recent survey on the evolution of treasury payments
, software-as-a-service (SaaS) provider Reval found that only 9% of treasuries in the Asia Pacific region have fully automated payment workflows and straight-through processing (STP) to multiple banks. Against this figure, 26% still handle payments manually using spreadsheets.
The results of the
2014 gtnews Transaction Banking Survey
told the same story, with 34% of respondents saying that they do not use onsite or online treasury workstation solutions and the percentage highest among smaller companies.
The level of automation for financial planning and analysis (FP&A) is a similar tale. The
2014 gtnews Financial Planning & Analysis Technology Survey
, run on a global basis and with 34% of respondents from Asia, showed that companies have not invested in business intelligence (BI) and analytics to the degree necessary to deliver the analytical functionality that FP&A professionals say they need. Moreover, 53% of organisations advised that they do not currently use a specific FP&A technology system and instead rely primarily on Microsoft Excel or similar spreadsheets.
Along with the inefficiencies such a lack of automation causes,
blogger Kelvin Walton this month reminded readers that Microsoft’s recent withdrawal of support for the
Windows XP operating system
– which is still in use at many corporates – exposes users to serious and increasing levels of technology risk. This issue seriously directly affects all remaining corporate treasury XP users, he said, as dependence on an unsupported operating system to manage communications, databases and calculations falls short of basic standards for good operational practice.
As the blog also noted, the potential risks of using an unsupported operating system extend beyond obtaining effective support when problems inevitably arise. Perhaps even more serious is that using the system provides a window for cyber criminals to penetrate and subvert treasury operations, with the potential for increasing security breaches and fraud attempts.
A Technology Fix
Automation can provide myriad benefits, as Sydney Airport Authority’s (SAA) treasurer Christine Kelly and treasury manager Lynn Cheng explained when they described their shift to a new treasury management system (TMS) in a webinar organised by Reval last month. While they were already ahead of the curve by having a basic TMS in place, their experience with an upgrade still provides a good example of the improvements that a treasury department can expect from automation.
The main catalyst for change was an increasing volume of payments, a shift at SAA towards more offshore debt issuance and more cross-currency swaps, said Kelly. Along with wanting to do the work more efficiently, she realised that in five years’ time SAA would lack enough people to support all the functions they would be required to do. Moreover, the treasury team wanted a better approval payments process and flexibility for remote approval. They also needed to comply with new hedge accounting requirements, and support payments as well as month-end processing.
A key challenge was that while SAA wanted to connect its treasury system to its banks, each bank had their own proprietary services for customers and there was no standard way of communicating. The plan for a real time gross settlement (RTGS) system to be implemented in Australia over the next several years would only add yet a further level of complexity were they to stick with the existing system.
Instead, Kelly and her team created a business case to present to senior management that demonstrated significant savings in time and costs from implementing a new TMS. They also evaluated the options of installing the software or going to the cloud, involved security staff to ensure that security was appropriate, and spoke to auditors as well as other corporates. The team secured approval to implement a new TMS, which enabled SAA to connect to 21 banks, offered flexibility, and future-proofed the organisation.
The benefits once the TMS was implemented included a reduction in the number of approvers, fewer people needed to process or approve a payment, shorter times involved for making a payment and cloud-based remote access for users. SAA also achieved a workflow benefit, as they now have one level of payment authorisation rather than three. Further benefits included reduced payment generation time, decreased payment errors and improved efficiency in the process. Along with all these process benefits, Kelly said staff have been able to spend more time on value-added activities such as reporting and financing.
While the drivers for automation and the results will vary between companies, the combination of pressure on costs, changes in regulations, challenges in finding staff and the requirements from new technology such as RTGS means that the pressure to do more with less will only grow greater. Corporates can benefit greatly from starting on the process towards treasury automation sooner rather than later.
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