Making the switch from Excel to a Treasury System

By Helmut Springer | 25 August 2015

When is the right time to switch from spreadsheets to a treasury system? How soon can companies see the pay-off? For mid-sized companies, it is sooner than they think.

Treasury professionals, particularly in mid-market companies, have to determine when the right time might be for their organisation to take the leap from working in spreadsheets to investing in a Treasury Management System (TMS). But when does this investment pay off? In a recent Reval survey of more than 130 finance professionals, 81 percent of respondents say they would gain time for strategic analysis by automating operational workflows. Among those, 14 percent believe they could save at least 50 percent of their time. This is not a trivial return on investment.

An example of a family-owned automotive supplier, which began to expand regionally, illustrates a common scenario when making the switch from Excel to a TMS:

A treasury professional based in headquarters was still performing all tasks in Excel. As she only had to keep an overview on a handful of bank accounts, it did not take her a long time to collect cash balances for the bank portals. Still, she needed to work thoroughly to make sure the company’s cash position was accurate.

As the company opened new subsidiaries in three different countries, this treasury professional began working with two local banks. Two foreign currencies were added to her portfolio as well. She adapted the tables and calculations in her spreadsheets fairly quickly; however, updating the numbers and converting them into Euro now took a bit longer. Luckily she received support from the local accountants at the subsidiaries. This saved time, but it also created uncertainty as she now had to juggle multiple versions of the documents. Additionally, it was very difficult to verify which cash flows had been updated accurately. And because she bought multiple forwards and options to hedge foreign exchange risk, her plans became even more complex.

And so it happened: The updated numbers were provided too late from one of the new subsidiaries. The treasury professional was not informed about the incoming order worth several million Euros. The exchange rates were unfavorable, and the loss was significant. The company had to issue a profit warning. At this point, the CFO began to re-think the idea of investing in a treasury management system.

A TMS would capture all cash flows from across the enterprise, and make financial transactions available and visible. Daily market data feeds can help to convert cash flows into the group currency automatically. But as everything is documented end-to-end, treasury professionals have the ability to back track the original local currency cash flow. When hedging FX risk, derivative trades can be linked to the original cash flow, and valuations can happen automatically. As all cash flows would be managed centrally, analysis and reports for the CFO and auditors can be created easily, and within the system. Data changes are documented automatically as well through audit trails, solving another common audit challenge.

Treasury management systems are not just for large companies. Cloud technology has made it easy for mid-sized companies to get the same kind of core functionality that large companies do, but configured to their usage and their budget. Cloud-based treasury technology also makes it possible for mid-sized companies to make the switch. They don’t need to draw on IT resources, they sign in using a browser, and they are always on the current version of the application, which is updated automatically.

When thinking of the efficiency and security gains, and the time savings and analytical possibilities a treasury system can provide, don’t forget the potential damage spreadsheets can cause. Taking everything into consideration, investing in treasury technology can pay off much earlier than companies might think.

By Helmut Springer, Vice President, Reval

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development