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What a difference a downturn makes. The technology that underpins daily finance operations is now being marketed as a key corporate differentiator, and not the necessary cost centre it has sometimes been perceived to be.

“In today’s company, cash is an asset,” says Kevin Grant, chief executive of IT2, a treasury management software company. “It is about availability of cash and the profile of the current cash position.”

The comments reflect a changed attitude among executives of companies large and small after a steep learning curve for the past few years. For most of the past 20 years, a combination of cheap credit, looser lending policies from banks and falling hardware and software prices fuelled corporate expansion plans. While the front office sold goods and services to customers, computers and communication lines allowed back offices and corporate treasury departments back at headquarters to keep a daily track of sales and payments.

However the financial crisis and its aftermath has dramatically changed the picture. Technology prices may have continued to fall – allowing companies to do more for less – but the environment for lending has tightened.

Many businesses discovered counterparties for payments – and even their banks – were not as creditworthy as assumed. Banks that did survive are under pressure from politicians and shareholders to improve their profitability and lending standards at a time when their earnings are being crimped by the weak global economy.

This situation has been compounded by demands from global regulators designed to shore up the financial system from systemic risk. Agreements such as Basel III, which sets out that banks maintain higher standards of capital, and incoming requirements from G20 countries to process more over-the-counter derivatives clearing through clearing houses, are set to absorb even more capital from the banking system.

As capital becomes an increasingly scarce commodity, companies are finding the onus is falling on them to even more closely monitor their own liquid assets, and the potential risks to them.

As Mr Grant noted in the past, many companies roughly worked on an 80-20 rule for treasury management, expecting smooth and steady payments to be made 80 per cent of the time.

However that perception is changing. A global survey by Accenture, the professional services consultancy, last year found that top-performing companies saw liquidity risk as either their first or their second concern.

The survey also found a growing recognition that companies have an opportunity to drive competitive advantages from their risk management capabilities.

“This means that risk management at the top-performing companies is now more closely integrated with strategic planning and is conducted proactively, with an eye on how such capabilities might help a company move into new markets faster or pursue other evolving growth strategies.”

In practical terms, market participants say “knowing your customer” means knowing your counterparty’s risk profile and the link between it and its own customers. As the financial crisis showed the inadequacies of traditional asset valuation tools such as mark-to-market accounting and value at risk, analysts expect that concern will result in greater use of software that is able to monitor and calculate risk intra-day, or closer to real time.

Companies have also begun examining inefficiencies in their own operations. Businesses have often operated as black boxes with separate software packages for differing finance functions like corporate finance, treasury and risk. “Middle and back offices functions have struggled to keep up with spending in the front office. They need to take a holistic view of risk,” says Stuart Grant, financial services business development manager at Sybase, the US database company.

However the focus on risk is putting pressure on existing functions. “Many treasurers already use a standard treasury management system, but these same treasurers may feel constrained by the system’s inability to cope with increasingly complex requirements,” Enrico Camerinelli, an analyst at Aite Group, the financial services consultancy, wrote in a report late last year.

Growing companies may see themselves as nimbler, more adaptable players. But few have the time or money to run all of their own IT systems. Fewer still have the inclination for a lengthy and risky upgrade. At the same time the onus is growing to monitor their operational risk.

Increasingly, many are considering putting parts of their operations in the cloud, allowing software providers host finance functions in a remote data centre.

Software, rather than being bought, can be rented as a service. The chief attraction, besides cutting labour costs, is that it provides access to large amounts of computing power, ideal for making rapid financial calculations.

How quickly that could come about may depend on the size of the company. In August, the US technology research group Gartner forecast a switch to a more evolutionary approach, owing to the limitations of IT budgets but also the burden of managing the legacy portfolio.

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