McCoy's Building Supply, a retail chain that operates 88 stores in Texas and four surrounding states, has made great strides in recent years in increasing its visibility into its cash.
Tracy Mock, the company's treasury and A/P manager, said the company has a direct pipeline to two of its main banks and accesses a third bank via SWIFT, with its workstation provider, Kyriba, acting as its SWIFT service bureau.
"Then we have 41 different bank accounts that we use a third-party data accumulator to gather the data for us every day and feed us the file every day," Mock said. Previously, "we weren't looking at cash at any of those accounts until the month-end bank statements arrived," she said.
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Bob Stark, vice president of strategy at Kyriba, said the use of a third-party aggregator to gather bank data is common among retailers that have accounts at small banks to cover far-flung stores. "When you get really small banks, they don't provide BAI or any standardized reporting," Stark explained. "There's no choice except to utilize this service."
All of the files, which include prior day and current day information, are fed into the company's Kyriba workstation.
"So we're positioning almost real-time because of our current day feed," Mock said. "By 9:30 in the morning, I know what our current day outflows are going to be."
McCoy's now has 100% cash visibility.
"Without that visibility, we were leaving bigger cash balances out in remote bank accounts because we didn't have as good a visibility into those bank accounts," Mock noted. "Being more accurate with our data and our forecasting allows us to lower balances and utilize that cash better at corporate."
That in turn is a plus for McCoy's finances, said Ignacio Fortuno, McCoy's controller. "Having access to those balances and those transactions that hit the accounts every day certainly helps you to keep your borrowing at a minimum, and that obviously has a financial impact."
The company concentrates its cash, a task that it used to accomplish with a patchwork system of different banks' software and modems. But since it implemented its Kyriba workstation two years ago, Mock said, it concentrates cash through the workstation's payments module, using a daily ACH debit to move excess funds from smaller banks back to one of the company's main operating banks.
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Susan Kelly
Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.
