Control Through Visibility
Progress and Hindsight: from Thomas Edison to Treasury Management Systems
When Thomas Edison perfected the lightbulb and laid the foundation for a viable system of lighting at the end of the 19th century, he created a network subsequent generations can’t even imagine ever having lived without. From the vantage point of technological progress, any era preceding the current standard appears like the darkest of ages – pitifully unenlightened, primitive, ignorant and blind: “How could anybody live like that?” “How were these poor souls even able to do their jobs?” By the same token, today’s digital natives find it all but unimaginable that they share the planet with people who don‘t take advantage of the blessings of digitization: why would anybody do without the potential visibility that comes with access to global data networks and forgo the swift information transfer that enhances our lives by freeing up resources and creating a sustainable basis for informed decision-making in all walks of life?
Even though I don’t belong to the cohort of post-millennials, who have never lived in an analogue world without laptops, smartphones and the high-speed data networks enabling their use, I was recently struck with the same kind of disbelief when I had a chat with BELLIN Founder and CEO Martin Bellin about the humble beginnings of what we now call treasury.
The dark ages of zero visibility
When I questioned him about the technological infrastructure treasurers had at their disposal twenty-five years ago, he painted a rather bleak picture: “I remember my first job back in the early nineties, when treasury was about to break away from accounting and establish itself as a discipline in its own right. I had no system, no visibility, no overview and no clue. I didn’t even know how many group companies we had. The exact opposite of visibility and control.” “But Martin”, I asked, “How could you guys even do your job?!”
Turns out they couldn’t, certainly not as well as they could have with the assistance of suitable tools. Without up-to-date and reliable figures, sustained liquidity planning was all but impossible, risk management bordered on guesswork and payment processing was an arduous and often opaque ordeal. Consequently, Martin applied his IT-background and tried to fix the problem: He built his own rudimentary application, a database to record every bank connection and every account the company had, as well as each loan and any other data pertaining to the headquarters’ business. “But that wasn’t even close to what we should have accomplished.” Because with no contact to and between the group companies, collaboration was virtually non-existent and relevant data unattainable, so a strategy-driven treasury couldn’t be established. But the first step was taken: even though the initial system was static and still relied on Excel spreadsheets, it facilitated a modicum of visibility and control for the core company, enabling it to run a treasury independent from banks and other external advisors.
Networks need nodes: Load-balance your treasury
With the advent of the internet things started to get moving, literally so. Martin Bellin seized the opportunity and transformed the formally static system into a network application. He now held an invaluable tool in his hands to empower treasurers by allowing them to graduate from gatherers of vast data amounts of doubtful accuracy to strategic planners. The concept of Load Balanced Treasury was born.
The beauty of the newly created application didn’t mainly lie in its many components, that enabled the treasurer to perform integral treasury tasks like liquidity planning, multilateral netting or payment processing in an intuitive and efficient way. The real benefit of this web-based Treasury Management System was how it provided these features: by combining information from across the entire company and from all its users. With the headquarters as well as all the subsidiaries participating in the system, accurate and synchronous data was available at all times. Along with this newfound visibility came an unprecedented degree of control – always knowing where their cash was, for example, enabled treasurers to properly manage the company’s liquidity for the first time. Moreover, the group-wide transparency generated by the system allowed the streamlining of processes through shared service centers and consolidated payment platforms, which significantly improved efficiency and promoted a new level of security.
Which begs the final question: why would anybody want to do their job any other way? There is no reason to dwell in the darkness – so let’s turn on the lights and enjoy the view!