Freeing your treasury

Effectively Load Balancing with a Treasury Management System

Freeing your treasury_HEADER
Author: Kent Clark
Posted on:
November 15, 2016


If you’ve ever met us at a trade show, we’ve probably told you that we have zero per-user license fees. Unfortunately, the assumption most people come to when we tell them this is that we do so to save you money. While it does save you money, the real reason we do this is much deeper, and more important. The truth is, we want you to have as many users as you can, across as many countries as you can, and we want them all using the same software so that you can have a more efficient, effective treasury. We call this “Load Balanced Treasury”, and today I want to tell you how it doesn’t just save you money, it frees your treasury.

“Load balancing” as a concept borrowed from IT. Essentially it’s a process of sharing load between available resources. Without a system to distribute that load, specific resources can get overloaded. Resource overload is bad, because what that can do is halt the entire system until capacity is recovered.

A non-load balanced system

You end up with two options here: increase resources to the overloaded system, or reduce load on that system. So let’s say you go with the former, and allocate more resources there. You solve the overload, but meanwhile, your other systems are possibly not working at full capacity, or worse: idling. This is where a load balancer comes in, it’s positioned between the requests and the resources.

This concept holds true whether you’re a computer system, or a multinational corporate group. Each subsidiary can manage its own finances, and if that’s all going well it’s all fine and dandy. But what happens when one freezes up? This damages the corporate group as a whole.

Load Balancing your treasury: the inherent flaws in the Centralized Model

Now central treasury comes along and it seems to be the solution. Maybe a team manages the European subsidiaries, maybe another manages the Americans, or maybe you have a shared service center so you can pump as many resources into the problem as possible. This seems efficient, but anyone working in the role can tell you that they’re overloaded.

Just like increasing the resources to the one overloaded system, the central model just puts more power behind the company doing all of the work.

Now maybe they’re lucky and some of the subsidiaries can send exported files from their computer systems, maybe they can send CSVs, and maybe you only need to mildly rewrite them, but honestly, how often does that happen? Instead, you get improperly formatted Excel documents with headers in the wrong order, copy-and-paste errors transposing data from banking portals, inconsistent characters used in the sheets, and now it’s up to central treasury to fix it all.

And don’t get me started on the American office that still uses Fax machines…

The further problem with the centralized approach is that it requires people manually fill in data that the central treasury needs for their own efforts. This adds no value to the subsidiary and that’s a problem. If it’s not in their interest to do more, they are often going to fill in data to a level of accuracy and completeness that just satisfies the central treasury. This creates added work for central treasury and inefficiencies in how they operate.

Take care of your subsidiaries and they will take care of you.

With Load Balanced Treasury, the subsidiaries take on some of the responsibilities – to the extent that it’s helpful – while maintaining central control. They can do all those tasks that they need to do to operate locally, and maybe the tasks that they are experts in (such as region specific decisions). We also have the central treasury to organize and participate in the overall process. With Load Balanced Treasury we can use decentralized capacities with centralized control because we are working from a single data source in a central platform.

This last point is crucial: a central platform used by both subsidiaries and central treasury is required for this to work. Their day to day operations shouldn’t just be transposed, rather the system should be pivotal in helping them get things done. This is why we have features like centralized payments and multilateral netting. This is why we build integration with so many systems. This is why we build tools for the subsidiaries. We want them to run their own operations out of the system, because this way you gain clean data and efficient workflows.

For example, all that time that your South African office is taking to put together CSV files for you is suddenly moot, as that data is being pulled directly from their daily operations within the system. Your treasury team is no longer having to chase down offices across time zones, its time processing is reduced to zero because it’s all in the system, and ready for analysis. Suddenly your entire company is running smoother.

It’s using centralized systems to decentralize effort

Let’s face it, the main piece of this entire concept is a centralized system, and any system will do that, right? It’s true.

What we do differently is that every aspect of our system is built around this model. This is why we have multilateral netting, why we do centralized payments, why we have systems to make sure that subsidiaries with intra-firm trade deals have an avenue for voicing disagreements. This is why we have no per-user license fees: we want everyone to use the system. We want your subsidiaries all on it. We want your offices in China, in Alaska, in Bangladesh, we want them all on there. We want this because when they do it, it makes the power and the efficiency of our tools greater. So why would we put a huge economic disincentive, such as a per-user license fee, in the way of this? Why would a TMS vendor work against your best interests by nickel and diming you on the very thing that makes their system great?

Load Balanced Treasury. It’s our philosophy, and it lies at the heart of all that we do.

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