General

Flexible Cash Positions - by Currency, by Country, by Subsidiary, by ......

Sujith Nair — Thu, 12 Aug 2010 00:30:09 GMT

A cash position is the cash you have/don't have or expect to have/not have across your banks at a given moment in time. You create one or multiple positions during a day, multiple if you have considerable current day fluctuation in cash and make short term investment decisions based on it. All treasury management systems or workstations should let you do that - i.e create multiple positions during the day.

During our early days at Treasury Sciences (some 3 years ago now) while responding to one of those lengthy RFP's ; we responded to a series of questions on cash positioning. The reason I recall this particular RFP is because the questions were vague. They asked if the vendor's system could create cash positions, if the system could position by currency, by country, by subsidiaries and finally by departments within subsidiaries. These were followed by a series of questions on how much effort was needed for each and so on. Well, they may not have known what they wanted when they wrote the RFP.

Since this RFP, we have met with multiple organizations who needed some combination of the above mentioned cash positioning groups (It be noted that we are yet to meet anyone who has all of the above needs). For example, some organizations would want their subsidiaries to position for themselves across currencies with the ability for central treasury/management to view the global enterprise position.

Our product team went to work and came up with a solution - TAGS.

Tags are generic, yet a very effective solution that has been used by web based applications for a while now. So, we let end users (mostly administrators) create TAG's within TS CMO. Customers can call the tag what they want (typically named a Subsidiary or a Region or a Department or something that is meaningful to the organization) and create as many tags as needed. Then administrators assign accounts and users to these tags. The system ensures that users assigned to a certain tag work within the confines of the tag- i.e they can work with only those accounts that are associated with the tag.

Within tags, users have the ability to create positions in multiple currencies- the only restriction being the accounts that they have access to based on the tags they are associated to. Finally, there is the global enterprise position - the ability for central treasury or management to view the enterprise position across currencies and tags.

From a security perspective, roles still exist and overlap with tags. For example, a user with view only access based on her role would be able view data in the accounts that she has access to based on the tag she is associated with.

We think that use of TAGS is the most effective way of providing a large organization with flexible cash positioning capabilities - end user driven, flexible, easy to manage and secure. And it just takes several minutes for an administrator to setup or change using a web browser.

Do let me know if you have questions, especially if you have similar needs and have alternate solutions to this problem.

Treasury Managemen , Treasury Workstation, Cash Position

Cash Analyst needed with specific, strong Technology Expertise!

Sujith Nair — Tue, 02 Feb 2010 05:42:17 GMT

Recently I saw two job postings on Linkedin, I saw both on the same day which is probably why I noticed the subject matter of this post. There is something very surprising in these postings, if not bothersome. Here are some of the typical needs that you may expect and see

Prior Experience, Forecasting, Daily Positioning, Bank relationship management capabilities, Certification etc..

Now, here is the other set of requirements for a Treasury Analyst that I will discuss today which are also very common to most postings out there.

Proficient in advanced Excel or MS Access and SQL

or in some others

Must have experience with Sungard products or Oracle suite of Treasury Management Products or another vendors products. Some even go to the extent of saying that the Treasury Analyst should have worked on one of these systems for more than 2 years.

If you get a chance, please go through some of the job postings out there in the Treasury Management space. There is a good chance that you will be surprised as well.

From what I understand of business software applications (treasury management systems or treasury workstations included), the primary goal is to help the business function; whatever that function may be. Help via automation, faster processing, elimination of errors, repeatability among other but primarily - Efficiency. On a side note, I still remember (I can almost hear him even now!) an old teacher of mine yelling "Efficiency, Efficiency" on the top of his lungs explaining applied sciences and engineering.

There surely has to be something wrong with the job postings mentioned above. After all, you can't expect to add another totally different and unrelated skill set set to a cash analyst's resume and then hope that it will help with efficiency of the core skill set.

If you look carefully, you would realize that there is one of the two possibilities for the job postings mentioned above. What is even more interesting is that these two possibilities are interconnected.

Let us take the need for specific software product experience for a cash analyst first. The very reason that a specific product has to be mentioned in a job posting for a user of the system indicates that there is a learning curve involved. Users of the system have to spend considerable amount of time understanding and learning the product before they can be functional users of the product. Hence the need for specific experience; after all we all want to hit the ground running.

Now the first point. If someone is interested in expertise in MS Excel, Access and SQL it is unlikely that the organization has a treasury management system. They are making do with something less, something which was never meant to be a treasury management system. Why? Here again, chances are that these organizations realize that making do with something lesser but something much more common like MS Excel is better than hunting for users with expertise in a specific vendor's product.

Going back to my applied science and engineering reference earlier, the very point of using software is to make a business function easier, better, faster. It is to improve efficiency. Unfortunately, a lot of the products out there have missed the point.

Our group of engineers here at the Treasury Sciences are trying not to make these mistakes by providing better usability, better and faster training via product videos and making the adoption process smoother. In fact, our most important selling point or differentiator is that we can get your organization and users up and running on a enterprise class Treasury Management System faster than anyone else.

Our hope is that there will never be a job posting that says "Need cash analyst with 2 years of experience with Treasury Sciences products".

Thank you, feel free to email any comments to sujith@treasurysciences.com.

Why should an organization migrate from Manual Positioning using Excel Spreadsheets to a Treasury Management System (or Treasury Workstation) ?

Sujith Nair — Fri, 15 Jan 2010 08:08:21 GMT

The reason for the post is a question from a potential customer of ours. After spending an hour or so on our Cash Management Operations Module, a cash manager of a large retail chain told us that they were intrigued by it, believed that the features provided by our product will be very useful to them and wanted like to try the product out. Then he had a question.

"How do I justify the cost of a Treasury Management System? I can hire an analyst and use a spreadsheet to continue daily positioning, it has worked for us so far".

I will make an attempt at looking at the possible benefits in the rest of this post. Hard cost benefits of using an enterprise TMS typically include 3 types of cost benefits (reduction in cost).

Detection of Errors: Detection of errors in forecasted data or in early detection and cancellation of inaccurate electronic payments can result in operational cost savings. Detection of errors in banking data can result in accurate positions.

Reduced reporting costs via consolidation: Reports are run enterprise wide. Ensuring that all data from banks and other internal and external systems are consolidated and reported via an easy to use interface results in efficient reporting and reduces reporting costs considerably. Typically financial institutions charge customers for each generation of a report. As an example, a customer of ours with 8 subsidiaries is currently saving over 15,000 USD a month by not paying the bank for each report run- the data is extracted from the bank once and stored in our TMS, the data (up-to 7 years of historical data) is reported to over 150 users via our reporting tool.

Accurate and timely positions resulting in accurate investible cash sooner: The actual dollar benefits derived varies from one organization to another- the more complex an organization is, the larger the risk of inaccuracy and the better the chances of improvements in accuracy via the use of a system. In typical large implementations, we see improved position accuracy in tens of thousands of dollars almost daily; we also see improvement in predicting tens of millions of dollars of investible cash on a pretty regular basis.

The primary benefit in utilizing an enterprise TMS vs. manual process for cash positioning is the improvement in accuracy and the timeliness of cash positions day after day provided by automated forecasting, bank connectivity, reconciliation and positioning capabilities of an enterprise TMS.

There is more to a Treasury Management System but unfortunately not all of it is visible upfront, when you are making a choice. Let us look at some of the se benefits in a bit more detail.

Accuracy & Timeliness: Reduced manual intervention and increased automation results in more accurate forecasts and positions. Typical spreadsheet errors such as typos, formula errors etc are eliminated. Additionally, automation ensures that data that needs to be collected for forecasting and positioning is collected at the earliest available time - this typically results in automated, systematic positions being available sooner than manual positions. Accuracy results in better-informed investment decisions and timeliness ensures that your investments can be made at the earliest, ensuring that the best available investment options are available to you.

Scalability & Manageability: As the positioning process becomes more and more complicated, say by the introduction of new subsidiaries in multiple countries; it becomes more and more difficult to position cash on an enterprise basis using a manual process/spreadsheets. Organizations that stick to manual positions in such scenarios typically have 2 choices –(1) position each country/subsidiary/currency separately thereby losing visibility of enterprise cash or (2) try enterprise positioning with an excel spreadsheet typically resulting in inaccurate positions.

Consistency & Reliability: Systematic processes eliminate issues with consistency, not matter how complex or simple the cash positioning needs are resulting in reliable, consistent cash positions day after day. Typically, this eliminates the need to double-check each calculation. More importantly, it has been a regular experience for us to find errors reported by banks. If positions were created manually, typically there is limited ability to double check data reported by the banks. Enterprise TMS's typically calculate the CAB, OAB along with floats and compare it to the numbers provided by the banks ensuring that any discrepancy can be identified. Again, the more the number of banks and accounts the more likely an organization will find errors.

Security: An enterprise TMS typically encrypts all confidential data and the use of roles in a system ensures that users with the appropriate privileges see the data. The level of security and access restrictions provided by an enterprise TMS is way better than what can be achieved via an Excel document.

Multi-user Access: Enterprise web based TMS like the Treasury Sciences Suite of Treasury Management products provide unlimited access to multiple users of the treasury and across the enterprise. For example, delegating forecast input and management directly to the departments that are responsible for the forecast can ensure accountability and accuracy of forecasts. Additionally, you can have subsidiaries create their own positions in multiple currencies while having the ability to view consolidated enterprise free cash in a currency of your choosing. An excel system is typically useful for one user.

Compliance & Audit-Ability: Manual approvals and audit are not efficient ways to ensure the enforcement of organization policies and controls. Use of a TMS considerably reduces chances of fraud by tracking and reporting on each action by all users of the system and provides you the ability to enforce organization policies and processes across the enterprise. A system audit is typically much faster than a manual process audit as well.

Who wrote the macros in that spreadsheet?: This is something we have seen in multiple instances - a spreadsheet is created and updated over a long period of time. The person who wrote the macros is no longer with the organization and typically the organization is stuck with it. Even if the author is around, it does not take much for a spreadsheet to get very complex- well, it was never meant to be a treasury management system.

Focus on more important things: There are typically more important things that a cash analyst or a treasury manager can do instead of downloading bank files manually or printing out multiple reports from multiple banks and entering the data into a spreadsheet. An enterprise Treasury Management System makes your life much simpler and lets you focus on how best to manage your cash.

All of the benefits mentioned above have a cost and a cost saving associated with it. What it is depends on your organization, the scale of your operations and your situation. Also note that the improvements in cash positions, cost savings and improved investments via the use of a Treasury Management System are typically not easily predicted upfront as there is an element of unknown-unknown's (manual positioning and related processes over a period of time in an organization typically result in hiding the possibilities of better forecasting and positioning) here.

The only way to find the true benefits for the organization is by trying out an enterprise TMS for a reasonable period of time and by comparing it to an organization's manual process. This has become a very long post. Thanks for reading and do let me know your thoughts at sujith@treasurysciences.com.

Tangible Benefits Derived by using a Treasury Management System

Sujith Nair — Tue, 28 Apr 2009 14:05:58 GMT

Multiple times over the last several months, I had the opportunity to speak with Treasurers and Cash Managers at various organizations, both small to medium size companies and large ones. One of the questions that come up very frequently is regarding the tangible benefits of using a Treasury Workstation, more so a Treasury Management System. Yesterday, one of our customers had to put together a list of benefits they derived out of using the Treasury Sciences Suite of Products. So here it is - the list of benefits

Dramatically simplified the accounting review for daily banking activity by reducing 10 pages of daily accounting journal entries requiring review to 1 page of entries requiring review and 9 pages of entries directly uploaded to the General Ledger. We’re enhancing the technology to further reduce the need for any manual review prior to upload.

Over 80 users have been boarded with a goal of over 200 spanning multiple subsidiaries and such user groups as: Accounting, Disbursements, Payroll, and Cashiering.

Currently processing about 25% of the Organization's wire and ACH payments through the new payment platform, replacing 3 different Bank of America payment platforms with a single user interface. At completion of the conversion project, 100% of these payments will go through the new system.

Developed intuitive user screens that allowed a simple web delivery (webinars) of online training which simplified the roll out process to remote organizations.

The majority of daily investments and redemptions of investment cash by our subsidiaries (about 80 transactions per month) are now paperless (replaced faxes and emailed notices) and secure (no Faxes, emails, or telephone calls)

o  Eliminates missed settlements

o   Allows straight through processing with accounting treatment printed directly on bank reports

o   Ensure identity of all users

Central delivery of online bank reports reduces bank fees by $10-$15K per month.

Faster, more accurate determination of daily cash position is giving the Treasurer’s Office detailed funding requirements for the day about ½ hour earlier, which translates into improved investment yields.

Better identification of cash available for investment is allowing us to reduce balances left at our bank by about $3-$10 million per day and upgrade them for better investment returns by making them available for direct investment by the Treasurer’s Office

I hope that the above list (I have only altered it enough such that it does not reflect the name of the customer and any other confidential data) provides a tangible list of benefits of adopting a web based Treasury Management System or Treasury Forecasting. If you have any questions, or comments or feedback please let us know by posting a comment here or sending us an email. I hope that this information will help you in your decision making process-when choosing a Treasury Management System or Treasury Workstation.