall says that asking about support is all part of assessing the capabilities of suppliers. Additional questions, he says, should be based on the following:
- Security of the service – if hosted, attestations such as SSAE16 provide a clear indication that the vendor has the necessary internationally recognised certification in place for their processes and infrastructure.
- Connectivity – what are the vendor’s capabilities in connecting to multiple scheme’s, clearing infrastructure, services, banks and other financial messaging services?
- GDPR compliance
- Administration and audit of the solution – users, authentication (multifactor, tokens)
- Disaster Recovery and DR plans
- Reference customers – all proven solution providers will have a number of satisfied clients willing to share their experiences of dealing with the vendor
- Fraud and Sanctions screening – what tools are in place to monitor and control this?
“Treasury departments ideally need to look for a solution provider that has a proven track record of customer success,” Marshall explains. “With the growing adoption of cloud-based solutions, a new breed of super-bureaux are emerging which belong to larger software providers of payment and cash management solutions. These service providers offer a fully outsourced payment factory solution with integrated multi-bank connectivity. Consider a larger, well-established organisation that is better placed to deliver greater value and meet a wider range of client’s needs, both now and in the future.
“A comprehensive payment factory, hosted securely in the cloud and connected to multiple banks should be able to deliver a lean and agile infrastructure for the corporate. It must be able to cope with current and future regulation and changes in market practice. Whilst this facilitates operational efficiency, it must enable the corporate to rapidly scale up (or down) as business volumes change. As part of the overall solution, it is not unreasonable to expect some supplementary capabilities such as risk and compliance monitoring, along with Sanctions Screening which should keep the client’s environment secured.”
Marshall concludes by sharing one final piece of advice: “A treasurer should select a vendor with the domain expertise to act as a trusted adviser, who can help solve cash management challenges. After all, the best relationship is one of partnership.”
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