As the amount of data captured and stored grows exponentially, reports that were once simple logs and lists have become larger and denser, but not necessarily more transparent. The good news is reporting technology is expanding rapidly and crossing new frontiers, so that data can be aggregated and summarized, filtered for the most useful information, arranged in graphic displays and packaged into the reports most useful as tactical business intelligence tools. Here are eight key ways that some treasury and finance departments are leveraging intelligent software today:
- Trend spotting: Simply knowing what drives your business can lead to analytic reports that better support potential actions, even when the process is low-tech. The Columbus (Ohio) Airport Authority closely monitors the flow of people boarding planes, which helps it plan infrastructure improvements and forecast non-airline revenues.
- Improve processes such as FX hedging and commercial paper funding: FX exposures across a large global enterprise can be captured, aggregated and various positions netted out, providing the bottom line exposure. By applying the company’s hedging policy—expressed in rules or guidelines—the reporting program can identify potential trades to hedge this exposure most efficiently, as well as the specific instruments, maturities and dealers involved. When it comes to commercial paper funding, reporting programs can analyze the cash forecast, which itself may be an intelligent, software-generated report, and review current CP outstandings and maturity dates. After applying funding policy and supplying the amount of CP, maturities and dealers to use, you only need to review and approve the transactions.
- Quantify forecasts: Traditionally, forecasts were guesses that reflected history and intuition, but now they can be quantitatively derived and more accurate, making treasury staffs more confident about taking action based on those forecasts.
- Get real-time counterparty risk: Treasuries can collect and analyze the latest data about the financial performance of their banks, hedging counterparties and trading partners to avoid any potential risk.
- Dynamic portfolio analysis: Treasury staffs can “war game” investment portfolios and apply Monte Carlo simulations, which can help in designing a game plan for when interest rates start to rise.
- Reduce bank fee charges: Companies can save by examining account analysis reports from multiple banks and flagging instances when banks aren’t charging the negotiated fees.
- Tighten working capital management: Highlight changes in inventory, collection times or payment outflows that affect working capital to manage it more efficiently.
- Benchmark performance: Get your banks or vendors to pull data from thousands of corporations to provide benchmark reports showing how your company stacks up within your industry or peer group, as well as determine the companies in the top 10%.
Here's the full article, Harnessing Data More Effectively, from our June issue.