4 ways a treasury management system can help better navigate COVID-19

Imagine living through the COVID-19 pandemic without technology. You wouldn’t be able to stream your favorite shows, video call loved ones, or order your groceries from the safety of your couch. Now imagine running treasury without proper technology. It would be catastrophic. First, you have to wait for the bank to provide your bank statements to view your bank balances. You have to record your cashflows by hand in a spreadsheet to predict your end-of-day closing balance. Only then, can you start trading with your banks on the phone. Again, you have to capture all trade details manually. All this manual work takes a lot of time and is error-prone. Now more than ever, treasury needs quick access to information. The treasury team needs to know where their cash is and evaluate the risk to their organization. A Treasury Management System (TMS) is vital.

4 ways to navigate:

1. Create a single source of truth A TMS provides you with one source of truth which gives decision makers the right data at the right time. At the moment, there is uncertainty around working capital due to the lockdowns and other restrictions. Therefore, senior management requires on-demand global cash positions from treasury. The treasury team needs to act fast. They do not have time to identify which of the recorded data is correct. With the reliability of a TMS, you get data that you can trust. Treasury solutions offer functionality to manage banking, cash, payments, trading, FX, regulatory compliance, and risk. Having everything recorded in one place allows for real-time visibility which can be easily reported to senior management, so that they can make important funding or investment decisions.

2. Do more with less Resource constraints have meant that companies are looking to do more with less by automating time-consuming, repetitive, and low-value tasks such as reconciling bank accounts. Treasury systems automate tasks through straight-through processing. This leads to greater staff efficiency and productivity. Error rates are reduced, while also improving transaction processing time and data reliability. The time that a TMS saves, allows you to focus on analysis and strategically growing the business. Automating each of your treasury’s key processes can save huge amounts of time which can be used elsewhere while improving the quality of the data as automation reduces the scope for human error. Examples of areas that can be automated include reconciliation, generating cash positions and forecasts, and payment execution.

3. Improve security and compliance reporting Spreadsheets are a fantastic resource at times. However, spreadsheets do not keep an audit trail which is required when running a treasury function. The consequence of not having an audit trail is that tracing the steps becomes onerous as you must ask around the team about who entered what, if something is not clear. In contrast, a treasury system allows procedures and workflows to be carefully planned out while maintaining security which satisfies auditors. Username and time/date stamps are added against each action in the system, leaving an audit trail for security and operational reasons.Many treasury functions still print various documents which get signed by multiple people as part of their approval process, and then store them in a cupboard in the office taking up space. This is not only cumbersome but opens the possibility to fraud as someone can easily forge another’s signature. With a TMS, it is possible to set up tasks with approval layers to ensure effective control and monitoring, while simultaneously reducing human error and possible fraud. If regulatory compliance and reporting are necessary for your company, professional technology can also help. A treasury system ensures reliable and compliant reporting as data such as bank accounts and signatories are kept up-to-date and stored in one place. The tool provides consistency when recording deals, generating payments, and accounting entries which gives a clear up-to-date view of the company at any time with easy reporting.

4. Mitigate risk holistically The COVID-19 pandemic brought uncertainty to our economies which incurs risks to our organizations and puts treasury teams under immense pressure. Not only does treasury have to deal with operational risks but they must also manage financial risks such as counterparty exposures, FX, or interest rate risk. Calculating counterparty exposures and performing scenario analysis by hand is inefficient as the data you are working with will soon be out of date. This can result in breaching a counterparty limit and putting your organization in risk which could have been avoided. A TMS provides real-time reporting and can enforce limits automatically. With the use of the correct technology, treasury will have visibility of their risk with a click of a button, helping them take a justified action.

A treasury system is a vital tool for a treasury function to operate with. It is the one source of truth in an organization where data is kept up-to-date and processes are automated and streamlined for better use of time for analysis and growth. A TMS mitigates operational and financial risk while ensuring regulatory compliance. A need for treasury technology is heightened during economic uncertainty as you are required to keep the CFO up-to-date with the latest positions and analysis. Having a treasury system in place improves the efficiency and accuracy of the information for your CFO to make better decisions.