Small but Mighty: Technology Supports Treasury Staff Optimization
Here’s why the 2020 Bronze Alexander Hamilton Award in Technology Excellence goes to USI.
USI’s treasury team has always been lean, even as the business has grown exponentially. Harnessing the right technologies at each stage of organizational maturity has been key to success with a small staff.
The insurance and financial services company launched in 1994 with a single office and a team of 40 people. Today, it has more than 8,000 employees in offices in every U.S. state as well as several international locations. “USI made more than 100 acquisitions in its first few years of existence, and management typically just left them alone to operate as they had been operating,” says Nancy Colwell, director of treasury. “Before I joined in 2003, the entire treasury department consisted of one cash manager—an information consolidator tasked with capturing the corporate cash position on a spreadsheet.”
Core treasury activities varied from location to location. “There was no cohesion,” Colwell explains, “and trying to consolidate information from across the company wasn’t terribly efficient. Every business unit was cutting checks out of its own accounts. My first goal when I started was to determine the optimal banking structure across the company.”
Through this bank account rationalization process, Colwell eliminated about 60 percent of the company’s accounts. She established a banking strategy based on the nine regions of the company’s organizational structure. “We said every region could have two bank accounts—one for their fiduciary cash, which they manage on behalf of our clients, and one for operating cash for routine expenses,” she says. “Then we created two shared accounts for all the company’s check disbursements, each associated with either fiduciary obligations or operating expenses.”
The goal of isolating the check disbursements was to minimize the risk of check fraud. To that end, Colwell also assigned location codes to each region based on the type of disbursement (fiduciary or operating), enabling the regions to easily identify their checks for reconciliation purposes. To clear the bank, a check needed a serial number that matched the correct location code. This approach was more secure than the widely decentralized legacy process, and it was more efficient as well.
Colwell’s next step was to deploy a treasury management system. “The financial meltdown of 2008 made it clear that tracking cash flows on a spreadsheet was not the way to go,” she says. “We did an RFP [request for proposal] for a treasury workstation and ultimately selected SunGard ICMS [now part of FIS]. Having a centralized tool for our cash management functions—including cash positioning, bank statement aggregation, and reconciliations—made a world of difference. It gave us a much better handle on monitoring our cash companywide.”
Electronic bank account management (eBAM) is another pillar of the USI treasury technology infrastructure. In 2012, the company was one of the first corporates to take advantage of the technology. USI deployed the FIS eBAM solution, which enables electronic opening, closing, and modification of bank accounts. The treasury team leveraged the software to automate many management tasks for accounts around the world, as well as to handle associated information such as signatories and the potential need for future Foreign Bank and Financial Accounts (FBAR) reporting.
Over the years, USI has continued to upgrade and modernize the treasury management system. A few years ago, the company transitioned to a software-as-a-service (SaaS) solution, FIS Integrity. Today, the treasury solution automatically imports transaction information via BAI files. “The data flows automatically into the system,” Colwell says. “It goes through all the rules we’ve established, allocating each transaction to the correct location. It also automatically performs multiple reconciliations, to ensure that we’ve accounted for every penny. So, in effect, it’s eliminated the manual spreadsheet process we used to use and replaced it with simply pushing a button.”
“To merge our processes across both companies, without disrupting either business, we needed to add over 3,000 rules to the treasury system so that it could apply all transactions to the correct G/L [general ledger] accounts,” Colwell recalls. “That was a huge project, and we had about four months between the start of the process and the close of the acquisition, when the G/L mapping had to be working in production. We got it done, and neither company skipped a beat.”
Colwell sees SaaS treasury software as a major driver of efficiency opportunities. “It’s preferable because we can leave all the technical aspects of managing a treasury solution to the experts, so we don’t really have to worry about involving our IT department,” she reports. “The company has been growing exponentially, and the IT group always has many other projects on their plate. Knowing that the software will automatically be upgraded for us, and that the support team at FIS will manage any crisis situations that we can’t resolve within treasury, Integrity just made sense to us.”
To boost internal confidence in managing treasury data in the cloud, USI instituted a provider audit process. “FIS is responsible for safeguarding our data,” Colwell says. “Obviously, we maintain internal controls. In addition, every year, we go in and look at FIS’s controls to make sure there are no deficiencies in them that could put our data at risk. Those audits give us confidence that our data is in good hands.”
USI’s ability to put the right technologies in place has enabled Colwell to support the rapidly growing business with a lean treasury team. Although her function has quadrupled in size in the past two decades, it still consists of four staff members. “We’re still pretty small considering the size of our business,” she says. “The automation and technological advances we have made enable us to stay on the smaller side in terms of staffing.”
The tech-driven efficiencies have also enabled USI’s treasury team to turn their attention away from rote chores. “We’ve freed up our time for value-added activities like managing USI’s debt and investment portfolios,” Colwell reports. “We also service more than 200 online banking users every day, assisting them with research and supporting their business decisions with insights into cash flows.”
Having additional bandwidth for investment management is crucial. “We are primarily investing fiduciary cash that we’re holding on behalf of our clients, until we need to remit it on their behalf,” Colwell says. “That amount has grown over the years so that now we have close to half a billion dollars to place every month. For these investments, preservation of capital is our most important priority, so we have extremely conservative laddered portfolios that conform to our liquidity needs.” The technologies underlying USI treasury provide clear visibility into those liquidity needs.
“It’s easy for treasury teams to get complacent over time, as they do the same thing over and over again and it continues to work,” Colwell says. “Sometimes it’s not complacency, it’s fear of the unknown that holds people back. But what was the right way to do something several years ago might not be right anymore. Even though we’re small, our treasury group is always looking for ways to enhance our processes so that we become a better partner to the business. That’s the natural progression of striving to be a world-class treasury department.
“The world is evolving so fast that treasury professionals who just sit still are going to be left in the dust,” Colwell concludes. “We all need to be learning, all the time, so that we can make the best possible contributions to our treasury team and our company. Beyond technology, it’s critical for treasury professionals to be willing to learn, willing to grow, and willing to change with the times.”
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