As companies adjust to remote working and unprecedented drops in revenue, cash management becomes the chief concern for business continuity, says John Byrne, owner and CEO, Salmon Software.

Effective cash management is reliant on strong treasury management systems (TMS) with a focus on data integration and automation of services.

“Remote working and remote processes are here to stay and I think they’re going to be a part of our selling process from now on. Clients or potential clients will say to us – ‘Have you got the ability to do this remotely in the event of another coronavirus type scenario?’”

According to Byrne, Salmon Software has seen a drastic uptick in clients requesting full automation of their treasury services in the past few weeks. As the pandemic forces treasurers out of their offices and into their homes, remote treasury management is a reality and automated processes are a necessity.

“From a treasury perspective, the main benefit that has been highlighted is that manual processes really need to go. You have to automate as much as you can in relation to treasury so that anything that needs to be approved or authorised or executed has the capability of being executed remotely and approved remotely by whoever needs to do all those steps,” says Byrne.

Current market conditions have quickened the move towards automation and remote processes. Salmon Software’s hosted client base has grown from zero to 40 percent in the past three to four years, says Byrne.

“There’s no doubt that the acceptance of hosted solutions and treasury in the cloud, has increased significantly in recent years, but the pandemic has positioned remote working and automated processes as the saviour”.

A 2019 survey by Deloitte found that improving data visibility was the number one challenge for treasurers. Data has typically been produced and managed manually by corporate treasury teams, processes which are being drawn out due to the shortcomings of remote working. According to Byrne, the more strenuous a process data management becomes, the less teams are able to make smart decisions regarding hedging, trading, cash management and more.

“Clients are saying: ‘We have a lot of information in different systems. Can we get an integration into the treasury system so that the treasury system has the complete set of data to give us information quicker?” says Byrne.

“From our perspective, we see that as a selling point. Within our Salmon Treasurer TMS we have pretty much have automated any process that can be automated in the treasury environment.” 

According to a 2019 study by PWC, 64 percent of corporate treasurers noted an increased focus on working capital management. TMS and hosted services can provide a smooth integration of cash data in order to have a clearer view on working capital, liquidity, servicing loans, rescheduling debts and other priorities for firms.

“If historically [firms] were putting stuff on the backburner or delaying projects that would give them access to data quicker, that’s now accelerated,” says Byrne.

Deloitte also reported that the use of spreadsheets has been decreasing over the past two years, with greater investment in TMS and hosted services solutions becoming the norm. As business continuity becomes a priority for businesses in surviving the pandemic, these trends are likely to accelerate.

Cash management is a major concern for corporates as they suffer from a lack of sales and in many cases, a significant drop in revenue. Companies are now looking for ways to manage cash more efficiently and want to learn more about liquidity across multiple banks, multiple jurisdictions , multiple currencies, multiple subsidiaries and other such parameters. According to Byrne, projects not involving cash management or rescheduling debts will have a lower priority. For example, while the transition to SONIA, SOFR, SARON and other risk free rates, away from Libor was the “talk of the town” up to the arrival of the coronavirus, now it’s an issue for later in the year.

“I think [firms] have bigger problems at the moment in terms of cash consolidation, cash management, working capital, servicing loans, rescheduling debt – that’s drawing more focus than the transition to Libor is and I think everybody is of the view, rightly or wrongly, that while this is an awful situation, it has a limited lifespan,” he says.

Byrne believes Libor will become a more acute focus for firms in the final quarter of 2020 or first quarter of 2021.

As far as implementation goes, Byrne says the Salmon Treasurer TMS is perfectly positioned for remote onboarding. Moving away from in-person data processing workshops with existing clients and with new clients, Salmon Software now implements remotely and hosts workshops remotely.

“Ultimately it is still clients looking at a screen as they would be in a normal project implementation… … so from our perspective, not much has changed. Hindsight is great, but Foresight is better,” says Byrne.