Understanding Treasury Technology Pitfalls And How To Avoid Them

Webinar: Understanding Treasury Technology Pitfalls and How to Avois Them


Craig Jeffery

Managing Partner,
Strategic Treasurer


[0:03] Craig Jeffery:

Welcome, everyone. I didn’t like line dancing that much. So I came to Texas thinking. What do you guys do here? So the topic is technology pitfalls. What are they and how to avoid them? What’s the best way to avoid pitfalls? Stay on paper. I think you know you can’t stay on paper, you gotta adapt, you have to move and, but in an era and a time of change, and constant adaptation, and the necessity of using technology, how to do that for the victim we can’t see me in a building, I don’t think we need to go through that, but we’re going to cover today. Couple things one what’s the current state of Treasury technology our view across the landscape are different categories of what it looks like to look at top usage and adoption challenges. What are your parents and what are you experiencing? And then how do you navigate or no passes to avoid the pitfalls. There’s going to be some bumps, maybe some potholes but let’s see how we can avoid them as much as possible. And then a little bit of a discussion about managing investments in technology but before we get there how many people are actively involved in Treasury.

Craig Jeffery:

Okay. Almost everyone is actively involved in some furniture building projects now. How many have one plan for this year? Okay, anybody in Treasury not as well. Let’s let that sink in for a second everyone here maybe it’s a selective group you’re coming you’re looking at technology, But there’s almost always a technology project underway, and you learn from experience and you learn how to do things right. And sometimes we can avoid that. But, let’s take a quick view of our view of the technology landscape and takeaways and pictures of how to do it. Now look at this and all its elegance there are five sections around the side. Okay, it’s not that elegant but there are present management systems within portals and banking. There’s compliance management activity. Working Capital Management, kind of touches on the cash conversion cycle around here to treasure visibility. How can I see my bank, looking through my exposures? And then there are risk management tools that helped me everywhere from exposure ID to calibrating those and managing and optimizing what goes on.

[2:34] Craig Jeffery:

We look at all of the things that occur. There’s a tremendous number of tools that exist there. Some of these activities might be in the same system, the system might have different modules and different capabilities. And so you’re not going to have 506 different systems in your organization, hopefully. How many of you have at least 10 spreadsheets to depend on every five people? Raise your hands. Rest, you’re still counting them up. You will get over it. We’ll get over 20. It’s funny, I’ve got three, oh yeah we got another one. Okay. Yeah, 40. Oh until embarrassingly raise our hands. How many have more than 100 spreadsheets? Don’t raise your hand.

Craig Jeffery:

But anyway, so when you look around this, there are different categories but what I have on the side here, advanced automation. This got added to our landscape, we added to our landscape two ago, why because we couldn’t find a way to put it in. So we stuck in RPA robotic process automation, machine learning in AI there. Why did we do that? It’s cool. Everyone wants to hear about AI and machine learning right and RPA. Well, partly it’s because it’s cool. And people will come and want to hear about those topics but partly because the robotic Process Automation does what, it helps move stuff between systems gracefully. Checking information it’s like macros on some sort of steroids or enhanced capability so it can take data from the system check it, move it to another so it short circuit some of the hands-off because we often have multiple, multiple systems. Is that your experience and they have multiple categories like this, and they work on one system right you have so many systems and then what’s the biggest thing. The hand-off between systems, hand-off Excel and something else. And one of those hand-offs? And what are the challenges with the hand-off?

[4:36] Craig Jeffery:

Hand-offs are manual, manual processes print errors and effects are the most costly. And so, therefore, we have a challenge and so we want to put technology and management so your system itself will think, or so many tools that help move it along. So how complex is the technology and different companies. Got a couple different slides here to make you feel more comfortable with how complex things in your organization, or to just show what some layouts look like your Treasury, oftentimes Treasury once you get to a certain size or Treasury system you have a Treasury component of an ERP, or you’ve got something that’s dedicated for Treasury, what’s my position? How do I forecast? How to keep track of my debts? My investments? How do I look and calibrate my risk, so that I can manage my activities? So oftentimes as a Treasury management system. There’s almost always some type of accounting system, and they may be the same or may be different but these are ones that track reconciliations finance reporting A/R the cash conversion cycle plan. And then some other activities that sit on the side. Connecting to different business partners.

Craig Jeffery:

Treasury is very externally focused, you have to deal with banks. The third-party rate providers, you have to send money, receive money, get information in for your forecast, which you have to provide that to your A/R, A/P, and accounting for reconciliation. Now to get the state of the back end, things like treasure aggregators for connectivity providers help you move data in and out, whether you use legacy, older style, host the host connections like SAP in whatever format, those are going into tools that help facilitate getting this data in from outside the organization. So that’s another component of the complexity reveal is a lot of systems internally, but it’s treasuring passes information from outside. And then we put Supply Chain Finance because everyone cares about the cash conversion cycle and cares about working capital. A/R and AP is a component that taps into putting something coming to a bigger area. That’s dropping into the organization of external connections for investment portals, FX activity training, market data force all that information is necessary for the Treasury to make smart decisions. So the last thing I’ll say on this, we want to get into the pitfalls with business intelligence solutions or tools that help me with visibility. One of the big questions you have with the questions we have today, what is management asking for now that they didn’t ask me 15 years ago or five years ago, let me ask just one more question. How many people have more information they have to report or more analysis if we now have three years ago, may have more. Does anybody have less? Does anybody have the same?

[7:47] Craig Jeffery:

Okay, so only think of okay one has about the same everyone else has more. What are the additional things you’re asking me now? When you have three years and over five years? Does anybody have the answer? Credit analysis for forecasting or Okay, how would then apply those defects or issues and then to make them better, a good example. Anybody have any additional activity to do with regarding risk? Some nods if you are allowed to speak that’s okay. Any KYC.

Well, that’s very true. Yeah. KYC knows your customers. All the bank mandates are the permissions very much detail. They’re expecting more that I have counterparty risk and they asked me more in Counterparty we’re celebrating the spending on the flyers there’s nothing flat for a while. A big around 2007 2008 and then people were like, everything good? What went wrong? We fix ours.

Craig Jeffery:

That’s a different topic. But anyway, so we’re looking at this intelligence and say, I’ve got data here, here, outside, etc, you’re asked to do more, you’re asked to look at different owners. And so pulling those together and going using tools that are also grabbing data from different locations to pull that together and doing additional analysis, additional self-service on these questions and have what If this occurs? What is our exposure? What happens if our shipments to China there’s a problem with that? Who is impacting our supply chain? Maybe our creditors are impacted and this type of situation whatsoever be the financial exposure but, the problem with French banks? What’s our exposure to customers whose credit is less? So these ideas I’ve got to collect data places is what is causing more and more people to move into paperwork, accessing data to pull out information together.

All right, so let’s look at some, some results. What are people using for four different tools? One of the technology, Excel, small firms even 7% loves Excel 75% of large organizations here. That’s a lie. I think it’s 100% I don’t know why people don’t say no. It’s an anonymous survey. But, the bank portals you can see, those are used heavily if you’re banking love it, treasure management system, small companies aren’t using those as much. But two thirds sometimes it’s number 80% it’s 82% depends on the survey population will break it out by size. ERP has training for you to see how these numbers move across the board. So we show the number of systems upfront and you can see these are some of the percentages of organizations that have them will have elements of them.

[10:56] Craig Jeffery:

So, let’s look at one more. So I only look at the right side. I treasured people practical, or emotion. You guys think was it both? The normal depends on the day. I would have said they’re rational and normal, but then you guys said you like line dancing. And actually, that’s the most rational dance, right? You guys weren’t doing something crazy. So I guess that fits in the rationale. They’re very rational. How many people want to attend webinars in the latest, coolest name? Do you know how many remember e-bound? Nobody raised their hand, Ernie, remember? Thank you that somebody remembered you there. How many? How many remember the Alamo? Remember the Alamo? Yeah. That’s excellent. Very good. Now I’m off track. What are we talking about?

Craig Jeffery:

So we’re done. Treasury is very practical if you pop up a webinar and you say we’re talking about blockchain, everyone wants to listen to it. Right? And so but the reality is what are people doing? We’re looking at APIs, please ranked innovative technology, or do you think will have the greatest impact on Treasury automation? Very smart API’s for one or two to say 68% AI and machine learning 59% for one or two, blockchain distributed ledger fewer chatbots and other ones that just fall off? Why is that so practical? APIs are great with that, machine learning can detect anomalies, anomalies, and payments, anomalies, and transactions, that we can detect problems before they become effects and have to be fixed in a very laborious manner. They can help us learn and forecast So these two are very practical plumbing, plumbing, and transactions and then monitoring seeing what’s going on. What are some of the other challenges of technology? We look for this on the next slide? What are some of the biggest challenges you’ve had with implementing predictability? No questions got to be summaries not four minutes.

IT resources that don’t exist Okay good. What banking corporate lots of connections that you got to get to the right time to feel inside more banks, and you like secure. Everyone loves that. Everyone loves a secure email. We don’t even ask them some questions and people get ticked off in a quick survey and do it ‘i’m Mad!’ Banks data standardized and you’re not right? How about internally? Resistance to change?

Craig Jeffery:

It’s nice when you push change, it’s not so nice to be pushed on you, right? That’s the whole difference. Right? So those are some of those are actually some great challenges. There’s another one, that’s a significant issue. I didn’t put it on here, but anybody ever used the phrase or let’s say, know, somebody, knows, a friend who’s the brain. Let’s be aggressive. And what does that mean? In Treasury space? I’m going to run somebody over and you’re going to say we’re going to do it if we’re gonna spend a lot of money but which also means like it may take a year to let’s be aggressive and do in two months. Just getting through procurement takes three months. How are we going to do that in two months? Right? It’s setting the standard. That’s there’s not really aggressive, it’s just unrealistic.

[15:08] Craig Jeffery:

And yeah, it can cost a lot of money. So what are some things that are taking a long time sticking to the implementation roadmap, pretty significant differences between what the expectation was and what the reality was, but look at that expectation, only one in five actually stick to the road now, that’s not a high level, right? And one in 92 that’s kind of interesting. But you know, one of the things that I thought was a highlight effective communication with the vendors looking across all these different projects. That’s a pretty low expectation with communication with vendors.

Well, about one in four says, Hey, we had a pretty good time handling patients and those are some of the significant differences and what goes on. Those are challenges. We’ve got a few more items to look at. Now I’m trying to look at a clock for time and it says 1:30 pm. And then you know, it’s not 1:30 pm, is it? It’s 10:30. Okay. Okay, that’s messing with my head. It’s the third time, but I’m Eastern Time Zone one central. This was Pacific. So what we’re telling the Pacific at 87 miles off the California coast and managing it that way, that’s perfect.

Craig Jeffery:

So this is a pretty chart, please don’t memorize it or try to take notes on it. It’s just showing examples of somebody with multiple systems across the board. And what’s going on here. You got either bank being added banks going off. We’ve got different systems pulling in data, various banking platforms. Maybe you’ve combined company multiple Treasury systems, you got a hedging platform, you got all these spreadsheets. And this should be like a massive activity that shows lots of items going on different FTAs in each system, you got multiple ERPs because you’ve done what, got successful and bought someone else. They’re going to intimate it, they bought another company, and then they bought another company. Right? Then what happens? They haven’t integrated everything right? banks do that too. Yeah, well, one bank and you find out when you connected globally, there are four banks you’re connecting too. How’s that simple? But what happens internally as well. So this is an area of quite a significant amount of confusion and complexity with regard and your, your overall structure. So we keep moving.

So just a few things that we talked about the data. We will talk about data for different analytics like AI putting things together putting the systems together means looking at your data on your connectivity your systems according to analytics, because that previous slide has to comprehend what you’re trying to get out at the top for answers, you have data and your connections how do you connect with all these banks gracefully making payments or not so they are secure but with all the taxes being made revolving different systems, so, we will manage the payment system you see managed by payment hubs and then you have to do this management, sitting on the side is how you leverage RPA or A/R or AI machine learning how many people have are RPA in their companies? How many people also have something Treasury with RPA?

[18:39] Craig Jeffery:

Okay, so So, so, there you are. So, all those levels are important in terms of architecting your technology stack, what goes on? Just a question to you not a question but a result of how many people are using the system? You buy a system, put them in until they reach the deadline and cut it back and you cut it back further. And then you only do phase one, you don’t do phase two, how common is that is? That’s really common. So you don’t need too much technology and then someone uses it. You don’t train them. What happens? We use less of it. Rather, pretty much. It’s like, Oh, I use this million-dollar system. Give me a dashboard of balances.

Like, really? I think it does better than that. But that’s part of how we can get there. And that’s part of the issue. What are the pitfalls if we don’t build things out? We don’t brush things typically, we don’t build them out. And we don’t have an institutional process of updating the technology and updating people. Everyone needs to continue to train people to come on. Otherwise, its first-person gets 75% between someone they get 40% and 20 to say why are we using them can’t even answer them. But just look at how many people are using less than 40%. About one in five and in the center more than about 40% of organizations. How much are we using this system that you paid for?

With a few other charts, they only need pleasure. I only have one comment about this slide. This is the question of when you say how long I think my timeframe is 27% I would get it done within one to three years. And only one-third of that number actually accomplished it within that time frame. I’m going to jump forward fairly quickly because we want to leave some time for q&a or q and responsive questions or comments. So we’ll look at it! I have a lot of slides here. I did. So those I’m going to leave behind for you.

[20:55] Craig Jeffery:

I want to say one thing here in terms of people investing in technology. Work here has been investing heavily in technology in payments, Treasury systems, banking systems, receivable management systems, very elevated over the last five or six years. And we think that it’s going to be extremely elevated for Treasury oriented systems for at least five years for payment system for at least seven years, because of all the changes that are going on. So here’s where it’s been happening, got cyber fraud protection, faster and more integrated A/R, CMS, highly elevated, those affordable plans expand significantly and make significant investments. So with that, I think we know that the landscape is intense. It’s complex. There’s a lot of change going on. And anybody reduces some room in your house?

Craig Jeffery:

You’re you have furniture in the house. How easy is that to do? Is it easier having an empty house and you’re like, Okay, we’re gonna take all that done? Take the floor. Yeah. And then we’ll move furniture. Right? So that’s one aspect. Right? It’s, you have to move and redo part of the house while you’re using the house. That’s another that that’s one element. What’s Uh, what’s another issue? Yeah.

I don’t know how you guys decorate your rooms or whatever, but you don’t get you to know, this type of Automan and some high tech-looking art piece here and some old-style Victorian couch in a room because what will happen will happen with your eyes will look at it. It’ll crash, it’ll hurt. It will work. Same thing with technology to make sure that all of your technologies working together towards that, that ideal room in your house.

[22:46] Craig Jeffery:

Now that was fairly quick. I didn’t realize all that time went by so quickly but a couple of comments here and then I want questions. If you have revolutionized space, all those changes are impacting every aspect, of Treasury, every single aspect, data processing power is doubling at the same cost that is raising once, paid itself before 40% of years is doubling every 2 years, connections are getting better, they’re getting easier. This is bringing democratization of Treasury technology that’s available to more people, more companies, we have to make those connections. And it takes a lot of effort and time and requires planning it out and making sure you get the pieces done properly. So having the right type of project plans and delivering on those without pulling things off the deadlines. And then never getting to them are a couple of ways to avoid pitfalls. All right. Thank you.

[0:03] Craig Jeffery: Welcome, everyone. I didn’t like line dancing that much. So I came to Texas thinking. What do you guys do here? So the topic is technology pitfalls. What are they and how to avoid them? What’s the best way to avoid pitfalls? Stay on paper. I think you know you can’t stay on paper, you gotta adapt, you have to move and, but in an era and a time of change, and constant adaptation, and the necessity of using technology, how to do that for the victim we can’t see me in a building, I don’t think we need to go through that, but we’re going to cover today. Couple things one what’s the current state of Treasury technology our view across the landscape are different categories of what it looks like to look at top usage and adoption challenges. What are your parents and what are you experiencing? And then how do you navigate or no passes to avoid the pitfalls. There’s going to be some bumps, maybe some potholes but let’s see how we can avoid them as much as possible. And then a little bit of a discussion about managing investments in technology but…

What you'll learn

Treasury departments are adopting new technological innovations to improve efficiencies and outcomes from various treasury functions but what are the important factors a treasurer as a decision-maker should consider during their evaluation to ensure that they pick tech which meets their objectives and helps them realize its full potential.

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