Interview with Craig A. Jeffery
Jeffery: The biggest change in the technology landscape for midsize firms is the greater availability of hosted applications. This level of elevated performance and reduced price allows midsize firms to achieve visibility, control and functionality once available only to large multinationals. While exciting for the middle market, it should be approached with a degree of caution. Under the new rules, firms must now choose their technology based on complexity and not size. Ease of use versus power and flexibility compete, but the gap between the two has shrunk. Before selecting a system, you must know what you will ask of it. A general rule of thumb: More ad hoc requests require leaning towards newer systems; more reports to various non-treasury staff would suggest a more mature system capable of automated reporting and distribution. Transaction services are still best handled by banks, where capabilities continue to increase for exception handling, problem resolution and reporting–and given the need for greater visibility and control, some banks are gaining traction by providing better liquidity reporting across a number of financial institutions.
But if there is one priority that seems paramount, it is enhancing control in the financial supply chain and ultimately improving working capital management. Much of the acquisition activity and alliances in tech were with that end in mind, with some of the most obvious mileage being logged in the accounts payable and accounts receivable space.
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T&R: What should key priorities be for a midsize company upgrading treasury technology?
Jeffery: Assess your needs and the current capabilities of your systems, based on where your business is headed over the next several years. Do you need to add capabilities or greater flexibility?
Your goals may include visibility to cash and liquidity, managing risks, and optimizing processes and working capital. If this is the case, then your priorities will center on process design, control and flexibility and getting the right data to the right people. One key question to ask: Will the technology help your treasury or finance department spend more time thinking? If not, you are not choosing the right technology. Any new system today should require less care and feeding to maintain adequate uptime, and the most effective systems allow the right people to access them wherever they are located.
T&R: What are common pitfalls for midsize users?
Jeffery: New treasury technology can become like a shiny hammer–everything starts to look like a nail. First, identify the problem or function you want to address. That is one obvious way to avoid that pitfall.
Another common mistake is to believe all the hype about a hot new system. Just because a system is likely to grow in capabilities doesn't make it a good investment if it will require you to hire staff. The other extreme, of course, is to choose a cheaper system even though you suspect its days are numbered.
The delivery platforms now support affordable outsourcing (payments, invoicing) and treasury management (TWS, risk/ FAS133, account management). The most common pitfall is to believe that most technology is beyond your budget.
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