The Route to the Right Treasury Technology

Treasurers are back in the market for technology, but their investments are being driven by compliance requirements and a need to cut costs. The latest tools are changing the face of treasury operations and propelling executives into high-profile roles.

Several years ago, Sue Sadler, director of cash management with Honeywell International Inc., realized that her company was experiencing higher-than-acceptable revenue leakage in its thermostat line. The Morristown, N.J.-based technology and manufacturing giant sells many of its products to large retail chains, and those companies routinely reduced the amounts payable shown on its invoices. For example, a customer might claim that it had received a promotional discount on its order that was not showing up on the bill. Honeywell's invoices to these organizations typically were hundreds of pages long, and just one such document might return with several thousand deductions.

At the time, Honeywell had no automated way of checking its invoices against orders. "We had four people dedicated to the deducts on one account," Sadler recalls. Even so, she was in no hurry to purchase software to improve the process. At Honeywell, as at many other organizations, "it's difficult to make a commitment to [new] technology," she points out. "You've tried so many things, you're leery of trying something else."

However, a careful review of the situation convinced Sadler that an automated system would improve efficiency and free up cash. After spending nine months investigating software packages, Honeywell implemented a product from Aceva Technologies Inc. that electronically extracts information from invoices as they are being generated and compares it with purchase order data. When the system detects a discrepancy -- for example, the invoice price is $89 per unit, but the purchase order price is $75 -- it immediately flags the invoice for review.

Using the new system, Honeywell's cash managers were able to accelerate their research and resolution processes and lop 20 days off the business line's days sales outstanding. The software also helped the company free up some $15 million in cash flow within a year of its implementation, according to Sadler.

Like Honeywell, a growing number of companies -- while not exactly out on buying binges -- are heading back to the treasury technology market. "The spending is picking up," says Bill Follini, senior vice president of strategic marketing with Orbian, a supply-chain finance company in Norwalk, Conn.

One reason for the uptick is that today's treasury systems offer enhanced connectivity to corporate software assets -- enterprise resource planning (ERP) tools, for example -- and to external data sources such as trading portals, according to Bent Benjaminsen, senior vice president of strategic initiatives with software and services provider SunGard Treasury in Wayne, Pa. "The amount of electronic information provided to today's treasurers is growing exponentially," he notes.

In addition, more and more systems are modular, so treasurers can limit their purchases to the functionality they need. That's a switch from 10 or even five years ago. Recalls Benjaminsen: "Eight years ago, when I first implemented a workstation, I had to implement the entire system." It was not possible, for instance, to turn off the application's international accounting component.

A small but growing number of treasury tools are now available from application service providers (ASPs), third-party vendors that offer organizations access to this technology via the Internet. Businesses that use ASPs pay a monthly fee to access the treasury software resources they need, sidestepping the up-front capital investment that a purchase would require.