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14 December 2018

Should spreadsheets remain as the main treasury management tool?

Spreadsheets are familiar

We all use spreadsheets. They are familiar accessible, and the de facto standard in Finance departments. Some 9 out of 10 companies use spreadsheets to manage their long-range and strategic planning. And 8 in 10 use spreadsheets for direct and indirect tax provisioning as well as treasury management. Excel is hands-on; it enables executives to feel in control of the numbers they are crunching. With 500 million users worldwide, Excel is inexpensive, convenient, and as widespread as it gets. It offers the flexibility to make changes quickly and easily, and its functionality is intuitive enough for beginners, yet advanced enough for power users with more complex needs.

The Drawbacks

Does that mean that they should remain the primary tool for organizations to manage their treasury? Excel —on its own— was not designed to manage data sets beyond a certain size and level of complexity. Even Microsoft, the maker of Excel, is looking for ways to break the old dependable. While Excel can be a piece of the cash management workflow, in most cases it is not efficient or effective enough to manage the entire process. Excel spreadsheets, which are completed manually via a process of copying and pasting data from one spreadsheet to another, put the enterprise at risk for user errors. Manual mistakes can happen, such as mistyped data, incorrect formulas inputs, hardcoded number errors, broken, outdated and incorrect links, corrupted sheets, etc. While there are some system checks and balances to minimize these, the error potential (especially amongst unskilled users) can be great.

With the current preoccupation with cash flow, cash forecasting and the regulatory demand for real-time snapshots of a company’s financial sturdiness, spreadsheets show many weaknesses:

  • Quality: Spreadsheets lack quality testing. They are built with few safeguards for data governance, data processing or data quality, and not subject to the testing rigors of software.
  • Collaboration: Spreadsheets were not meant for collaboration. Excel remains largely an individual tool and the information is contained in silos. Collaborating on data using email is inefficient, unsecure, and inaccurate. Spreadsheets are unsuited for enterprise-wide collaborative efforts such as budgeting and planning—especially at the level of detail that corporations require.
  • Efficiency: Spreadsheets were not conceived for multiple stakeholders and complex budgeting processes.
  • Accuracy: Spreadsheets don’t readily facilitate an audit trail for every data change. In cash flow forecasting terms, this makes it more difficult to ensure proper corporate governance— which should be a concern in today’s compliance-heavy environment.

Treasury Management System Advantages

Enter Treasury Management Systems (TMS). Appropriate for midsize and large companies, the TMS solution can bring better control and transparency to Cash Liquidity Management.

Visibility, Flexibility and Transparency

A Treasury Management System brings immediate visibility of all data via a single view or through analytics. It automatically consolidates and reports information across the organization in real-time. This provides true data consistency and eliminates double entry processes.

Cash Flow Forecasts and Dashboards

Cash Management can be simplified by capturing data and producing dashboards in different perspectives delivered by a Treasury Management System. The users get the ability to slice-and- dice or drill-down views, moving through data hierarchies and detail levels. Furthermore, Risk Management could be facilitated though ongoing prediction of cash inflows and outflows over a defined period of time. These key predictions could be produced by the cash flow forecasts of TMS dashboards.

Collaboration

Data consolidation facilitates the collaboration between different business units or subsidiaries and provides financial reporting compliance. Their Cloud-based applications can be accessed by anyone, anywhere.

De-risking

Global treasury teams working together in real-time in a common system can have better control over cash management. In a world of financial turmoil, being able to assure liquidity and funding continuity is a must for de-risking the business. The economic reality forces companies to look beyond desktop spreadsheets.

Spreadsheets and TMS: Coexisting via Modern BI Tools

Despite their drawbacks, spreadsheets will always play an important role in Treasury. By upgrading them and integrating them with valuable Treasury Management Systems, we can help eliminate their drawbacks.

The transition to TMS has a substantial cost savings, as well as a reduction in the total number of templates, by moving from desktop spreadsheets to online, dynamic, and database- driven spreadsheets.

A unified TMS can deliver powerful reporting through a business intelligence tool like Power BI with Excel Online. All the processes, including planning, budgeting, consolidation, reporting, analysis, and score carding are consolidated and easy to use.

Conclusion

It pays to invest in a treasury management system combined with online spreadsheets and BI tools, in order to simplify cash liquidity management, de-risk business and obtain accurate financial reporting in real-time.

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