Where Excel Excels

Although more sophisticated software has been around for decades, many treasury functions continue to rely primarily—or even exclusively—on spreadsheets such as Microsoft Excel. Currently, more than half of companies (51 percent) use spreadsheets as their only treasury technology, according to research firm The Aite Group.

“I have seen some companies that turn over tens of billions, who are still doing treasury management on Excel,” says Damien McMahon, a partner in PwC’s Financial & Treasury Management practice. “Excel is still the most commonly used system in treasury.”

Soon, however, treasury organizations that rely solely on spreadsheets will be in the minority. The Aite Group report goes on to predict that 55 percent of companies will be using treasury systems other than Excel by 2020. Many of these businesses will be implementing a new treasury management system.

Historically, when companies have installed treasury software, they have worked to replace Excel wherever possible. In the drive to improve efficiency, automation, and accountability, finance teams may discount the value of a spreadsheet in the hands of a power user. That, too, is beginning to change.

“People are accepting Excel’s role in the overall treasury systems architecture, rather than ruthlessly trying to remove it,” says McMahon.

Choosing the Right Tool for the Job

Companies installing their first treasury management system will likely find that many staff members have never used a tool other than Excel to manage treasury, observes Enrico Camerinelli, senior analyst at Aite Group, in an April report. In fact, Aite Group estimates that almost two-thirds of companies with more than $750 million in annual revenue—and three-quarters of companies with annual revenue under $250 million—will have used only Excel before trying out a treasury management system for the first time.

In planning the new systems environment, treasury leaders should consider areas in which staff can continue to leverage Excel’s strengths. The stickiness of Excel lies in its appeal to the individual user: its flexibility, speed, ease of use, and visual familiarity. But Excel is not up to all the challenges of a complex modern treasury department. It is not well-suited to incorporating disparate data feeds, integrating with other corporate systems, or providing an audit trail for combating fraud or regulatory compliance. “Treasury has been, until recently, a very siloed office, so the relatively minimal need to integrate with external systems has made spreadsheets a management tool for treasury,” says Camerinelli.

The first guiding principle treasurers should follow in structuring their treasury infrastructure is to make sure they’re using their treasury management system, not Excel, for mission-critical functions, as well as for activities in which security or controls are vital. “Many treasurers will try to avoid using Excel for key control areas,” such as account postings, payments, or any transaction subject to regulatory scrutiny, according to PwC’s McMahon.

Bryan Lapidus, director of the FP&A practice at the Association for Financial Professionals (AFP), notes that the strengths of a treasury management system include the abilities to process high transaction volumes and connect to disparate systems and data. A treasury management system, Lapidus says, “allows for better business continuity, version control, and offers one source of truth.”

Spreadsheets, on the other hand, are best used on the fly and at individual workstations to enable treasury professionals to be flexible and responsive to changing conditions. Excel, Lapidus points out, enables treasury employees to try out new models and complete one-off analyses, perhaps before adding a new data feed to a treasury management system.

Indeed, spreadsheets can serve as an important complement to a treasury management system, says Camerinelli: “The value of a good [treasury management system] is that it can integrate with spreadsheets, allowing the upload of data from a central repository (i.e., the [treasury management system]), and then work on a private spreadsheet ‘sandbox’ for personal use.

“Spreadsheets must not be banned,” Camerinelli continues, “as they are certainly still useful for personal computing (the very purpose for which they’ve been created in first instance) and for ‘quick-and-dirty’ calculations.”

Treasury software vendors are realizing that there is yet another way for corporates to retain the benefits of Excel, even as they move over to a treasury management system: Some of these systems imitate the look and feel of Excel, McMahon notes. They may offer Excel-like user interfaces, or they may open their systems up to developers of business intelligence and data visualization software, such as Tableau or QlikView, through application program interfaces (APIs).

For some treasury professionals who take proprietary pride in their custom Excel documents, moving to a treasury management system may require them to “accept change and loosen control and power,” says Camerinelli. The more that vendors can work with Excel, not against it, the easier the transition will be.

“It is not a technical issue, but rather a behavioral one,” Camerinelli says.

Hilary Johnson is a freelance journalist and contributor to Treasury & Risk who has also written for Reuters, Barron’s, Crain’s New York Business, and Global Finance.