EXECUTIVE REPORT

TREASURY TECHNOLOGY:WHAT COMPANIES WANT

Treasury Technology: What Companies Want

Gregory J. Millman

William M. Sinnett Director of Research

Financial Executives Research Foundation

the source for financial solutions 1250 Headquarters Plaza West Tower, 7th Floor Morristown, NJ 07960 www.ferf.org an affiliate of financial executives international

Treasury Technology: What Companies Want

TABLE OF CONTENTS Purpose and Executive Summary 1 Introduction 2 Research Methodology 3 Technology Currently Used 4 Bank Communications Software 4 SWIFT 6 ERP Solutions 7 In-House Banking Solutions 8 Cross-Border Multi-Currency Notional Cash Pooling Solutions 9 Key Business Drivers 10 Technology Companies Want 12 Companies Interviewed 14 About the Authors 16 About Financial Executives Research Foundation, Inc 17

Treasury Technology: What Companies Want

Purpose The purpose of this study is to describe the technologies that treasury organizations use to manage liquidity and automate tasks traditionally performed manually, and describe the treasury capabilities that they would like to have in future technology. Executive Summary FERF staff interviewed treasury executives from 10 companies for this research project (see Exhibit 1). Executives interviewed were asked to describe the current types of technologies that they use to manage their treasury operations, why they selected those technologies, whether they planned to acquire new technology, and the capabilities that they would specify in making future technology investments. Then, to get an overview of industry trends in treasury technology, FERF staff interviewed Melissa Cameron and Niklas Bergentoft, with Deloitte & Touche LLPs treasury consulting practice. The companies interviewed use a variety of treasury software technologies:

All of the companies use bank communications software. Seven of the companies interviewed use Enterprise Resource Planning (ERP)

systems, but none of these companies use all of the treasury modules available with their ERP systems

Key business drivers behind the selection of treasury technologies:

To improve automation was a key business driver for 9 of the companies interviewed.

Other key business drivers include cost reduction, cycle time reduction, and more accurate financial reporting.

Global standardization is important. Capabilities desired from future technology purchases:

Integration of treasury management with financial reporting systems is important. Cash management, liquidity management and bank connectivity are other

important functionalities that are desired. Companies are looking for ways to standardize their multiple bank relationships.

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Introduction Finance organizations must perform critical functions in a world of increasing complexity and tighter regulation. External factors, such as the reduced overall market liquidity and added complexity of managing global counterparty risks, have increased financial management costs. These factors have led to investments in technology solutions, because merely adding headcount is not an adequate solution to managing risks on a real-time basis. The treasury function faces similar challenges, because of the following external factors which place increasing demands on the treasury function:

Globalization; Financial market turmoil; Risk management; The effects of the liquidity crisis; and Regulation.

Technology solutions can automate manual treasury processes, such as:

Liquidity management and forecastingTechnology solutions can consolidate data to facilitate cash flow forecasting. In addition, there are solutions that provide better visibility into cash balances held across multiple banks.

Risk reportingThe key focus lately has been on exposure gathering and risk reporting. Treasury and risk technology solutions can be used to help automate exposure gathering, reporting of counterparty risk, foreign exchange (FX) and interest rate risk.

Work AutomationMany treasury departments still utilize spreadsheets for the bulk of their information gathering and processing work. Automation of labor intensive tasks such as bank reconciliation, cash positioning, liquidity forecasting and automation of accounting can save considerable time, reduce errors and enable treasury professionals to perform higher value-added work.

Compliance and reportingCompanies require stronger integration between traditional treasury management software and financial reporting applications. This requirement is driven by regulations such as Financial Accounting Standard 133, International Financial Reporting Standard 7 and International Accounting Standard 39, but responds to a broader mandate of increased reporting and transparency of financial positions, transactions and documentation of processes to ensure compliance.

Previous FERF research, such as Sarbanes-Oxley Section 404 Implementation and Sarbanes-Oxley Section 404 Compliance, stressed the importance of automated systems and controls, which companies are now implementing in the treasury function.

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Research Methodology FERF staff interviewed executives from 10 companies for this research project (see Exhibit 1), to better understand the various technologies they use, their benefits and shortcomings, and what capabilities and functionality they would want from future technology investments. Then, to get an overview of industry trends in treasury technology, FERF staff interviewed Melissa Cameron and Niklas Bergentoft, treasury consulting professionals with Deloitte & Touche LLP. Three of the 10 companies participating in the research are large, publicly-held companies based in the United States, five are privately-held companies based in the United States, one is a non-profit U.S. company, and one is a U.S. subsidiary of a foreign-based firm. Executives interviewed were asked to describe the current types of technologies that they used, why they selected those technologies, the types of reports produced, whether they planned to acquire new technology, and the capabilities that they would desire from that new technology. Exhibit 1: Companies Interviewed Company Annual

Revenues (in $) Ownership

ArcelorMittal USA Inc. $7 billion U.S. Subsidiary Autodesk 2 billion Fortune 1000 Cargill 117 billion Privately-Held Cushman & Wakefield 2 billion Privately-Held Discovery Communications 3 billion NASDAQ DuPont 26 billion Fortune 100 Excellus Health Plans, Inc. 6 billion Non-Profit Parsons Brinckerhoff 2 billion Privately-Held Smart & Final Inc. 2 billion Privately-Held Southern Company 16 billion Fortune 500

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Technology Currently Used Bank Communications Software All of the companies interviewed use bank communication software. This software, provided by various large commercial banks, provides real time account transaction information and enables treasury departments to have more up-to-date insight into cash and liquidity. Niklas Bergentoft from Deloitte & Touche LLP notes that, according to the JPMorgan Global Cash Management Survey 2009, more companies than not continue to increase banking relationships. Though treasurers often seek to reduce the number of their banking partners for cost and efficiency purposes, trends over the past three years indicate that the number of banking relationships have actually increased in 32% of companies (compared to 22% of companies that have reduced banking relationships). This could be a measure taken by treasurers to reduce counterparty or operational risk. However, with standardization in banking communications, it is now easier for companies to keep bank communication maintenance low. Due to recent market events, the numbers have actually increased, which could prompt further focus on standardizing bank communications with multiple banking partners. Bergentoft says that several recent drivers have reduced the barriers to implementing standardized bank communications solutions to ease the burden for corporations of managing multiple interfaces with banking partners. They include:

Increasing standardization of global communication formats (e.g., FIN messages, ISO 20022 XML standards);

Easier access for corporations to join SWIFT through the SCORE membership (see SWIFT on page 6);

Roll-out of SWIFT Alliance Lite for direct, secure and low cost, web-based access to the SWIFT messaging services for lower volume corporations and financial institutions;

Increasing range of SWIFT service bureau providers in the marketplace that allow for seamless integration with internal applications, networks and operating systems with low cost and implementation resources and offer message monitoring tools for identifying errors messaging failures; and

Availability of multi-bank reporting platforms offered by various banks and software vendors that can receive and consolidate bank statements from other banking partners for a single view of global cash positions and activity.

Bergentoft adds that recent developments around standardizing creditor reference numbers for both cross-border and domestic payments, will also further enable straight-through-processing of invoice payments between suppliers and their customers. Standardized bank communications strategies can allow companies to adopt these types of industry initiatives quicker.

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Excellus Health Plan, Inc., of Rochester, New York, does not have an ERP system, but uses Chase Insight and HSBC Net, the treasury workstations supplied by their banks. Years ago, the implementation of Chase Insight brought new technological capabilities to a treasury that had previously depended on a teletype machine and a telephone to manage cash. "To calculate our daily cash funding requirements, we download transaction detail and produce detail reports twice a day. This detail is then moved to an access database to create reports used for general ledger reporting at month end, explains Debbie Vistocco, Corporate Vice President of Cash Management. International business has grown in importance over the past few years for Parsons Brinckerhoff. Not long ago, two thirds of revenues came from the United States and only a third from the rest of the world. A single treasury center in the United States was easily able to address the needs of the business. Now that international revenues have grown to half of the business, a new approach is necessary. Parsons Brinckerhoff has a corporate treasury staff in New York, but no shared service centers. Day-to-day treasury functions are largely decentralized, but the company recognizes the benefits of centralization and would like to move in that direction. J.P. Morgan is the firm's main cash management bank in the United States, and the channel for wire transfers and foreign exchange. HSBC is a primary international cash management bank. The company is presently evaluating technologies to improve the visibility of global cash balances. "We should be able to know how much cash we have each day, instead of taking reports on a weekly basis," says Matt Bray, Treasurer of International Operations. Process improvements and time efficiencies are also high priorities.

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SWIFT SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications and is a member-owned cooperative that provides the communications platform, products and services to connect over 9,000 banking organizations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardized financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest. SCORE stands for Standardized Corporate Environment and enables corporates to use SWIFT's single, secure, and reliable messaging platform to access the services that their financial institutions can provide (for example, cash management services). SCORE is based on a Closed User Group, a subset of customers that have been grouped to use certain SWIFT services and products in a defined context, which caters for financial messaging between corporates and financial institutions. SWIFT has a resource center for corporations at www.swift.com/corporates . The SWIFT for corporate Fact Sheet describes its services and benefits for corporations:

Cash and liquidity management; Financial risk management; Resilience and availability; Security; Business continuity; Easier compliance; and A single platform with extended services, beyond treasury and cash

management. Bergentoft from Deloitte & Touche LLP says that, with the adoption rate of SWIFT bank communication on the rise, and more corporations re-visiting their bank communication strategies, it is likely that banks, SWIFT and SWIFT partners will continue to broaden solutions offered to corporations. We have already seen some treasury and Enterprise Resource Planning (ERP) vendors provide standard connectivity portals to SWIFT or providers of SWIFT connectivity, says Bergentoft. It will be interesting to follow how, over the next few years, the vendors of cash and liquidity management solutions will ride this wave, or face increased levels of competition from new service offerings from the banks, SWIFT and SWIFT service bureaus. We use SWIFT, which provides us with a secure pipeline in which to exchange bank communications and transactions, says Lawrence G. (Larry) Boyer, global treasury CIO for DuPont Information Technology. It was originally set up as a bank-to-bank network, but was opened to corporations several years ago. In many instances, SWIFT utilization allows us to replace the use of proprietary bank software. We look to SWIFT data standards as the foundation for communicating with our partner banks.

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ERP Solutions Bergentoft says that, over the last few years, Deloitte & Touche LLP has seen ERP vendors make investments in expanding and deepening treasury functionalities. However, most treasury departments still favor the specialty Treasury Management System (TMS) due to the availability of deeper treasury management functionality in the TMS compared to the ERP based solutions. Seven of the 10 companies interviewed use ERP systems, but none of these companies use all of the treasury modules available with their ERP systems. Dave Symons, Manager of Cash Operations at Southern Company, says We see improvements in their treasury modules a big opportunities for the ERP vendors, because there would be benefits from integration with their ERP system. Autodesk has used an SAP ERP system since 1994, and was, in fact, one of the first SAP customers on the West Coast of the United States. The company has regional offices in North America, Europe, and Asia. Bank files pulled in each region post automatically in SAP. "Instead of issuing payments internally, we are delivering a payment file to the bank," says Mark Abrahams, Vice President and Corporate Treasurer. In Europe and Asia, the majority of payments issued to the banks are electronic. In the US, Autodesk sends a file to the bank, who outsources to a third party to issue checks on our behalf."

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In-House Banking Solutions Melissa Cameron says that uncertainty about the future availability of credit has forced many companies to hone in on how to tap into internal sources of funding before going externally. Additionally, many companies are exploring ways to consolidate cash and centralize cash and liquidity management globally in order to gain greater visibility into their global cash position in order to make the most cost-efficient short and long-term investment and borrowing decisions. She says that an in-house bank can assist in achieving global visibility and control of cash and reduced liquidity needs. Additional benefits from in-house banking may include improved enterprise-wide controls, reduced operational costs, and add greater strategic value to the organization as a whole. Technology is critical to enabling a successful implementation of an in-house bank and the automation, centralization and integration of the following in-house bank functions allow companies to achieve a truly straight-through in-house banking solution for:

Cash Management Cash Forecasting Payments and Collections Factories Intercompany Netting and Lending Centralized FX Management and Hedge Management Standardized Bank Communications (e.g., via SWIFT) Rule based payment and journal entry routing

The ability to set-up internal in-house bank accounts for participating subsidiaries and the central Treasury center is the cornerstone for setting up an in-house bank through which the activities listed above would flow. ERP solutions and open architecture treasury technology solutions that offer easy integration seems to be well-positioned to offer a solution that seamlessly integrates and centralizes treasury activities and interface to ledger systems and other data sources along the supply chain, such as accounts receivable and accounts payable data. Cameron says that, to support the centralization efforts, companies are looking to leverage shared service centers to take on operational roles to support activities such as account reconciliations, generating and consolidating payment runs, and generating daily cash position reports. In-house banking technology should be able to provide the flexibility to support the shared service center operating model. The functions of the treasury department at ArcelorMittal USA Inc. include day-to-day cash management, forecasting, bank relationship management, management of debt for the USA subsidiary (covenant compliance, interest payments, etc.), and some foreign exchange management. Domestic treasury operations are centralized in Chicago. ArcelorMittal operates an in-house bank; any excess cash goes from the United States to Paris for investment, and most borrowing in the US is also from corporate. ArcelorMittal has a unit in South Africa that handles hedging on a global basis.

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Cross-Border Multi-Currency Notional Cash Pooling Solutions Bergentoft says that the use of external providers for pooling services has increased over the past four years, and is the most common external service sought out by corporations. Specifically, the use of cross-border multi-currency cash pooling solutions offered by many banks and software providers, allow corporations to manage global liquidity positions at a group level on a multi-currency basis. Companies can, as a result, centralize cash balances held across all subsidiaries and their banking partners using a single software solution and with the global pooling feature, be able to see offsets to debits and credit balances across various currencies and various legal entities to a single currency without physically converting funds. These solutions act as a global overlay structure, supported by a web-browser based portal, and provides consolidated bank account reporting, third-party payment abilities, as well as full integration into treasury workstations, ERP systems, and other proprietary solutions. Good solutions will also be able to handle regulatory requirements around withholding tax and VAT charges and interest allocations in multiple jurisdictions.

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Key Business Drivers Cameron says that the business drivers behind treasury technology projects vary and depend on the background and issues faced by each company. Some of the business drivers usually brought up by treasurers relate to:

Increased process automation resulting in reduced cycle time; Accomplishing straight through processing; Improved controls; Improved system capabilities to meet accounting and regulatory reporting

requirements especially around hedge accounting; Increased employee (FTE) time for value added activities (e.g. analytics); Data access and improved reporting capabilities; Global visibility and control over cash; Counterparty exposure measurement; Improved risk management (operational risk and financial risk); Consolidation of systems; Common global platform to enable continued company growth; Improved system functionality for treasury activities.

She adds that she has seen companies achieving benefits from:

Centralized foreign exchange execution with potential for FX cost reduction due to consolidation of FX trades across the company, better pricing through trade portals, and impact on intercompany settlement;

Improved exposure management processes and risk reporting through consolidation of exposures and automated counterparty credit risk, FX and interest rate risk reporting;

In house bank development to automate intercompany netting and accounting with a potential for reduction in banking fees related to reduction in external payments to subsidiaries, reduction in disbursement accounts and related maintenance costs associated with accounts due to centralization of payments;

Standardization of bank communications strategy with reduction of annual bank communications cost upon implementation of standardized bank communication platform (e.g., SWIFT). Typical ongoing costs that can be reduced are in the areas of fees, interface development and maintenance, migration and upgrades due to bank platform changes

Improved pooling, cash visibility and forecasting with potential for improved interest returns on excess cash depending on negotiated rates with banking partners (can include structured global bank RFP);

Bank rationalization exercise with potential of reductions in fees as a result of consolidating banking relationships and structured global bank RFP.

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Executives from the companies interviewed were asked What were the key business drivers behind the selection of your treasury technologies? The number of companies mentioning each of five possible business drivers is shown in Exhibit 2. Exhibit 2: Key Business Drivers Improve Automation 9 Reduce Costs 6 Reduce Cycle Time 6 Enable More Accurate Financial Statements 5 Ensure Regulatory Compliance 3 Larry Boyer of DuPont related that Back in 2000, DuPonts vice president and treasurer was focused on globalization, and wanted to both standardize and simplify global processes. The decision was made to develop common processes, automate and centralize them globally, and then look for the right tools. Automation of cash management processes was a high priority. "The more we can standardize and simplify, the better off we'll be," Boyer explains, "We're always looking for ways to eliminate manual activity." Automation should help the company streamline its financial supply chain. Cash forecasting, for example, suffers when there are delays in the manual entry of receivables and payables data. Eric DeLau, Project Manager Treasury at ArcelorMittal USA Inc. noted that When ArcelorMittal USA selected its treasury technologies, its objectives were to improve automation, reduce process cycle time, and cut administrative costs. Mark Abrahams, Vice President and Corporate Treasurer of Autodesk, Inc., said that the company had a clear idea of its requirements back in 2003, when it began the search for its treasury systems. Asked to identify their top criteria, Abrahams said that ease of use was important. Autodesk wanted models that could support multiple bank accounts, a robust data base, investment of cash, debt, and cash forecasting, he said. Modular selection (plug and play) was important, as were user-friendly dashboards and reports with integrated graphics. Goals included automation, cost reduction, and reduction of cycle time, especially for cash management and cash forecasting. The bank proprietary system, CitiDirect, provides something of a back up and offers a bit more detail about transactions than the treasury systems. Susan Jirsa, Minneapolis director of global treasury services for Cargill Incorporated, says simply that Global standardization is the driver.

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Technology Companies Want Six of the 10 companies interviewed are now actively searching for new treasury technology. When they were interviewed for this project, they were asked What new capabilities do you desire? They were given seven options, and Exhibit 3 summarizes their responses. Exhibit 3: Capabilities Desired Cash Management 6 Liquidity Management 6 Bank Connectivity 5 General Ledger Integration 5 Dash Board 4 Compliance 3 Risk Management 3 Privately owned real estate firm Cushman & Wakefield is re-thinking its approach to treasury technology globally. Among the most important priorities will be integration of treasury with financial reporting systems. At present, treasury information is manually transferred to the financial reporting systems. Thats a significant issue here, says treasury manager Janice DeTorre. At privately held food retailing company Smart & Final, cash management and forecasting are high priorities. A primary objective of their technology review was to acquire a system that will automate these functions and maintain a clear audit trail. Debt management, bank account administration, and signatory tracking were all on the shopping list. A workstation provider was selected in December 2008, and implementation was completed in the summer of 2009. At Southern Company, one of the obstacles to adopting a new treasury system is transition costs, says manager of cash operations Dave Symons. He notes that Southern is "somewhat locked in through all the electronic communications links we have with our banks". However, in his opinion, there will be transition cost issues to consider no matter what system Southern might eventually adopt. Business drivers for choosing a new technology include improvement of automation and reduction of process cycle times. Regulatory -- especially Sarbanes-Oxley -- compliance will be a sine qua non. Integration with the general ledger system is merely "somewhat important". "It would be nice if we had closer integration, but I don't see it as central and key," Symons says. The primary users of reports from the existing system are treasury staff. This staff prepares special reports for senior management when necessary, using data from the treasury systems and complementing it with data from other sources.

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Minneapolis-based Cargill, Incorporated has embarked on a massive global process redesign effort, which will include the implementation of SAP as its global ERP system. Cargill hopes to replace the existing treasury management systems with one globally integrated solution and currently is analyzing SAP's Integrated Treasury Solutions capabilities in this regard. Cargill's treasury expects to recommend a treasury technology roadmap within two years. The goal is to standardize and automate, using the power of straight-through processes and integration to:

1. improve automation, 2. reduce process time, and 3. cut administrative costs.

Integration of treasury management with financial reporting systems is an important objective. "The more aligned cash management processes are with original transaction detail, the more accurately we can forecast cash flows and manage working capital for the corporation," says Susan Jirsa, director of global treasury services. The company has over 80 bank relationships, and "multiple cash management banks across the globe," she explains, and would like to integrate these into a single global database to access consolidated information on accounts receivable and accounts payable for cash forecasting. In our regular discussions with treasury organizations, Bergentoft says, we have seen many companies expand the influence that their treasury departments have in managing commodity price risk, and companies are increasing their use of derivatives in risk management programs. With this change, companies are looking for treasury management solutions (TMS) that can also manage commodity trading and risk management. Most TMS vendors do not provide commodity trading or risk management capabilities, but recognize this need, and would like to partner with companies to develop these capabilities. Some vendors now partner with Commodity Trading & Risk Management System (CTRMS) vendors by integrating these solutions with the core TMS or ERP systems.

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Companies Interviewed ArcelorMittal USA Inc. ArcelorMittal, created by the 2004 merger of Ispat and LNM Holdings, employs 320,000 people in over 60 countries, producing 73 million tons of crude steel, roughly eight percent of global steel output. Annual revenues for the group are $105.2 billion. In 2005, the company acquired International Steel Group, headquartered in Cleveland, Ohio, which became ArcelorMittal USA Inc. ArcelorMittal USA Inc. annual revenues of $7 billion. The International Steel Group included the former LTV and the former Bethlehem Steel, not to mention Acme Steel and Weirton Steel. Autodesk, Inc. Autodesk, Inc. (NASDAQ: ADSK) is a Fortune 1000 software technology firm headquartered in San Rafael California, Autodesk has offices in 60 countries, employs 7,500 people, and generates approximately $1.7 billion annually. Cargill Incorporated Minneapolis-based Cargill, Incorporated is a privately-held food, agriculture, and risk management company with approximately 138,000 employees and $117 billion in annual revenues. The company has three shared service centers for treasury processes, located in North Dakota, Argentina, and England, respectively. Cushman & Wakefield, Inc. Privately-owned real estate firm Cushman & Wakefield, based in New York, NY, has 15,000 employees and annual revenues of $1.8 million. Discovery Communications Discovery Communications (NASDAQ: DISCA, DISCB, DISCK) is the worlds number one non-fiction media company reaching more than 1.5 billion cumulative subscribers in 170 countries. It has over $3 billion in sales and 5,100 employees and contractors. Based in Silver Springs, Maryland, Discovery Communications distributes programming in 170 countries worldwide, and has regional offices in London and Singapore. DuPont DuPont (NYSE: DD) is a Fortune 100 chemical company based in Wilmington, Delaware. It employs 58,000 people worldwide and has annual revenues of $26 billion. DuPont has regional Treasury centers in Wilmington, Singapore and Asturias, Spain. Asturias also serves as the center of Treasury back-office operations. Excellus Health Plan, Inc. A Blue Cross/Blue Shield non-profit health insurer based in Rochester, New York, Excellus has 7,000 employees and $6 billion in annual revenue.

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Parsons Brinckerhoff Inc. Parsons Brinckerhoff is an engineering consulting corporation with approximately 13,000 employees worldwide. About half of the company's business is in the United States, but Asia is quite important, as are the Middle East, Australia, and the United Kingdom. In October 2009, Parsons Brinckerhoff Inc. was acquired by Balfour Beatty plc, a construction firm based in the United Kingdom. Smart & Final Inc. A privately held food retailing company based in Commerce, California, Smart & Final has approximately 9,000 employees and over $2 billion in annual sales. The company selected a workstation provider in December 2008 and completed implementation in the summer of 2009. Southern Company Southern Company (NYSE: SO) is a Fortune 500 electric utility based in Atlanta, Georgia. Annual revenues are approximately $15.7 billion and the company employs 26,000 people.

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About the Authors, Gregory J. Millman and William M. Sinnett Gregory J. Millman is a contributing editor to Financial Executive magazine. He has also written for Forbes, Barrons, the Wall Street Journal, The Washington Post, and numerous other periodicals. He is the author of books of financial journalism including The Floating Battlefield: Corporate Strategies in the Currency Wars; The Vandals Crown: How Rebel Currency Traders Overthrew the Worlds Central Banks, and The Day Traders: the Untold Story of the Extreme Investors and How They Changed Wall Street Forever. His most recent book is Homeschooling: A Familys Journey. Prior to making a career shift to journalism, he worked in banking, consulting, and project finance in China. He earned an MBA at the Olin School and a Master of Arts (Asian Studies) from Washington University in St. Louis. He may be reached at gregmillman@gmail.com or by phone at (732) 926-1225. William M. Sinnett is Director of Research at Financial Executives Research Foundation, Inc. (FERF). He received his Masters of Business Administration degree from the University of Pittsburgh. Prior to joining FERF, he held positions in financial management with Mellon Bank and Carnegie-Mellon University in Pittsburgh. Bill can be reached at bsinnett@financialexecutives.org or (973) 765-1004. The authors wish to thank Deloitte & Touche LLP for their invaluable help: Melissa Cameron is a Principal of Deloitte & Touche LLP. She leads Deloitte & Touche LLPs national treasury consultation practice which provides treasury services to large multi-national corporations and private equity firms. Deloitte & Touche LLPs treasury practice offers services in global FX risk management, global liquidity cash management and assist these to be enabled by treasury technology solutions. She has worked for Deloitte & Touche LLP in both the United States and the Asia Pacific and worked in the banking, investment management and insurance sectors prior to that. The views set forth in this publication are those of the authors and do not necessarily represent those of Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. This publication contains general information only and Deloitte LLP is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Melissa can be reached at mcameron@deloitte.com or (415) 783-4654. Niklas Bergentoft is Senior Manager at Deloitte & Touche LLP. He leads the treasury technology consulting group at Deloitte & Touche and specializes in treasury IT strategy, operational and systems assessments and large scale system implementations. Prior to joining Deloitte, he has worked in corporate treasury, treasury technology, and accounting functions. The views set forth in this publication are those of the authors and do not necessarily represent those of Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. This publication contains general information only and Deloitte LLP is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Niklas can be reached at nbergentoft@deloite.com or (212) 436-2591.

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About Financial Executives Research Foundation, Inc. Financial Executives Research Foundation, Inc. (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non- members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals. The views set forth in this publication are those of the author and do not necessarily represent those of the Financial Executives Research Foundation Board as a whole, individual trustees, employees, or the members of the Advisory Committee. Financial Executives Research Foundation shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. This and more than 120 other Research Foundation publications can be ordered by logging onto http://www.ferf.org. Copyright 2010 by Financial Executives Research Foundation, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher. International Standard Book Number 978-1-61509-035-8 Printed in the United States of America First Printing Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Financial Executives Research Foundation, Inc. provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For further information please check Copyright Clearance Center online at http://www.copyright.com.

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ExecReport_TreasuryTechnologyTreasury TechnologyTABLE OF CONTENTSPurposeBergentoft says that several recent drivers have reduced the barriers to implementing standardized bank communications solutions to ease the burden for corporations of managing multiple interfaces with banking partners. They include:Increasing standardization of global communication formats (e.g., FIN messages, ISO 20022 XML standards);Easier access for corporations to join SWIFT through the SCORE membership (see SWIFT on page 6);Roll-out of SWIFT Alliance Lite for direct, secure and low cost, web-based access to the SWIFT messaging services for lower volume corporations and financial institutions;Increasing range of SWIFT service bureau providers in the marketplace that allow for seamless integration with internal applications, networks and operating systems with low cost and implementation resources and offer message monitoring tools for iden...Availability of multi-bank reporting platforms offered by various banks and software vendors that can receive and consolidate bank statements from other banking partners for a single view of global cash positions and activity.Bergentoft adds that recent developments around standardizing creditor reference numbers for both cross-border and domestic payments, will also further enable straight-through-processing of invoice payments between suppliers and their customers. Stan...Bergentoft says that, over the last few years, Deloitte & Touche LLP has seen ERP vendors make investments in expanding and deepening treasury functionalities. However, most treasury departments still favor the specialty Treasury Management System (T...Cross-Border Multi-Currency Notional Cash Pooling SolutionsBergentoft says that the use of external providers for pooling services has increased over the past four years, and is the most common external service sought out by corporations. Specifically, the use of cross-border multi-currency cash pooling solu...Cameron says that the business drivers behind treasury technology projects vary and depend on the background and issues faced by each company. Some of the business drivers usually brought up by treasurers relate to:Increased process automation resulting in reduced cycle time;Accomplishing straight through processing;Improved controls;Improved system capabilities to meet accounting and regulatory reporting requirements especially around hedge accounting;Increased employee (FTE) time for value added activities (e.g. analytics);Data access and improved reporting capabilities;Global visibility and control over cash;Counterparty exposure measurement;Improved risk management (operational risk and financial risk);Consolidation of systems;Common global platform to enable continued company growth;Improved system functionality for treasury activities.She adds that she has seen companies achieving benefits from:Centralized foreign exchange execution with potential for FX cost reduction due to consolidation of FX trades across the company, better pricing through trade portals, and impact on intercompany settlement;Improved exposure management processes and risk reporting through consolidation of exposures and automated counterparty credit risk, FX and interest rate risk reporting;In house bank development to automate intercompany netting and accounting with a potential for reduction in banking fees related to reduction in external payments to subsidiaries, reduction in disbursement accounts and related maintenance costs assoc...Standardization of bank communications strategy with reduction of annual bank communications cost upon implementation of standardized bank communication platform (e.g., SWIFT). Typical ongoing costs that can be reduced are in the areas of fees, interf...Improved pooling, cash visibility and forecasting with potential for improved interest returns on excess cash depending on negotiated rates with banking partners (can include structured global bank RFP);Bank rationalization exercise with potential of reductions in fees as a result of consolidating banking relationships and structured global bank RFP.

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