Treasury’s Focus on Efficiency Sharpens

A Business Finance survey shows how treasurers are using new technologies to cut costs and accelerate cash flow.

"Better, faster, cheaper" has long been the mantra of corporate treasurers, yet the drive to make their already-lean organizational machines run even more efficiently is unrelenting. In a recent survey of more than 400 treasury and finance professionals co-sponsored by Business Finance and JPMorgan Chase, 70 percent of respondents said that internal efficiency initiatives have had either an extremely important impact or a very important impact on their treasury function over the past 12 months. That proportion jumps to 86 percent for respondents in companies with annual revenues over $2 billion (see graph 1). This year, pressure to achieve new efficiencies has influenced treasury more than globalization, merger-and-acquisition activity, financial industry consolidation, or e-commerce has.

"Staffing levels are flat or down in most treasury organizations, but treasury is expected to do a lot more -- and that creates inherent problems," says Michael Fossaceca, senior vice president, large corporate sales executive, for JPMorgan Treasury Services in New York City. Three-quarters of the survey's respondents reported that their treasury department employs fewer than 10 full-time people. "New regulatory issues such as Sarbanes-Oxley, rapidly changing technical advances and increasingly complex financial management activities are forcing treasurers to look for ways to be more efficient," Fossaceca adds.

The driving force behind many of the solutions that treasury departments are turning to is the Internet. Forty-one percent of survey respondents -- and 51 percent of those in large companies -- said the urgency with which their organization is pursuing internally focused Web-based activities has intensified during the past year. Only 8 percent of all respondents and 4 percent of those in large companies said internally focused online initiatives became less important to their organization over the past year.

"It's now obvious how powerful a medium the Web is for conducting workflow activities," says Danny Peltz, executive vice president, wholesale Internet and treasury solutions, with Wells Fargo & Co. in San Francisco. "Take payables, for instance, which have to be routed and approved through multiple areas. Instead of using faxes or paper, now organizations can image invoices and route them through a Web-based tool, which compresses the processing time and reduces the cost. Treasurers are keen to reduce their operational costs year over year, and the Web can provide those kinds of efficiencies."

Kim Nelson, manager of cash management for The Ryland Group Inc., a home builder and mortgage finance company based in Calabasas, Calif., says that moving internal processes online is a priority in her Fortune 500 company. "We're definitely doing more and more related to data sharing and online ordering, scheduling and tracking to help all the divisions communicate," she says.

Back-office consolidation and Web-based automation have improved the efficiency of treasury at Ryland. "Most of our 22 divisions have title offices, and we used to have one to two people in each branch initiating wires to do the closings, funding and reconciliation," says Nelson. "Now it's centralized and staffed with four people. Before, the title offices would look at their bank account to see if they had all the money they needed to close a file." If not, funds had to be moved. "Now that it's centralized at our mortgage center, transactions are consolidated and money can move much quicker," she says.