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Embracing Treasury Management Workstation

By Rafael Martinez-Chapman, Treasurer and SVP, Level 3 Communications

Rafael Martinez-Chapman, Treasurer and SVP, Level 3 Communications

As a global company with presence in over 60 countries, Level 3 has to address a higher level of complexity in its treasury operations than most firms–currencies, regulations, time zones, working capital requirements, banking relationships, capitalization requirements, etc. As such, the ability to have cash visibility is very important. And not only just visibility, but speed to visibility. We need to make absolutely sure that even in the countries with a few employees, where payroll and taxes may not exceed $10,000 per run, for example, that those payments are paid promptly and that the right currency is available in the correct disbursement account. To that end, we utilize a treasury management workstation to simplify, automate and document cash balances and certain transactions.

"We utilize a treasury management workstation to simplify, automate and document cash balances and certain transactions"

The treasury management workstation automates a material amount of cash balances on a global basis. By working with our key relationship banks, we are able to use certain reporting formats provided directly from the banks that feed into the workstation. This enables Level 3 to have automated visibility on a daily basis to 95%+ of our global cash. And we have initiatives in place with the IT team to make the process even more efficient and effective in the future. We are ambitious and have high expectations.

The remainder of the cash balances is reported using a more typical approach of online checking and Excel reporting. This approach is more time consuming and is susceptible to human error. We manage the human error concern by a twofold approach–bank reconciliations and auditing of reported cash compared to online historical balances. Of course, the fewer accounts where the manual process is needed, the more time the treasury team has to perform more value-added work.

Is Treasury Management Software worth the amount of money and time spent?

The first thing to remember about project management, as considering a treasury management software is a full project including treasury, IT and typically accounting, is to remember that you will encounter surprises and likely unexpected cost. These risk management considerations must be taken into account as the project cost/benefit analysis is conducted. During this phase, one must not only consider the obvious cost of software, required IT personnel and time to implementation, cost savings, etc, but also must account for quantitative and indirect benefits. For example, a project that improves automation in Treasury will improve capacity not only within the department but also in collections and the reconciliation teams and even investment returns due to higher cash visibility.

Another suggestion is to consider conducting a request for proposal (RFP) for this type of project. The RFP will enable the team to leverage different perspectives provided by the various vendors to fine tune assumptions, dependencies, and resources. Discussions about ERP systems, customized solutions and technological fit with existing online platforms should take place during this stage. These discussions should enable the teams to better prepare and plan to minimize surprises and have realistic project timelines and resources assumptions.

Post implementation, the team should monitor actual benefits compared to expectations to learn and grow. This, in turn, should also help create credibility for future projects.

Overall, by following the project management outline discussed above, Level 3 was able to obtain the financial and intangible benefits expected out of the treasury management software. In addition, as the firm has grown via acquisitions, the team was able to derive more benefits by integrating other treasury platforms. In short, to Level 3, the treasury management workstation was worth the time and money invested.