From the September 2008 issue of Treasury & Risk magazine

Hosting Takes the Cake

A riskier economy is actually increasing spending on treasury technology for tools that provide global visibility of all cash, improve cash forecast accuracy and clamp better controls on the movement of funds.

Until last year, Liz Claiborne treasury operations in the U.S. and Europe were heavily dependent on spreadsheets and disparate banking systems, says John Engeman, assistant treasurer of the $4.5 billion retailer. Europe essentially had its own treasury operation, and corporate treasury had limited visibility into what was happening there. That has all changed dramatically. With its first treasury workstation from Kyriba, Liz Claiborne treasury staffers can see almost everything from its treasury office in North Bergen, N.J. A European treasury center in the Netherlands still controls many treasury activities there, but U.S. corporate can see exactly what Europe is doing in real time, thanks to one shared system, which is about to be rolled out to Asia, Engeman reports. Welcome to treasury technology 2008, where a fragile economy has raised concerns over control and liquidity management and created a boomlet in automation, particularly through the use of application service provider (ASP)-hosted solutions. "There's no holding back on spending that protects assets and gives increased visibility to cash, even in the face of a recession," notes consultant Craig A. Jeffery, managing partner of Strategic Treasurer LLC, Atlanta. "Across the board, 2008 so far has been a strong year for spending on treasury technology."

Liz Claiborne has validated the benefits: less time spent on manual keying, fewer clerical errors, a better real-time view of the global cash position, fewer idle balances, lower banking fees and more time available for value-added projects. "Our workload hasn't diminished, but thanks to having balances and transactions fed directly into Kyriba, we now have more time to work on expanding how we use the workstation," Engeman reports. "We keep coming up with new ideas to make it work better," he adds. "We're working with Kyriba to build a payment factory and upgrade our collection efforts in Europe. We're pushing to marry different financial processes with Kyriba technology, and it's paying off."

The evolution and increasing popularity of hosted solutions is setting off a battle between treasury software vendors and banks over who will get what share of corporations with more than $50 million but less than $2 billion in annual revenue, Jeffery suggests. Some banks like Citi, Wells Fargo and Bank of America are adding treasury workstations or workstation-like capability to their offerings, he reports. "They're offering GL (general ledger) feeds, good visibility across all cash, and some ability to track debt and investments," he reports. Others are making modest enhancements such as single sign-ons or investment portals, he adds.

Treasury staffs are not turning up their noses at incremental improvement, notes Brian Hinton, executive director of new business development for receivables products at JPMorgan. That bank's Receivables Edge is now used by 16,500 of its 22,000 lockbox customers and is a surprise hit among middle-market companies.

More useful help is coming from data consolidators, which are including SWIFT data, Jeffery reports. "We're seeing some pretty exciting gains in visibility, and collecting data is moving away from treasury staffs to specialists who don't just compile data and report what's missing but organize it into reports. It's tremendously important for treasury staffs to take advantage of this development,"

While smaller companies are happily trashing spreadsheets and moving to basic, economical hosted solutions, large companies are refining their search for the best solution and it's increasingly clear that comprehensive, integrated solutions are losing. There will be no "mother of all treasury systems" coming down the pike, asserts Gary Greenwald, head of global information products at Citi. "The world has grown more complex, with shared service centers and payment factories doing more and more with liquidity management. The solution today is taking stock of your needs and then finding the right pieces. Today's solution is a mix-and-match mosaic."

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