Experts have been predicting for decades that treasuries wouldautomate more of their processes. The big push has yet to occur.But a recent white paper from Wall Street Systems says theheightened concerns about counterparty risk and an increasedemphasis on accurate cash-flow forecasting amid the credit crunchcould be the final straws that get treasuries off spreadsheets andonto treasury systems.

Until now decisions on whether to purchase treasury systems havebeen guided by calculations of the likely return on the investment,says Mark Lewis, director of corporate treasury at Wall StreetSystems. “Now there is going to be demand irrespective of the ROIbecause of what's happening in the markets.”

Eighty-seven percent of companies now cite counterparty risk asa top treasury concern, according to Wall Street Systems' andconsultancy Treasury Strategies' interviews with 46 U.S.-basedmultinationals. Still, the companies surveyed acknowledge thattheir efforts to manage counterparty risks primarily rely on manualprocesses.

In the wake of last year's market chaos, in which companies sawsupposedly low-risk short-term investments go sour as financialfirms like Bear Stearns and Lehman Brothers disappeared, treasuries“are not sure what's still left out there,” Lewis says.

“You've got to use your own common sense,” he says. “But if youdon't have the technology in place to tell you who you're investingwith and you don't have that in real time, you're blind. You can'tmake the correct decisions.”

Calculating the ROI on a technology investment related tocounterparty risk is particularly difficult, Lewis says. “Untilyou've had a $20 million, $30 million loss on a bank that just wentdown, you don't realize that the risk that you're facing issignificantly higher than the cost of buying a risk managementsystem.”

The survey also shows that 28% of the companies see cash flowforecasting as a top concern. But a stunning 87% of the bigcompanies surveyed still use spreadsheets for cash flowforecasting.

Lewis points out that the problem of cash flow forecasting ismore complex for multinational companies such as those surveyed.“If you don't have visibility of where your cash is and you're in acredit situation where you can't get access to funding, it seemsincredible that they're sitting on cash in some locations when theycan't get funding domestically,” he says. “They have to figure outwhere the cash is and how to get it back in order to leveragefunding.”

See also: After Tomorrow