Digital Treasury: Technology Innovations & Opportunities

[0:00] Announcer:

Thank you for joining today’s session to know the latest technology innovations in the Treasury world. We have with us Julie Weaver, Director of Treasury at Caliber collision centers. Julie was a sixth-grade spelling bee champion, but she also plays sports in the all-city 1600 yard track event. She’s very involved in various boards and has received many awards, including the coin of excellence from Caliber. Julie, the stage is all yours, a round of applause, everyone.

[0:30] Julie Weaver:

All right. Well, thank you for being here to talk about and especially innovations instead of the happy hour going on right now. And I will preface this with I think a lot of the presentations have been given in this room by consultants, and we don’t see any and why and I’m just a treasury professional. And so I’m going to talk to you about what I know, what I’m thinking, what projects I’m interested in doing and hopefully this can be very interactive. I would love to hear what you’re thinking about. And what’s interesting to you guys too.

[1:07] Julie Weaver:

So we’re going to talk about first, here’s the agenda, the evolution of technology, which is going to sound a lot like Sashi. And then we’re going to talk about the Digital Treasury. What’s the digital toolkit for a treasury? How it can help a treasurer meet their objectives, and then really how to take those ideas and move them forward.

[1:34] Julie Weaver:

So first of all, going digital. This is how industries have evolved even in simple things like your morning coffee. We used to have the old coffee pot with the filters in the coffee grounds. In fact, I still have one of those. And now everyone’s got the Keurig and then really convenient, packaged coffee. How your ride to work has changed. Back in the day people walk to work and it was the stagecoach, and there were cars. Now there are cars with all the bells and whistles and even Uber and Lyft. So there’s been a lot of technology that has really disrupted a lot of industries. For instance, in the transportation industry, how Uber and Lyft really have taken the place of taxis in the United States at least. How in the hospitality industry there’s now Airbnb so which gives you another choice. You don’t have to go to the Marriott and Hilton and you can go to an Airbnb and even if you’re entrepreneurial, there’s a way you can even get into the business and the entertainment industry how Netflix has disrupted that industry, with first their mail-order CDs, and now the streaming now there’s all kinds of streaming going on in the entertainment industry. How Amazon has affected the retail industry. If you’re in retail, and you’re not online, and hopefully you have something really specific, and different to sell, and home technology, every home now has a Google or an Alexa or a nest or a ring or the technology where you can, I think this is really forward and turn your lights on and off of your cell phone, no matter where you are. So we’re officially in the digital revolution.

[3:31] Julie Weaver:

We were hunter-gatherers, then we were farmers. Then there was an industrial worker. So now we’re knowledge workers. And even in maybe the blue-collar fields like mine, collision repair. There’s so much technology now in cars, that even those workers have to have knowledge or else they won’t be able to do their job.

[3:58] Julie Weaver:

So Digital Treasury, what is it? So we’ve got all these ideas going on where we’ve got all these payment options now, payments are really a hot topic. So there are the real-time payments there for consumers, you’ve got down, and Venmo, and you know, all of that is going into the B2B space. So payments are really, really a hot topic. So we’ll talk more about these things later. We’ve got the digitization and Uberization of transactions. So with AI, DLT(distributed ledger technology). All these are machine learning, biometrics, they’re all finding their way into cash management. They’re in the Treasury in the cloud. Are all of your ERPs in the cloud now? So we went to the cloud-based ERP just in 2017. But it’s made a tremendous difference. It’s great for connecting APIs. Ours actually has a lot of AI inherent in the ERP. The rise of FinTech has spurred technology like HighRadius and many others, and robotics and automation. So all of these things are ideas that Trevor is thinking of, and really just trying to think, how am I going to use this in my business?

[5:33] Julie Weaver:

So the digital tool kit, digital transportation formation, is spurred by the cloud technology, artificial intelligence, and robotics processes. Like we just talked about, API’s portals and dashboards. So we’ll talk a little bit about those since they weren’t mentioned before. Really a dashboard is where you’re going to get a summary at the touch of a button. There’s a lot of that gives customers a lot of self-service with affordable. For instance, at Caliber, we have a vendor portal where our vendors can go out they can log in, and they can look at what payments we have in our system and statuses so they can see what payments have been made what’s on the way if they’re, they can basically do their own reconciliation of invoices and APIs are really just a connection with another system. And some common ones that are currently available at banks are some of the data services where your account balance, account aggregation, account statements, image retrieval, and it’s the people’s want to know where I’m going to look into this year because the vision of it is you can have this API for your check images and integrated into your in your ERP. So you can be looking at transactions, fish images, and the image will show up for every single chat. So that one really sounds interesting. Make an appointment, you’ve probably seen those buttons when you’ve been on a website and you push the button and it goes to a third seamlessly go to a third party to make an appointment. There’s tax information, transaction details, and a lot around the payments area. There are pushed cards, wire payments, real-time payments. And you see this a lot with credit card payments and the gateways. So you can have a link input into your website where you click on the button, it takes you to the third party to process credit card payments.

[7:49] Julie Weaver:

It’s just some of the interesting API. So this is a survey that was done by PwC in 2019. We’re looking at data analytics, RPA, AI, and blockchain and really how relevant do treasurers think that these technologies are in the next two to three years? So the thing looks like data analytics, most people think it is pretty relevant. But then not a whole lot of relevancy, especially when you get down to blockchain. And another thing interesting about this survey is there’s a lot of I don’t know, which you typically don’t see in a survey, I think that really just means there’s a lot of confusion about what these things are, and how they might be relevant.

[8:42] Julie Weaver:

So the objectives of Treasury have been the same for years. But now how we get there is changing. So of course, we’ve got customer service in the middle. I like to say that Treasury is the heartbeat of a company because any money going in or out is managed by Treasury, you’re dealing with every single department in the company to experiment with legal accounting. So, customer service is really at the center. But we also want to optimize the balance sheet, which is talking really about managing your working capital. Getting money in faster, paying out slower. How do we manage that? What can we do company-wide to optimize the balance sheet, driving efficiencies, every treasury department needs to be efficient because inherently credit requirements are small. For instance, at Caliber, our Treasury Department’s five people, but I’m split with AR and we also manage the company 2000 person, the company closed program within our group. So we need to do more with less. Cash visibility and control, that’s really talking about cash forecasting, which is everybody’s favorite thing to do. And really getting more specific accurate cash forecasting. And of course, liquidity risk management is the goal of Treasury. So we do want to manage our money so that we have it when we need it, but we want to invest it or pay down our lock in our debt in instruments that give better yields.

[10:35] Julie Weaver:

Alright, so that first objective, cash visibility, and control, we’re talking about cash forecasting. And doing the cash forecast for a week, we can get pretty, pretty accurate, but the longer you go out, the accuracy becomes less and less. So we don’t have a lot of confidence in our long term forecast. We at Caliber, we do a 12-month rolling forecast. But after it gets past about a month or so it’s really just directional. And it at least got us out of trouble a couple of times. So how can a digital tool kit help with your forecast? So a lot of this is going to either be AI or it will be your workstation solution. But it can consolidate all of your bank information in one place. So that you don’t spend a lot of time going out pulling bank information from a lot of different portals. And if you’re dealing in foreign currency, which we’re not but if you are, you consolidate the foreign currency there in this in the workstation. The dashboard can be helpful here so we can see at a glance where we are and we can refresh with just a press of a button. AI can help with the forecast by the trending tools and the analogs that are written in there. It can make sure we’re not missing holidays and how that affects the cash forecast. And things like annual events. So like, for instance, we recently missed an annual rebate, because that was a year ago. So we didn’t have that in the forecast and the variance analysis. So these tools can help with the variance analysis. We can look at the frequency, I’d like to look at what we forecasted at the beginning of the month to how we ended the month so I like to look at that month variable. I know some people just look at the day. They’re looking at what we expect today and how close we got to that forecast.

[12:53] Julie Weaver:

Alright, so here’s what can happen when we don’t have good cash visibility and forecasting, it can result in bad investments. We put all our money in Bitcoin and now it’s all gone.

[13:19] Julie Weaver:

Alright, objective number two liquidity risk management. So this is really just making sure that we’ve got the cash that we need when we need it. And then when we don’t need it, it’s in investments that are giving us the best yield, or if it’s locked into maybe a liable loan that has better interest rates.

[13:44] Julie Weaver:

So the challenges with liquidity risk management are some of the same, account complexity and our cash flow forecast accuracy, and the timeliness of that information. So how can a digital toolkit help with this and it’s some of the same as before? But I think the big thing here is that you can crunch data for us. So we can look at that AR and the AP, which is very data-intensive. And it can continuously crunch that information to give us better forecasts. It can look at AR when it’s coming in, and just constantly improve our forecasts as new information is added. And it can look at AP and update our AP and when it’s coming out of our account.

[14:38] Julie Weaver:

Objective three driving efficiency and procedures and control. So our challenges are and one of the things we already talked about is our limited team size and limited IT resources. And how can digital toolkit help? This is where a lot of the FinTech solutions come in, like HighRadius. And also, like, I guess one that comes to mind is an expense reporting tool that I was looking at. And most companies really do kind of a spot check on the expense report. But this tool can actually look at especially if you’re on a company card program, it can look at the MCC, it can look at where the person coded it. And then it can have your procedures for your company and make sure that your expense report is compliant to your rules and guidelines. And it can then red flag that so you come in and you’ll have a dashboard and it will really tell you all the violations and who did it and it can automate emails going back to that employee. So you know, the machine they can look at every single expense report for a person, manual cannot do that. Portals are the great one that we’re looking at right now doing that the customer is going into a procurement portal, and really doing I consolidated billing through that portal, instead of individual billing and individual payments, filling them once a month, with 1015 days to pay, we are still negotiating that. And that way, you’re giving them the bill. And they’re paying it and you know exactly where it needs to be applied. And analysis statements are always a challenge. And especially different banks, because they all look different, all have different categories. And also, you can’t just look at an analysis statement and see how much do I pay for checks. That would probably be four or five lines that you have to add up to get really the real number. So, there are tools for that too, that you can enter your information in, it can make sure that your analysis statement, your trophy services are being priced as, as they should. Also, fraud can be detected with some of these tools. And really fraud is not a technology topic. But it is definitely a big Treasury topic. And I think we all know about Positive Pay and 88 filters and where, you know, you can restrict your accounts and you can’t take money out of them and that kind of thing. But the big thing now is imposter fraud. And even I just want to mention this and we’re all here together, even to the point of where they copy the voice. So like you could even get a call, I would think it was the CFO asking me to do a wire. And it’s not, it’s a fraudster being able to capture his voice, maybe a comma lender presentation or something and then you feel like that voice and manipulate the phone call. So what do we do about that? We, the only thing you really can do is call the person back at a number that you know, and make sure that it really was them requesting the wire to go out.

[18:23] Julie Weaver:

The Fourth objective is optimizing the balance sheet. One side goes on, you didn’t tell me. Okay, optimizing the balance sheet. We actually had a working capital consultant come in this year. And the big find there for us was on the payment side. And there were a lot of things that you can do on the payment side. The big thing is extending your vendor term. And how do you do that? That’s an area that we definitely need your procurement group involved with. But there’s a lot of working capital to be gained and using consultants is actually good for this exercise because they know the industry and kind of the averages for that industry of how they’re getting paid. And so they can tell you where you are, paying kind of like everybody else does. Are you paying longer? Are you really in pretty good shape already? Or are you getting taken advantage of? So they can kind of tell you where you really should be because they’re seeing the whole industry.

[19:38] Julie Weaver:

But along those payment lines, that’s really where payments come in and how you manage your payment term. So if you just have, hopefully not just check payments, and what are your terms for checks or do you offer ACH payment? Do you offer credit card payment? And then different terms for each one. So you might offer a credit card at 30-day terms. There’s even a hybrid credit card that many FinTech, not many banks offer it, but FinTech typically offers it where that hybrid product is. The vendors are being paid with a credit card, but they’re processing it on their behalf. So they’re getting in ACH. So you do get a rebate for that, you’ll get a rebate with the credit card. There’s advantages to each one, credit cards, the advantages, the vendor gets paid, but yet, you don’t have to pay for whatever your terms are with prevent maybe another 30 days. So you’re extending your working capital that way, and you’re also getting every day. Now the hybrid credit card product, the rebate is less and it’s a lower charge also to the vendor. But it’s still maybe a good fit for 45 days. So then 60 days is maybe where you put your ACH payment and don’t offer a check at all. Make that even an option we went to when we didn’t pay our interest checks about two years ago. So any new vendor that’s coming on board, they are either going to sign up for a credit card or ACH with us. And unfortunately, we still have about 50% chance because of those that were kind of grandfathered in. So that will be a project for us in the next couple of years is converting the rest of the vendors from a check. And the reason we still have check is that when we did our credit card program push the bank that was doing the program for us, they only called the top tier of vendors to get all your little ones down there that still are getting paid by check. And this to you might be able to use supply chain financing. With two standard terms, so if you decided you are now going to offer 60 day or 90-day terms, that was your mandate, he could offer a Supply Chain Finance solution where the vendors could go into the portal and they could decide why I want to get paid. Now, instead of waiting 90 days for my payment, or a month from now, you know, they can decide when they can manage when they want to get paid, and that there is a fee for that. So they’ll pay an interest rate fee for their payment being early. But it will typically be less than what they would pay getting financing on their own.

[22:42] Julie Weaver:

Right, so this is what happens when we don’t have optimized balance sheet results. Every month, our savings get smaller and smaller. We really got to figure out a better way to budget for this family.

[23:06] Julie Weaver:

All right. So hopefully you’ve got a few ideas that we’ve already talked about. So say you want to move forward. This is really speaking to project management. And what do you do next? The next step. So first, you’ll identify your opportunity areas. So like I said, for me, we’re going to get out of checks in the next couple years. We’re going to check into that API for images. We’ve got lots of opportunities for robotics, such as robotics are great for pulling reports and saving them somewhere or pulling reports and emailing them somewhere. That’s a very typical robotic type project. And we do that even pulling bank statements. We probably have about 50 bank statements that we have to pull. And we’re just doing that from the portal and just to pull it up, save it 45 minutes a month. It’s not a huge thing, but certainly something in some companies a couple of that as far as bank statements. And so those are some projects.

[24:26] Julie Weaver:

So those are our opportunity areas, then we’re going to align our internal stakeholders, we can’t do this alone. Across the set, make sure that everybody is on board with the project and the steps that we’re going to take. So for the tech project, I’m going to get AP involved, vendor management involved. IT is probably going to be involved whether almost everything IT has to be involved with, unfortunately. Hopefully, it’s limited and then we are going to perform a competitive landscape assessment, like what are our external partners? Are we going to use a consultant as a bank? What kind of vendors are we going to need to accomplish our goals? We’re going to identify the technology that we’re going to need for the implementation. And then we are going to execute a proof of concept and a pilot program. So we might just do it for the one you know one of the items or limited for us if we’re pushing something out to the field, we might do a pilot and just do a region before we push it out to everyone just to work out the bugs. Alright, that’s pretty much all I have. What are you guys doing? We can kind of use this extra time that we’ve got for discussion. Is anybody doing anything interesting?

[26:04] Audience:

Yeah, I said we, we here at Curtiss Wright have begun to use robotics to pull statements. So she had mentioned that earlier, we’re pulling daily statements down using a robot that reprogrammed. So we bought the software. We call it Watson, our name for it. But it literally goes into our banking logs in like a user would an encrypted manner using its own login course, you have to set that up with the bank, tell them what we’re doing, right. And so it knows to login and you know, whatever our you programmers are around midnight or so. So it’ll pull in all the daily statements, you know, 30-40 different bank statements per day. That way they are team, you know, have that information when they come in versus coming in, having to pull them, put them on a website, as well as our monthly statements.

[26:52] Julie Weaver:

And that is something that I’ve heard with robotics, is that oh, yeah, is that there? They are coming in two companies so robotics is a kind of skill now that are coming into companies and there are actually people that are going to be managing bots in the company, whether they be in the IT department or if they do, maybe you bought like we bought some ERP specialists that are actually in the accounting department that would manage something like that.

[27:21] Audience:

That’s where ours are. Okay. Just going to ask you just a maybe conceptual thing. Our banking is set up such that the AP is one bank receivables is another. Yeah, of course, we got credit card solutions, and yet another. Have you found a banking relationship where you’re getting full service if you will, in your industry are you doing this?

[27:46] Julie Weaver:

For us, our business is very simple, and we do use one bank for payables and receivables. I know in a prior company we did exactly what you’re doing. We have receivables in one and payables in another.

[28:00] Audience:

Did you have a Treasury role in that and what advantages did you have by having a separate office?

[28:05] Julie Weaver:

I mean, I think certain banks have certain specialties. So some banks really specialize in payments. But unless they’re very complex or cutting edge, all banks do maintenance really. So you know, you may want to diversify your banking relationships too. So you may want to have a couple of banks to bump pricing off of when you’re implementing something new, or just have that relationship with another bank just in case something happens to the other one.

[28:47] Julie Weaver:

Right. Yeah.

[28:55] Julie Weaver:

Yeah, I’m trying to think about what we did. I think what we did was we moved the money daily over to cover the AP account. And we did that by actually I think what it did was the bank was able to get the number and auto-debit our account so we didn’t have to even look at it. But it is a transaction and there is a bank involved with every transaction.

[29:24] Audience:

Have a question on the security side of things you know, there is a lot of sensitivity around you know, the security breaches and stuff like that. So just want to know your thoughts or anybody here on anything special are doing in that area?

[29:39] Julie Weaver:

I’m not in IT. I don’t know that we’re doing anything special, How about anybody else? Anybody else doing anything special on the IT side of things? No?

[29:54] Audience:

Multi-factor authentications and the things that consulting firms are kind of proposing something.

[30:01] Julie Weaver:

Yeah, I know that a lot of the banks, when you do log into their portal, they are doing the multi-factor authentication where not only do you have to log in with your username and password, but they also are sending you something to your phone where you’re going to have to put in that code. So I am seeing that on some of the bank portals.

[30:26] Julie Weaver:

Yeah.

[30:31] Julie Weaver:

Yeah. Well, in the biometric, I know some banks are able to use your eyes to log in, you’re able to use your thumbprint. So some of that is coming into play instead of just the username and password and mobile telephones, huh? Yeah. So there, they’re doing things to make it easier, but yet still secure.

[31:06] Julie Weaver:

All right, anything else?

[31:10] Julie Weaver:

Does anybody only pay by checks in here? Has no other payment option other than checks now? Good. I mean, when I came to Caliber, five years ago, it was 100% check. So that was just a low hanging fruit, big opportunity to change all the payment methods and get it to get electronic.

[31:38] Julie Weaver:

Well, thank you, guys. Appreciate it.