Using Tech to Support Your Cash Management Strategy

“Introducing a treasury management system (TMS) is time-intensive, so you need to think about when to do it in terms of time resource,” advised Simon Clarke, assistant treasurer at Arqiva, a UK-based corporate that owns TV masts. He was speaking on how to achieve efficiency through technology, on day two of the ACT’s cash management conference 2015 in London.

Arqiva previously relied upon spreadsheets, having never had a TMS before introducing an off-the-shelf on premise solution in 2013, with the assistance of Salmon Software and Bloomberg data connectivity.

The problem was Arqiva was also running a refinancing project two years ago, so Clarke’s advice about choosing the right time to implement a TMS was obviously hard-won.

“I’d also advise you to ensure that the vendors who present to you are the same ones who will actually implement the TMS,” he said. “With Salmon Software they were, so we could work with them to get efficiencies [for instance, designing a bespoke inflation swaps module].

“In a previous job of mine this wasn’t the case, so the project case and aims had to be restated,” added Clarke, explaining why he was keen to avoid a sales and separate implementer scenario again.

Clarke discussed the front-end time savings Arqiva obtained in its accounting and reporting procedures after its TMS went live in 2013 and also how it helps their trading methodologies, which are no longer solely reliant on voice. The back office automation benefits across settlement, reconciliation and confirmatory procedures were also highlighted.

“We’ve really benefitted from automating some of our processes [with the new TMS], freeing treasury up to give more value-adding assistance to the business,” he concluded.

BBC Case Study: Introducing SWIFT

The British Broadcasting Corporation, aka the BBC and appropriately a customer for Arqiva’s TV masts, was next up on stage at day two of the conference.

Stephen Wheatcroft, group treasurer at the BBC, presented another technology-focused case study; this time on implementing SWIFT into your business in order to reduce complexity, ease bank relationship management, avoid legacy and aid cross-border functionality. Future hoped-for benefits also included accessing electronic bank account management (eBAM) protocols more easily via SWIFT – if they ever come to fruition – and the Bank Payment Obligation (BPO) for trade finance.

“SWIFT gives you a single infrastructure to communicate with your banks, smooth payments, reporting, efficiency and so forth. It is better than having multiple bank platforms,” said Wheatcroft when explaining the rationale behind his project to centralise the BBC’s treasury and consolidate on SWIFT.

The project initially went live in Q1 of 2013 with full rollout achieved last year and further add-ons still being worked through to ensure optimum efficiency is obtained under the new structure.

The BBC chose Fundtech to act as its SWIFT service bureau (SSB) because it can help with continuing maintenance, resiliency and on-boarding.

Asked by gtnews whether the broadcaster would still have gone down the SSB route now that SWIFT’s Alliance Lite 2 (AL2) direct connectivity cloud-based solution has been launched, Wheatcroft maintained that it probably would have done, “as the aforementioned benefits of using an SSB would still apply.”

“Fundtech also helped us with file formatting, and provided is with good expertise and advice,” said Wheatcroft. “It is hard for me to say if AL2 would be an option were we starting now, because we’ve not done an analysis on it.”

Echoing remarks made earlier by Arqiva’s treasurer, Wheatcroft agreed on the challenges presented by balancing business as usual (BAU) operational commitments with other treasury obligations, such as complying with the European Market Infrastructure Regulation (EMIR) on trade reporting, while also undertaking a tech-heavy project like introducing SWIFT.

“It’s not been easy – and it’s taken longer than expected – but it has been worth it,” he said, before highlighting the key automation benefit that has accrued from centralising the BBC’s treasury and consolidating on SWIFT.

“As I’m sure everyone here would agree, treasurers’ boardroom profile and strategic role has been raised over the past six [post-crash] years and that is great, but it does mean you need to be more automated and efficient to free up time for value-adding work,” he concluded.

Willis Case Study

Continuing the theme of efficiency through technology, Joe Peka, head of UK treasury at the insurance broker Willis, presented a case study on consolidated electronic foreign exchange (FX) trading platforms and asked if they spell the end for voice trading?

Willis has 18,000 staff and 400 offices across 120 countries, annual turnover of US$3.7bn and 12 key banks and FX counterparties, explained Peka. He outlined the new technology infrastructure the group has introduced that is reliant upon:

  •  Bloomberg for rates and data.
  •  360T for the trading platform and connectivity.
  •  Misys for deal confirmation (and EMIR reporting).
  •  IT2 for the TMS.
  •  PeopleSoft for the enterprise resource planning (ERP) system.

“The aim of our project was to reduce the amount of time we take to do our hedging trades,” said Peka, with resilience, compliance, and the extra efficiency gained via the introduction of a single electronic FX trading platform the other key considerations. “We will not deal with any bank that will not implement our technology.”

Does this mean the end for voice trading? “Emphatically yes; for us it does,” he confirmed.

In terms of next steps, now that the new system is live, Peka is evaluating the use of trading algorithms to further aid automation and hide big trades, or acquisition moves for instance. “Repos and funds are another area we will investigate in the future,” he said.

For further coverage of the ACT cash management conference 2015, click here.
 

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