Treasury Transformation

by | May 25, 2017

Take advantage of cloud technology to reduce treasury costs, optimise working capital and minimise risk



Surprisingly, many large companies continue to manage mission-critical treasury tasks in Excel, introducing operational inefficiencies and significant risks to their business. As industries and professions worldwide are being rapidly disrupted by changing technology, treasuries cannot afford to remain behind the curve. With modern technology and automation, companies can:

• Significantly reduce cost and operational inefficiencies
• Better manage financial market volatility with significant implications for financial performance
• Navigate the increasing complexity of compliance and hedge accounting reporting
• Enhance credit security in an uncertain world.

For some, implementing a Treasury Management System (TMS) can appear a daunting proposition and has led many to maintain the status quo. Thankfully, the emergence of cost efficent cloud based platforms makes the transition to a secure and efficient operation a simple one. Low running costs, out of the box functionality and easy data migration tools means that a treasury function can be up and running in as little as 4-8 weeks. This article will use three examples to illustrate the potential ROI of treasury automation.

Automation = cost saving

A survey of 210 senior executives at Fortune 1000 companies found that 88% percent of respondents expect to pursue cost reductions over the next 24 months, a 10% percent increase YOY. Rationalisation of treasury management workflows through automation of for-merly manual tasks, will reduce the need to support operational growth through additional FTE hires.

Our first example focuses on a large Asian retailer who were recently in the market for a TMS. In the below table, they analysed the benefits of automation for their own TMS business case by comparing manual and automated approaches to three of their key treasury workflows.

Putting your cash to work

Treasury automation will also yield clear ROI through more effective liquidity management. Our second example focuses on a UK corporation in the education sector who currently maintains a cash buffer of around US$20 million in the event of sudden liquidity calls. Maintenance of this large balance in low yielding instruments was required due to poor visibility over 300 bank accounts. Manual balance collation processes meant that it could often take over a week to establish the opening cash position. A reduction of this buffer through a quicker establishment of the daily cash position and more timely forecasting would help the company to invest the cash in higher yielding assets reduce debt and increase net interest income.

Excel: the risky way to manage your Treasury

So far, we have discussed the benefits of automation, but what about when Excel goes wrong? In our third example, a small finance company that managed its treasury on a combination of spreadsheets found that running treasury on the cheap quickly became very expensive. The small two person treasury team had been using a ten-year-old spreadsheet model to report their interest rate risk. Having sourced this spreadsheet from an independent consultant many years before, it had become a key and entrenched operational tool over a long period.

In the process of a treasury review, a new consultant was engaged to validate the quality of these spreadsheets. They identified that the spreadsheet model was misrepresenting the impact of interest rate swaps on future cash flows. A consequence of this operational failure was that the treasurer had incorrectly entered into pay fixed swaps, instead of receive swaps, and unfortunately increased the Value at Risk of the loan book.

This discovery led to notable costs of closing out and replacing the swaps, and tough questioning from the board. This drove the adoption of an off-the shelf TMS to mitigate the risk of such occurrences ever happening again.


In an era of extreme cost scrutiny, demonstration of ROI is even more critical to justify the implementation of a TMS. Every company will need to address proving its ROI in its own circumstances. If you need more help doing this, then Visual Risk can leverage its business case builder and ROI calculators to help you kick-start your process.

With an automated treasury operation in place, treasuries can then leverage the latest analytical tools to manage the increasing financial risk that growing businesses continue to encounter.

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