While the treasurer’s role has expanded outward to collaborate, advise and influence other functions and business units, many treasuries remain mired in legacy clerical functions, fumbling between dozens of Excel worksheets, data repositories, bank portals, tickler files, sticky notes and filing cabinets. Yet treasuries must be better prepared to analyse, execute and report on treasury and risk management strategies, making recommendations that can help the C-suite move the needle forward on corporate initiatives. As companies continue their search for more analytical and strategic treasury talent, it might help to really think about how advanced technology can support the team already in place.
Maximising Talent Productivity
Every year, treasury departments convene to discuss their goals, and those goals include improved efficiency and productivity. That’s great, but where to start? Companies that have embraced technology have also seized the opportunity to gain some quick staff efficiencies in the areas below.
Morning Cash Management:
Everyone dreads the morning rush hour. Unfortunately, it’s not just a commute to the office. Starting at 7 or 8 a.m., staff can quickly get overwhelmed with organising bank statements, troubleshooting connection issues, populating cash decision worksheets, rekeying data into spreadsheets, reconciling figures, moving funds and executing liquidity decisions. Many organisations put up to three people on this process and struggle for completion by lunch; however, organisations leading in efficiencies accomplish this with one or two staff by 10 a.m., every day.
For organisations committed to forecast accuracy, the mechanics of effective forecasting can become a massive productivity hit. Proper forecasting requires consolidation of data from myriad data sources. Inefficient organisations require their talent to serve as forecast consolidators. As an example, one manufacturer had two staff members dedicate four hours every day to rekeying forecasts from business units into a global forecast template. Leading organisations eliminate the consolidation time burden and focus staff on variance analysis and accuracy improvement.
Generating Journal Entries:
Unfortunately for staff, every cash and non-cash event must ultimately be booked to the organisation’s general ledger (GL) system(s). Colleagues in accounting are equally overworked and have pushed the burden of proper GL entries onto treasury. During one GL improvement initiative with a biopharma client in the Northeast US, treasury staff was spending 30 hours per month generating treasury journal entries to SAP. Worse still, it was 100% concentrated at month-end. Through proper use of technology around auto-tagging, this organisation was able to reduce this time to a mere 25 minutes per day.
For better or worse, treasury remains a reporting hub – now more than ever. Managers, CFOs and boards are relentlessly looking for insight into liquidity levels and risk positions. Unfortunately, many organisations are creating massive treasury report packages and emailing them out to vast pools of internal recipients. Additional information requests are then dealt with reactively and with burdensome manual creation. Last year, a new treasurer of a hi-tech firm in San Francisco made his first mandate to stop the presses on such reporting practices. He shut off the report valve and waited to see who called and complained. The result was the creation of a simple report package for internal constituents and a tailored report production for the senior executive and board teams, saving 53 hours each month in staff productivity gains.
Harnessing Current Talent
Once staff is optimised for efficiencies, they can take advantage of the tremendous opportunity to leverage their free time for collaboration and analysis. This enables treasury to explore different ways to deliver value to the business. Some examples are presented below.
Leading global treasury organisations that leverage technology gain real-time insight into their business units’ financial positions. This enables treasury staff to then act as a resource for their operating entities. Staff can get out of their offices to interact with business units and general managers. One global technology firm sent its treasury manager on a staggered six-month tour of the organisation’s global business units. The intelligence gained resulted in over US$1m saved from efficient use of internal liquidity.
Analysing Forecasted Exposures:
As mentioned earlier, staff are often burdened with forecast and exposure data collection and consolidation. Automate these tasks and free up talent for analytics. A highly productive staff performs variance analysis and continuously improves accuracy. They can liaise with forecast data sources to improve the accuracy and timeliness. They can also run simulations to better prepare for critical liquidity and risk events. One Houston-based energy organisation removed the time burden of forecast and exposure gathering, resulting in a foreign exchange (FX) cover strategy that mitigated US$2m in FX loss for 2013.
Optimising Global Bank and Liquidity Structures:
Over time, and over several acquisitions, many organisations end up with horribly ineffective bank and global liquidity structures. Unfortunately, while treasury staff know how to improve this situation, they are also the ones tied up in unproductive tasks. Removing this layer of inefficiency can open up the floodgates for improvement. The analysis and deployment of optimised bank relationship initiatives, pooling structures and payment netting programmes takes time; however, the results can be as much as US$1m or more in cost savings.
These are just some examples where treasury talent, when freed up, can add significant value to the firm. Enabling staff to add value is key to helping companies increase morale and retain the staff they have. Certainly there will be some staff members who will adapt quickly while others will take longer. One treasurer of a US food and beverage manufacturer held monthly sessions where her staff presented to each other to enhance their communication and presentation skills. Once her team was ready, they presented their projects to senior executives during quarterly forums. This allowed treasury the opportunity to showcase the results of its value-added work. Today, this treasurer’s staff cherishes their opportunity for transparency into their contribution to the overall organisation.
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