With over 20 years of experience in developing treasury management software for banks, our company has recently expanded into the corporate treasury space. To ensure we’re addressing the real needs of corporate clients, we spent the past year conducting in-depth interviews with CFOs and Treasurers across Hungary and the region. We listened closely to understand their biggest challenges around liquidity management and financial risk — and their insights are shaping the solutions we’re building next.

Understanding the needs of corporate treasurers in this rapidly changing environment is key for a IT company offering products for this market. That is why we wanted to have hands-on information directly from CFOs and Treasurers. We did not want to make a questionnaire only, rather we asked them in a long, app. 1 hour interview so that they can highlight what is important for them specifically. We approached locally owned mid to large companies with major foreign activities and some multinational companies as well and now we believe we have a good understanding of the focus points of the requirements.

Based on our analysis the following typical companies emerge from a Treasury management perspective:

The regional or local champions

The company already decided to implement an ERP system, but in most of the cases these are still “under construction” phase, a project which never finishes and started not so long ago. There is still room for some legacy systems for specific purposes like controlling, sales, procurement etc. so the ERP cannot cover the total operation, many times just a bit more than a financial system.

The treasury is part of the finance team but is already present as a job function or a small team.  A major part of the job of a treasurer is managing the data “chaos” and the lack of integration of the systems. The treasurer investigates where the reliable data is, and how it can be collected. Usually there is only one solution to that problem, manually integrate the data into a giant excel file using the input of different systems, some orally confirmed information. The result is usually that a certainty level of the liquidity or FX position diminishes very fast as we go ahead in time, many cases the 30-day time horizon is the maximum to achieve with higher accuracy.  Usually contracting is the first step where reliable position information is possible to catch.

With regards to FX exposure there are unknown risks, meaning the data is not available in time for the treasury. E.g. the risk position opens when the Sales team gives an offer, but the information reaches the treasury only when the contract is signed or at billing.

As it is difficult to put together the full picture the treasurer is forced to hedge transactions and not the actual risk position of the company, which obviously can become an expensive modus operandi.

With regards to processes the learning by doing is typical which means companies with high FX exposures are more focused on those processes which help them manage this risk better, some others more advanced to manage their scarce liquidity.

Multinational companies are more advanced in a few fronts: usually head offices pushed ERP implementation at an earlier phase and they showed the subsidiaries the best practices. In most cases the treasury is managed with Treasury management software and policies are in place. In some cases, there is a Central Treasury function, and subsidiaries are not independent in their risk management, their main challenge is proper reporting of the positions which often still comes as a result of an Excel based integration of different information sources.

It was very interesting to see where the interviewed companies see their major challenges. Let me highlight the most typical issues:

• Managing data chaos – too many different data sources, different levels of integration and difficulty in reconciling
• Manual consolidation of positions – Treasurer takes unnecessary amount of time with manual work on just putting together the liquidity or FX position
• Information silos – Difficulty in getting information on risks at the time of emergence
• Business plan vs. Cashflow plan – business plans are based on accounting view and not on cashflow view , the translation is not supported with systems
• Bank connectivity – there is no one consolidated view on cash positions when more bank accounts are used
• Company groups – we see the problem of the consolidation of different companies’ positions as an extra pain point

Based on these findings we built our corporate treasury system in focusing on the following areas:

1. Supporting the company groups in different setups
2. Putting liquidity and cashflow planning into the center
3. FX risk management
4. Multi-Bank connectivity