The economic crisis has vaporized the vestiges of traditionalism that still pervaded a lot of middle-market companies and forced their executives to think about new ways of doing things. "This has been a great time to step back and take a fresh look at internal processes, efficiency and cash flow drivers," notes Bernie Avondet, senior treasury management adviser at Cleveland-based KeyBank. "Cost is a big concern, and we certainly see cost-cutting, but cash flow is an even bigger concern, and we're seeing middle-market companies spend money on treasury workstations or other high-tech tools that will help them improve cash flow."
Middle-market companies are emulating large corporations by adopting more sophisticated services as they become increasingly affordable and easy to use, reports Laurie McCulley, a principal at Treasury Strategies in Chicago. "They're seeing that they can leverage technology. They're becoming involved in areas where they were never active before," McCulley says. "We've seen companies under $1 billion in annual revenue set up global cash pooling structures. That's new. They're using SWIFT directly through the Alliance Lite model and finding it quick and inexpensive. They're taking on global activity, either through sales or sourcing or both. They're encountering foreign exchange issues. They're worrying about their cash visibility globally."
Sophisticated automation is reaching middle-market treasuries. With $1.15 billion in 2008 revenues, National Financial Partners has just selected its first treasury workstation, and assistant vice president and treasury manager David Miller is delighted. "The products are phenomenal," he says. "The automation is terrific. The capabilities are endless. We'll see big improvements from putting all our treasury activities into one system that ties it all together and automates most of it. We'll be gaining a lot of efficiency."
The rational elegance of a fully automated treasury operation with full global visibility, straight-through processing, an executive dashboard refreshed in real time and optimized liquidity usually collides at some point with the messy realities of commerce. At Carlile Transportation Systems, the collision is conspicuous. Anchorage, Alaska-based Carlile is a $135 million trucking and logistics company with 650 employees. It has offices in five states and Canada, and its revenue has doubled in the past seven years. Carlile annually processes about 300,000 bills of lading to move more than 1.2 billion pounds of freight.
Columbia Sportswear is a middle-market company, with $1.3 billion in annual revenue, but it has global sales, substantial foreign exchange trading activity, and global payments and receipts, as well as a significant short-term investment portfolio to manage. It adds up to a significant amount of trading, tracking, reconciling and forecasting, much of it done manually back in 2008.