Listen to the latest episode of Bramasol’s Insights to Action Podcast Series. In this episode, Dave Fellers, Bramasol CEO, provides an in-depth exploration of global trends driving the need for enterprise-wide integration of treasury functions, along with a detailed discussion of the key SAP tool sets available to support and streamline the treasury integration process.

Subscribe
Subscribe

Also, below is a transcript of the podcast episode:

Jim Hunt: Hello, this is Jim hunt for Bramasol’s Insights to Action podcast series. Today, we’re really lucky to have Dave Fellers who is CEO of Bramasol. Dave first joined Bramasol in 2007 to relaunch it’s professional services business and, since becoming CEO in 2011, he’s turned Bramasol to focus more on the Office of the CFO and he’s guided the company to record setting growth in revenues along with a focus on accounting, compliance, treasury and finance transformation. Today we’re going to talk about treasury with a focus on integrating it across the enterprise, including how you do it and what the benefits are. Dave it’s really great to have you here today.

Dave Fellers: Thank you, Jim. It’s a pleasure to be here.

Jim Hunt: Well, why don’t we just jump right in and start with the overview. What are the key challenges that are facing treasury executives today?

Dave Fellers: What a time to be a treasurer executive in today’s market conditions and with the global pandemic. A treasurer today, and this is kind of true any day but it’s more intense nowadays, is you have to have visibility to cash and cash position. You need to know where your cash is. You need to know if you have enough to pay upcoming bills. You need to have predictability on what’s coming in. And that predictability is maybe a little different today than it was a few months ago. So that’s clearly one of the most important things. And then along with having the cash is having an understanding of the risk you face. And again, that risk can include credit risk, whether defaults are prevalent or climbing. If cash is a strain, you need to know if your cash is trapped, possibly in some geography where it’s not easily accessible. Or perhaps things have changed recently, as governments make changes to adapt with the situation they face. So, the cash you were counting on may not be as readily available. And then there’s other kinds of risks that you’re always managing as a treasurer, such as in commodities.

Dave Fellers: There’s two major issues that happened this spring,certainly in the oil and oil derivatives field between the Russian and Middle East oil standoff and then the COVID-19 pandemic, that as a treasurer you certainly wanted to be in a good position to manage that risk with hedging solutions, for example. So these are some of the big challenges, and then kind of one other one that all treasurers are watching more and more, and leads to a lot of integration in treasury functions to the rest of the businesses, is managing working capital. That’s the whole ability to understand and collect cash as fast as you can, defer payments as much as possible, manage payment terms, both outgoing and incoming, and working with your sales and procurement organizations to guide on where you need to be for that. So these are, these are just some of the challenges that treasury executives are being asked to deal with and bring solutions to their companies.

Jim Hunt: Excellent. So many of our listeners are in companies that have a global span, and you mentioned different geographies where your cash might be trapped and so on. We’re going to talk about enterprise wide integration, so what are the functions, you mentioned some of them, but maybe you could elaborate on the functions that are most in need of enterprise wide integration.

Dave Fellers: Yeah, absolutely, Jim. For each company, their own situation may differ, but one key trend is the overall integration of treasury into the operations of a business is a trend that’s been taking place. It’s an important attribute to consider in managing the treasury function, both from a treasurer’s point of view and also the CEO, the CFO and outsiders that are looking to understanding and having that integration from other parts of the business into how treasury is dealing with and managing those topics that I mentioned, like working capital and handling risk. Certainly one of the most important integration areas relates to the integration to the accounts payable and accounts receivable functions, for understanding where the cash is in the banking stream – so that there’s an understanding of where collections need to take place and where payments need to be structured.

One of the things that can happen is you can create a concept of straight through processing, which is integration now between treasury AR and AP, that allows you to handle collection of cash and outgoing payments in a way where the steps are integrated and essentially occur in one process flow, as opposed to being independent steps, possibly In independent systems. That does several things. It streamlines processing significantly. It can increase control. And with all that integration, it can increase the visibility quite a bit as well. Related to that, you might use tools such as procurement systems, such as Ariba and others, and tie that into your treasury. Finally, enterprise integration is really enhanced by leveraging reporting and dashboard type features such as analyzers that can give alerts that can be used to manage key performance indicators and trigger when a response or an action needs to be taken. And these capabilities are at their best the better the integration is of all the information across an enterprise, especially the more diverse and dispersed it is geographically or business unit wise.

Jim Hunt: That’s great. Dave, thank you. Next step, how does integration improve cash management and working capital management?

Dave Fellers: Well, and as I’ve covered, integration plays a critical role for the creating better visibility. But then the question is what can you do with that? And we have a few different clients that we work with for whom this improvement of cash management and what it drives is very, very important. And there’s an actual return to the company in being able to do this better. For example, if you identify that you have a need to borrow cash, essentially to gain some liquidity, the visibility you get through an integrated system around your cash side tells you that you need to take action. And the sooner you know that, and the more clearly you know that, regardless of geography, regardless of currency you may need to take action in, there are advantages to having kind of an early move capability that can be quantified sometimes by as much as 25 basis points, which over a significant sum of money can add up to quite a bit of savings if you’re able to reduce your borrowing costs by those kinds of amounts. And there are companies that have predicated some of their efforts around integration and managing, working capital and cash around obtaining those kinds of savings.

Jim Hunt: Those certainly can be significant across a large company. Let’s switch gears a little bit to the SAP side and talk maybe about some of the SAP applications that can be brought together for a treasury integration.

Dave Fellers: Yes, absolutely, Jim. There’s a number of functionalities and features within SAP’s portfolio. Some of them of particular interests include multi-bank connectivity, which is a kind of a middleware that communicates with banks. So if you want cash visibility, it makes sense that if your cash is in banks, that gaining insight to that is going to be valuable. And the multi-bank connectivity feature includes over a hundred pre connected banks, including across variety of different formats, whether it’s Swift or, or others. So that you get that visibility built in and the multi-bank connectivity tool will automatically communicate with this diverse set of banks to let you see your status on various things, such as in-going out-going payments and things like cash balances, and this feeds into another important feature, which is electronic bank statements.

Obviously an electronic bank statement is one of the backbones of treasury functions and having the ability to use tools like bank account manager and bank communication manager, and the automation they bring, allows you to have very timely, consistent electronic bank statement visibility, even multiple times a day, if that makes sense for your business for managing the processing happening there. One other feature of treasury integration across SAP applications is the accounts receivable and accounts payable processes actually do integrate with treasury. So I referred a couple of times now to the working capital management and the importance of that. And so the, the tool set allows for that. On the debt and investment side of things, there’s a credit facility management module and liquidity management. These are also tools that are part of a pretty broad and sophisticated set of capabilities that a treasurer will want to leverage. And then finally, and again I’ve mentioned this before, but tools like Ariba, which is part of the SAP suite that can link and integrate within the SAP function into treasury. You know, it gives you a lot of insight in this case, on the supply chain side, which can be very important for a company, especially in this time period where you’re looking to maintain supply chain resiliency, which is very important to companies are counting on that to help keep things going.

Jim Hunt: That’s great. One big thing that we’ve talked about a lot around Bramasol, we’ve done some webinars on it, is the SAP Central Finance or CFIN function. Maybe you could talk some about how that can play into laying out your implementation road-map and bringing the pieces together.

Dave Fellers: So SAP’s Central Finance capabilities provide a really great tool set to solve some key challenges. So many large corporations have very complex heterogeneous landscapes with multiple SAP systems and possibly other ERP systems like Oracle and other systems beyond that. And the ability from a treasury function, as well as from corporate finance to really get insight into the business can be challenging. The Central Finance tool set is actually S/4HANA with a number of enablers pulling information in from the source systems, again, whether it’s multiple SAP or others, so that you can get full visibility to things like accounts receivable and payables. And you actually can process those capabilities in the Central Finance layer, so the treasury function is fully a part of and integrated into that, which means that you can leverage and take advantage of SAP’s S/4HANA treasury capabilities in the Central Finance environment.

Dave Fellers: And if you choose to then move further to full adoption of S/4HANA, from a Central Finance starting point, the treasury piece flows right along with you because it’s one in the same and it’s already there. So it’s a big advantage there, taking advantage of that capability. And, as you mentioned, with Bramsol and myself being focused on serving the finance and accounting function, Central Finance is a key tool set that we spend a lot of time and have a lot of focus and expertise around.

Jim Hunt: So it sounds like it almost gives you the best of both worlds it’s S/4HANA based so that you have the advantage of the most advanced technology. You also have the advantage of, if you move to S/4HANA, you already have many of the underpinnings in place, but it sounds like it’s agnostic enough that you don’t have to do a full S/4HANA implementation in order to take advantage of Central Finance.

Dave Fellers: Yeah, absolutely. And central finance has solved a pressing need companies have had, regardless of the challenge to face the journey of going to S4/HANA. And that’s just creating visibility that Central Finance delivers. So it’s key kind of secret sauce is it’s connectivity tools that pull information in from outside sources into the various finance functions that are contained within Central Finance. And again, treasury happens to be one of the strong ones. Many treasurers like the idea of a treasury workstation and the Central Finance treasury set up essentially creates that equivalency of a treasury workstation concept.

Jim Hunt: Yeah. So many companies, they have the burden of their legacy systems that they can’t throw away and they have to deal with. And it sounds like Central Finance is a real key agnostic tool to help unify those, but also lay the groundwork to go forward.

Dave Fellers: Yeah, absolutely, Jim. When companies have such a complex environment that they’ve spent years building up and investing in, it can be hard to move away from that information technology infrastructure. It can be hard because of the investments made. It also can be hard because of the layers of customized functionality built in to meet the specific needs. So, at the end of the day, if you can pull out the key financial ingredients, the key financial information that you need to create centralized functions to create a greater reporting oversight and analytics, Central Finance allows you to do that. That gives companies a great opportunity to gain some advantages of the digital transformation that people talk about while not having to throw away all the systems that are foundational to how companies are running at this time,

Jim Hunt: This has been a great overview and what listeners are asking themselves now is what are the next steps and how can I get started? So can you elaborate a little bit on that?

Dave Fellers: Sure. And that’s a great question. Bramasol has a fantastic product to do a treasury assessment, and this is one of our special focus areas. So we have what we call a three step process across four dimensions that we think are a great way for any company to interact with us. Through this process that allows us to give a road-map, so to speak of where you are today and where you can go in the future as company. And the steps are relatively simple. There’s a preparation effort that takes place. Then there’s a series of workshops. And then we conclude it with a readout and delivery of the results. And the dimensions that we cover include an accounting point of view, taking a look at functional aspects of the operations and then a technical assessment, so the underlying technical underpinnings, and then finally looking at the reporting and analytics that are a part of that. And this is both looking at where you are and where you can go. And from that, it gives a company a great chance then to have some insights on the options available to them to move forward.

Jim Hunt: How long does that process typically take to do the assessments and get ready to start?

Dave Fellers: Assessments can be one to two weeks in Bramasol has a number of them. So we either can do a single assessment on a single area, such as such as treasury, maybe such as the cash and cash application function, cash management function, or we can also bring in other areas of the finance and accounting portfolio, as well as the underlying ERP portfolio. So, planning for about a week to two is the typical that companies like to take. It allows us to relatively quickly provide some analysis and then some feedback. And then from there, companies can make a decision on how to proceed further with other deeper dives, and possibly it gives them the insight that they need to make some decisions to move forward on a system or business changes that impact treasury or other finance functions.

Jim Hunt: Excellent. And on the podcast page, we’ll include information on how to contact Bramasol to engage on the assessment or to get any questions answered. Well, Dave, this has been great. Is there anything that you want to add in way of a wrap up? I think you’ve covered a lot of great territory here.

Dave Fellers: Well, I do want to thank you, Jim. And for those who do listen, certainly please follow up and find out additional information we’re making available. Bramasol is a very key partner of SAP and the SAP ecosystem, and we have been very focused for many years now on the finance and accounting area and focusing on how to help companies take the maximum advantage of the digital transformation that’s hitting everybody.

Jim Hunt: Great. Dave, I really appreciate your time today. I think our listeners will learn a lot, so thank you and have a good day.

Dave Fellers: Thank you.

You may also be interested in…

Internal Controls for Treasury
Read Now
Treasury Managing Risk and exposure
Watch Now
How Payment Factory can Improve Your Cash Flow, Increase Productivity and Reduce Risk
Listen Now