Larger corporations will find that the task of consolidating and investing the cash flows from their multitude of subsidiaries is an extremely labor-intensive process, involving the collection of information from every company location about cash requirements and excess amounts, logging in related transactions, and managing the flow of cash from perhaps hundreds of accounts to centralized investment vehicles—and doing so every day. The labor associated with this work may remind one of the years-long works of a group of monks who write a book by hand. A much easier approach is to use Internet-based software to more rapidly marshal the flow of information.
Many examples of such software are provided by various providers that you can find in the internet. Under this approach, a user organization signs up with an internet-based cash flow analysis, which usually paid on a subscription basis, and gives it the company’s list of banks and bank accounts. The staff of the provider then takes two to three days to contact each bank and arrange for automated porting of the company’s cash transactions to the provider’s site, where they are combined and reconciled. This results in a daily cash position worksheet that the accounting and finance staffs can use to determine the correct borrowing or investing decisions for the day.
Because of the great reduction in labor that would otherwise have been required to create the cash position worksheet, this also means that the information will be available much earlier in the day than would otherwise be the case, yielding more time in which to make the best cash management decisions.
In addition to this basic function, the site allows users at remote locations to enter special transactions, such as requests for wire transfers. This allows users at the corporate headquarters to see all cash-related transactions at the same time, while avoiding the use of manual entries of these transactions, which usually involve faxes of requested transactions from outlying location, that are then keypunched into a central electronic spreadsheet.
This approach also carries with it the advantages associated with any application service provider (ASP), such as the avoidance of an investment in software or hardware, or the information technology staff that would otherwise be needed to maintain an internal installation. Furthermore, the responsibility for keeping the site up and running at all times falls on the supplier, rather than the accounting or treasury department. In addition, the provider has a data file download that can be modified for automated porting to a company’s general ledger, so that cash transactions can be integrated with internal accounting systems with a minimum of effort.
One problem with Internet-based treasury software is that access to it is predicated on the reliability of Internet access, which still does not match the reliability of internal networks. Also, these sites are designed for companies with a smaller range of banking relationships (in the case of some service providers, information from four banks maybe the maximum allowable amount that will be automatically collected and presented); for those with a larger number of relationships, it is still necessary to purchase more expensive software and install it in-house. However, despite these problems, the use of an Internet-based treasury site may be well worth the effort for those organizations currently spending a large amount of staff time consolidating banking information for investment and borrowing purposes.