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Gaining efficiency by integrating treasury systems

  • stephen barr headshot

    Authors

    Stephen Barr

    Product Manager
    ChathamDirect

    Corporates | Kennett Square, PA

Summary

In today’s environment of dispersed teams, business uncertainties, and an increased demand for reliable actionable data, more and more companies aim to integrate and automate their financial risk management programs from end to end, streamlining data collection and informing decision making.

For many organizations, however, these efforts to gain efficiency face the hurdle of information housed across disparate systems that cannot easily connect with each other. Finding better ways to integrate the different components of a treasury technology ecosystem can offer meaningful benefits for companies seeking increased efficiency in their risk management operations.

SFTP, API, and ETL make connecting systems easier

When thinking about companies’ desire to integrate the different components of their treasury technology stack, consider one important piece of context: Establishing secure connections across different financial tools has become easier than ever. This means you no longer need to weigh trade-offs between using the best software for specific jobs and dealing with the difficulties of connecting the different components of a treasury ecosystem. All-in-one treasury technology providers made the argument in the past that having a single system handle all aspects of a company’s financial needs provided a better solution that wading into the complexity and expense — in terms of both limited money and the team’s precious time — of trying to connect disparate systems. With more consistent SFTP (secure file transfer protocols) standards and the proliferation of APIs (application programming interface), along with a growing number of companies providing ETL (extract, transform, and load) capabilities, connecting separate systems no longer presents a high barrier and companies can choose the best tools for specific jobs with confidence that they can integrate these different platforms at a fraction of the effort and cost once required.

Connected systems offer key benefits

Still, simply because connecting different systems no longer presents burdensome complexity, the question remains about why companies would prefer to automate upstream and downstream connections across their tools. Getting data between systems can be handled manually — and many treasury teams spend significant time keying data from one tool into another — so what would compel them to integrate these different systems instead? Integrating treasury technology tools, and specifically connecting the ERP (or enterprise resource planning) and risk platforms, offers three key benefits that can propel the team into greater efficiency and effectiveness, increasing the value added to the organization.

Eliminate manual errors

First and foremost, system-to-system integration effectively eliminates manual errors in data transmission. The potential for mistakes when relying on a person or team to type the output of one system into another introduces possible errors that can quickly compound. Integrating the ERP and risk components of a treasury technology stack means data flows directly between these two key systems, eliminating potential human errors that could lead to inaccurate assumptions and incorrect hedging decisions.

Streamline the process

The second benefit provided by system integration comes from streamlining the risk management process and saving time. Connecting ERP and risk systems allows detailed or aggregated exposure information to flow directly from the ERP and calculated journal entries and the cash implications of derivative transactions to flow seamlessly out of the risk platform. The automated transfer of relevant data between systems makes a previously cumbersome process far more efficient, reducing the time required from a lean treasury team and allowing them to focus on higher value-add aspects of their roles.

Gain a comprehensive overview of financial risk

Not only does system integration provide secure data flow that eliminates manual errors and offer a streamlined process that saves time, but it also enables a more comprehensive overview of organization’s financial risk. Getting holistic exposure data into the risk system provides the most complete look at the organization’s risk profile when making trading decisions, ensuring that the team can act on accurate and timely data from across the firm rather than reacting to incomplete information. Integrating systems rather than relying on error-prone manual data collection and consolidation ensures a reliable foundation for analyzing and mitigating risk.

Combining increased accuracy and a timesaving process with the comprehensive overview that a fully integrated treasury technology stack enables allows companies to reap the full benefits of easier connectivity across systems. Seamlessly connecting the ERP and risk platforms ensures a holistic risk profile with streamlined operations to manage financial risk effectively. There has never been a better time to take advantage of technology tools and secure a stronger, faster, and more accurate risk mitigation process.

About ChathamDirect

ChathamDirect is a groundbreaking financial risk management and hedge accounting platform that supports foreign exchange, interest rate, and commodity hedging programs. ChathamDirect provides a clear view of your entire hedging program, including cash flow forecasts, balance sheet exposures, and hedge requests — all securely available on a leading SaaS platform. ChathamDirect is backed by Chatham Financial, an employee-owned, independent market leader with a global team of capital markets experts, risk management advisors, CPAs, lawyers, quantitative analysts, and technology developers who serve more than 3,000 clients annually.

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About the author

  • Stephen Barr

    Product Manager
    ChathamDirect

    Corporates | Kennett Square, PA


Disclaimers

Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.

Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.

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