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Q&A With Tracey Knight: Why and How to Automate Your Treasury Function

Q&A article with Tracey Knight of Saasy Business Consulting

If you’re managing your cash with manual processes, you’re not alone. Only one-quarter of large treasury teams are automated – leaving most cash functions to run on some combination of an ERP and Excel, according to a survey of nearly 180 treasury leaders conducted by CMLI (minimum revenue $100 million). And that can lead to inefficiencies and inevitable keying errors.

But knowing what you’re missing out on is only half the battle. The bigger obstacle may be making the business case to automate. To help you overcome these challenges, CMLI sat down with Tracey Knight, a former treasury practitioner turned leader at Reval, HighRadius, Trovata turned independent treasury technology consultant.

Knight: Bank balances and transactions across all of your banks are essential.  Gathering it in one location (a database, not spreadsheets) is crucial to being able to search, sort, categorize, trend, visualize patterns and anomalies, etc.  Beyond the raw bank data, data from other sources (like an ERP to supply AR or AP information) can add great value in generating an accurate cash forecast.  

Additionally, you can become more proactive in your decision making when you have a good view of cash.  You can make sure you are managing your exposures well and don’t have too many eggs all in one basket — think those companies who had their operational cash and longer-term investments all with SVB.  Good cash management includes not only making sure you can maintain sufficient liquidity, but also carefully managing operational and counterparty risks.

Knight: Some ERPs have a decent treasury module, but some don’t have one at all and most aren’t as good as a third-party system that is dedicated solely to treasury.  ERPs are focused on different elements of finance from a balance sheet and income statement perspective, but often not focused on what is happening, or expected to happen, at the bank.  And there is no treasury task more important than making sure the company can meet its monetary obligations, therefore planning cash in the bank as well as short term debt and investments is crucial. Most ERPs just don’t help with that.

Knight: Excel is great in so many ways and it can get the job done when a company is very simple.  But as complexity increases, the number of spreadsheets grows exponentially and can become error prone.  Even if you automate some steps in Excel, many other steps are still very manual.  A Treasury Management System (TMS) can do so much more; it can automate tasks (gathering data, categorizing it, accounting for it, reporting on it, etc.), increase accuracy, enforce controls, allow for easier, more controlled collaboration, and more.

Knight: The traditional RFP when selecting a TMS involves asking hundreds of questions about functional capabilities.  Often, 99% of the questions are simply answered “Yes” even if the yes involves workarounds and a poor workflow.  Despite this fact, companies often pour many hours into the process of creating, distributing, collecting, reading, and scoring an RFP.  And the vendors receiving them often spend many hours responding to them.  The whole process may take a month or more. Many hours are dedicated to the various steps around an RFP, but not much is actually learned from it.

It’s also ineffective because vendors go out of their way to avoid saying “no”, knowing they may be scored negatively relative to a competing product that answers “yes” when both products essentially work the same.

The demo script (a custom one that is written with the highest priority requirements in mind) is a much better way of evaluating workflows within software and differentiating between the vendors.  Therefore, instead of a long RFP, companies should consider issuing a short, very pointed RFI and a quality demo script for the final demo.

Knight: Start by evaluating your current processes.  What tasks are highly repetitive and require little thought or skill?  Which of these tasks occur frequently, maybe even daily or several times a day? What tasks are error prone? What tasks have elements of operational risk — because of carelessness or fraud?  What data, questions or reports, are you asked for but cannot answer — or can’t answer quickly?  The answers to those questions often indicate the areas from which you can get immediate benefit. You should consider tools that address those items.

Knight: With so many different vendors and products available, it’s important to be clear about your prioritized requirements for now and into the near future (only out about two years or so).  Making decisions about things you aren’t likely to do or need within two years can cause you to be focused on the things that won’t return any value for years.

Knight: Common stumbling blocks to selecting and implementing a system include: not socializing the idea around the company and getting preliminary approval, thinking too big and that you will go from spreadsheets and a simple treasury to a world class treasury needing all modules right now, taking a long time to go through the selection process where you don’t remember the different products you’ve seen and the differences between them, allowing so much time to go by that other priorities arise during the selection or implementation and the project gets postponed, or being subtly influenced by factors that ultimately won’t impact your success or failure with the product– quality of the demo person, helpfulness of the salesperson, colors of the UI, etc.

Knight: Ideally, the system should make things better in at least one of these ways:  time savings, reduced errors, better or more complete information, faster information, new insights — visualizing and understanding the data better, better collaboration with other desks or departments, and a reduced risk for fraud.

Knight: The real goal is to make things better, to move up the maturity ladder in terms of having a treasury able to perform existing functions faster and more strategically and add on new tasks and capabilities to be able to better support the board, CFO, and other departments.  Therefore, the task is not just to automate, but to improve processes.  Oftentimes, existing processes were put in place to support a manual environment.  Each step of the way, for every desk, for every function, the team should be asking: Is this function necessary?  Who benefits from it?  How do they benefit? Why do we do it this way?  Is there a better way with technology?  Question everything!

Knight: Rarely can you make a leap from spreadsheets to world-class in one big step.  Instead, it takes a series of improvements over time. So focus on one or two large strategic items as well as a variety of quick wins, low hanging fruit so to speak. Strategic items are things like implementing an in-house bank and/or multilateral netting — starting a real cash forecast instead of just relying on the FP&A forecast.  Perhaps, putting in place bank structures to consolidate cash faster and easier for increased investment income or reducing idle cash to pay down debt faster.  Quick wins are things like automating the gathering of daily bank balances and transactions, automating all repetitive cash accounting entries, reconciling to the GL daily using clearing accounts, etc.

So, measure processes (before and after automation) that show utilization of human capital and cash, the number of bank accounts, average available balances left in non-interest bearing accounts, interest expense on debt, interest income on investments, FX gain/loss on the balance sheet, compliance with investment/debt guidelines, accuracy of the cash forecast, percent of cash transactions booked to the GL automatically without human intervention, days sales outstanding, days payables outstanding, cash conversion cycle, etc.

Do this, and you can make (and demonstrate) the value of your treasury department.

If you have questions for product/vendor-agnostic expert Tracey Knight, you can reach her directly at [email protected], through LinkedIn, and through her website,

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