Automation of treasury functions is not only an important issue for large multinational Asian companies with highly sophisticated treasury needs, but even for those with relatively straight forward cash management requirements, said SunGard in a recent report.
“There is an increased demand for centralisation and aggregation of data. Many organisations are operating with more than one underlying ERP [enterprise resource planning] system and further interface with multiple points such as banks, foreign exchange platforms, trading platforms and market data to bring together a single view of cash and risk,” said Michael Fullmer, senior vice-president of AvantGard, SunGard’s liquidity management solution for corporations.
The report highlighted companies’ continued reliance on spreadsheets and the failure of certain ERP systems to meet requirements to carry out treasury tasks as the main challenges for non-automated treasuries. These issues are intensified for multinational companies that need to obtain data from many different centres and subsidiaries and that need to handle the dynamics and more complex treasury functions associated with cash and financial risk management.
While for many years, companies have focused on centralising their cash functions as a way of reducing risk and improving efficiencies, Fullmer says this is not the only necessity. Companies also need improved bank communications and streamlined connectivity with market data providers and foreign exchange platforms.
The “ability to do more with less”, boost speed and reduce manual processing are the most obvious reasons for automation. However, according to Fullmer, automation can also be a major factor for companies that are looking to improve compliance with regulatory standards or internal guidelines, at the same time reducing the chance for errors occurring and help to prevent fraud. As a company expands, it will ultimately strive for clearer visibility of global cash positions, improved risk management and cash forecasting and more coherent communication with banks.
To achieve treasury automation, companies can interface specialised technology with their underlying ERP systems. Fullmer points out that it is equally critical to understand how to implement best practices with the automation process – essentially mapping the process into the technology.
According to the report, many treasury departments across Asia still operate in a silo fashion through a decentralised approach. However, this approach is highly inefficient, error-prone and costly. This is especially the case for those organisations doing business globally where the need for centralisation is paramount. The automation afforded by treasury workstations enables treasury departments to easily consolidate and aggregate disparate data and pinpoint global cash positions for better decision making.
Fullmer says that if a company is not using a specialised treasury solution they are most likely operating using spreadsheets and paper. “Not only are there efficiency gains to be obtained, but also there is an opportunity to go above and beyond basic cash management and engage in more sophisticated risk analysis. Without the automation, this level of treasury management is just not possible,” he explained.
In other words, automation via a treasury workstation is the next logical step for treasuries seeking to gain greater financial transparency and visibility.
