Running a Virtual Treasury: Get Yourself Connected

Remote working has quickly become the norm for many treasurers across the globe. But are treasury departments operating optimally in a virtual world? BELLIN’s Michael Juen, Chief Customer Officer, and Michael Bach, Head of Consulting & Implementation, explain how to establish a systems set-up that is efficient and secure, while maximising treasury connectivity and productivity.

No more commuting. No more squeezing into a suit. No more fighting over hot-desking space. It’s fair to say that there are many benefits to remote working. But a common challenge of working from home is suboptimal systems’ access – ranging from a slow internet connection to legacy systems not configured for the cloud, and security vulnerabilities.

Treasurers have not been immune to these difficulties. During the first few weeks of the pandemic, treasury departments had to rapidly adjust from physical to virtual operations. For many, this immediately exposed flaws in systems set-ups. As a result, temporary workarounds were brought in – simply to enable business to continue at some level of ‘normality’.

Now that the initial firefighting has subsided for many organisations, treasury departments are starting to refine their virtual ecosystems. Treasury leaders are putting their tech under the spotlight and asking what best practice looks like in a remote working world.

Defining the optimum

It’s important to remember, though, says Juen, that defining the basis for a great virtual treasury function is really no different from pinpointing the fundamentals of an excellent physical treasury function. “There are basic requirements that every treasury needs to meet. This does not mean that replicating the set-up treasury had pre-pandemic will be optimal in the Covid-19 era; there is absolutely a requirement for change and treasury functions must adapt to the current environment. However, it is vital to have certain building blocks in place to support any treasury function, virtual or otherwise.”

He outlines these fundamentals as follows: compliance and regulation; visibility, transparency and traceability; and supporting growth and efficiency. But, how can each of these be achieved? And how can treasurers optimise what they already have in place?

Time for transformation

Looking at execution of the first fundamental identified by Juen – compliance and regulation – it’s important to consider the difficulties of maintaining process integrity during lockdown. Ideally, he feels treasury would already have reconfigured workflow to avoid non-auditable processes. It should also be following all applicable legislation, regulation and best practices by, for example, implementing segregation of duties and multiple approval levels within systems. And most treasurers will be all too aware that remotely managing Excel workflows is a cue for increased error. A central database is key and a basic prerequisite for reliable data management in treasury.

“Companies that provide a systems environment which can be accessed both locally and centrally are enabling full participation in treasury management tasks – and de facto helping to support compliance and best practices,” Juen believes. He explains that a web-based treasury management system (TMS) enables this kind of decentralised working with relative ease. Those with a TMS without complete web access, meanwhile, have struggled to adapt to remote working in the current environment. “This may have led to workarounds that bypass certain best practices in treasury, which clearly is far from optimal,” he adds.

When considering the second treasury fundamental of ensuring visibility, transparency, and traceability, it is telling that web-based architectures are more effective here too. In this respect, Bach says financial transparency opens up, thanks to the prospect of enhanced reporting at the touch of a button. “Moreover, comprehensive treasury risk management is facilitated via a web-based TMS, thanks to reliable and stable market valuations being instantly available.”

Speaking of instant availability of data, Juen also highlights the benefits of readily available cash balances – across the group – helping corporates to conduct up-to-the-minute liquidity reporting. “In these unusual times, some treasurers may find themselves producing hour-by-hour reports for the board, so intraday liquidity reporting has quickly become the norm.” Having all current financial transactions visible thanks to a well-chosen web-based TMS also enables increased support for treasury accounting.

Of course, keeping this transactional data safe is critical. Bach notes: “In a remote-working environment, cybersecurity is even more essential – threats have increased and working from home has opened up vulnerabilities. The right TMS will offer robust security protocols, including two-factor authentication around payment workflows, to ensure data remains secure within the system, and when transferred externally.”

Adding value

The third fundamental, supporting growth and efficiency, is becoming more important as the treasury function becomes increasingly strategic and ever more critical to business success. “If you don’t have a really efficient systems landscape in place right now, it’s going to be very tough to add value,” comments Bach. “Central and local access to a TMS with managed user permissions is a game-changer in a remote-working environment. Everyone who needs it has access to the information, everywhere. That’s a strong starting point for supporting growth.”

Another way to bolster growth is to examine out-dated processes and practices, which may be limiting treasury’s ability to shine. Bach recommends stripping back the workflows and eliminating unnecessary steps. “This is precisely the kind of review we undertake in our scope management workshops with clients, in order to enable them to get the most from their TMS. We help corporates to automate repetitive manual tasks and implement straight-through processing wherever possible. In turn, this boosts efficiency and reduces both manual errors and the opportunity for fraud. It also frees up the team to be more strategic, which is exactly what’s needed in the Covid environment.”

Furthermore, looking outside of the treasury function, following processes into different departments, and end-to-end across the organisation, can yield even greater efficiencies. Of course, not all treasurers are yet at the stage of having the time to review and improve entire processes. But Juen says that even starting with parts of a process can yield benefits. “There is no need to go for a big-bang approach. Treasurers understandably have a lot on their plates at the moment – and processes can be refined over time. So, I would say that while supporting growth and efficiency is an excellent aspiration, it’s not critical in the middle of a crisis.”

Getting your priorities right

What is more time-sensitive, however, is getting the basic framework for a virtual treasury in place. As alluded to, an integrated, web-based TMS, with the right functionalities (see box 1), can help to do just this. Such a system connects treasury to all of its business entities, banks, trading platforms and enterprise resource planning (ERP) systems, ensuring collaboration but also segregation of duties. This architecture can also drive efficiency through secure access to, and management of, group-wide real-time data, boosting transparency and visibility and affording standardised and consistent processes for the whole group.

As Bach summarises: “A TMS can be the foundation for completing necessary and value-added treasury tasks, both under remote working conditions, and as part of the future scope of treasury.”

The human element

While a TMS may be the bedrock for an excellent virtual (or indeed physical) treasury function, what’s also needed is a great team that works in a connected manner. Says Bach: “Best practice is not all about technology, it’s about humans too – and professional relationships and collaboration are even more important in a remote working environment.”

Juen agrees, adding: “Some treasurers have been feeling isolated during lockdown. Keeping people connected is a vital part of making a success of remote working. At BELLIN, we catch up every Friday via video chat – this replaces our ‘water cooler’ conversations in the office, and ensures we are all motivated for the week ahead.”

He concludes: “Ultimately, treasury is still a people business. The right TMS can enable those people to operate efficiently and securely [see box 2], whether in the office or at home, but this can’t replace human connections. The most important factor for building a successful virtual treasury is keeping your team engaged. After all, people make technology come alive.”