© 2010 Treasury Strategies, Inc. All rights reserved.

Navigating the Landscapeof Treasury Technology

PRESENTED BY:Laurie McCulley, Principal

May 13, 2010

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Three Key Objectives

1. What is treasury technology and why does it matter?

2. Integrating treasury best practices with technology

3. How your organization will benefit

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Agenda

1. Why Treasury Technology Matters

2. Introduction to Treasury Technology

3. Best Practices using Treasury Technology

4. Benefits of Treasury Technology

5. Next Steps

Why Treasury Technology Matters

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Recent market disruptions have increased the visibility of and demands on

corporate Treasury departments.

Key challenges include:• Changing role of Treasury

• Globalization

• Liquidity management

• Risk control

• Technology

• Industry competition

Industry Issues

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CFO’s Mandate for Treasury

1. Optimal liquidity management

2. Risk management (operational and financial)

3. Funding & credit

4. Efficiency

5. Advisory role

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Evolution of Treasury Management - 3.0

Treasury 1.0

Valu

e an

d Vi

sibi

lity

of T

reas

ury

Treasury Management Evolution

Operational &clerical

Management of bankaccounts and fundsmovement

Analytical andproactive

Management andprotection of liquidity in aworld of fluctuatingcurrencies and interestrates

Advisory & Strategic: NerveCenter

Insightful, integrated &comprehensive

Payment, liquidity & risk advisor

Providing business intelligence &decision-support

Treasury 2.0 Treasury 3.0

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Evolution of Technology - 1.0FX

Bank accounttracking

Bank reporting with multiplebanks

Accounting Manual payment entriesinto several bank

platforms

Financial transactionsanalysis

Remotesubsidiaries

Financialtransactionexecution

Reconciliation

Businessunits

Bank managedFX

Reconciliation Reconciliation

Accounting

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Bank managedIntercompany

Netting and FX

Bank accountadministration

Cash pooling

Bank reporting with multiplebanks

Accounting andreconciliation Manual payment entries

into several bankplatforms

Financial transactionsanalysis

Subsidiaries /Business Units

Financialtransactionexecution

Evolution of Technology - 2.0

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Analysis &Pricing

Bank AccountAdministration

PaymentFactory

BankConnectivity via

SWIFT

Financial TransactionExecution

Accounting &Reconciliation

Web Access forSubsidiaries

Dashboards

In-houseBanking

Evolution of Technology - 3.0Intercompany

Loans

Netting

Rules & Automated Workflows

AccountsReceivable

CashForecasting

Links to theIPA

AccountsPayable

Market Research &Data

Scenarios &Simulations

Rating Information

What is Treasury Technology?

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Full Spectrum of Technology Solutions

Bank-offered treasurymanagement systems

Enterprise Resource Planning(ERP) treasury module

Third-party (best-of-breed)treasury management systems

Fully Integrated Treasury Management Systems

Specialized (single purpose) Treasury Systems

Bank fee analysisMultilateral nettingFX exposure management

Bank account administrationRisk analyticsBank-to-book reconciliation

Transaction matching &confirmation systems

Credit information & market rateprovidersValuation & hedge accounting

Online trading portals(FX and investments)

SWIFT Corporate ConnectivityBank online systems(reporting & payments)

Other

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Treasury Management System

A Treasury Management System (TMS) or Treasury Workstation (TWS) is atool to:

• View bank data

• Create cash positions and forecasts

• Reconcile bank transactions with internal activity

• Execute payments

• Track financial transactions

• Calculate mark-to-market values

• Monitor and manage financial risk

• Create general ledger journal entries

• Report on all treasury activity

Best Practices Using Treasury Technology

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A more strategic and effective treasury is founded on 3 key pillars

The 3 Pillars of Treasury Best Practices

Robust riskmanagement

Global cashvisibility & optimal

liquidity

Effective treasuryoperations

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Gain (real-time and direct) access to all balances and transactions onworldwide basis

• Optimize idle cash balances

• Control bank accounts

• Execute FX more efficiently

• Improve debt management

• Enhance day-to-day cash flow predictions

• Monitor counterparty risk

Global Visibility & Optimal Liquidity

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Visibility & Control of Cash -Simplifying Bank Connectivity

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SWIFT for Corporates

Leverage a single, standardized pipeline for bank communication

SWIFT

Information Reporting Payments Transaction Matching& Confirmations

Trade (LC)Processing

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SWIFT for Corporates – Before

Corporate

e-banking Y

host to host X

e-banking Z

VAN

Internet

Leased line

Multiple Channels

1. Multiple transfer systems, platforms,interfaces, solutions and channels

2. Bank-driven solution

3. Inflexible design

4. Potentially unreliable channels

5. High internal and external cost

TMS

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Corporate

SWIFTNet

Standardizedgateway

Corporate

e-banking Y

host to host X

e-banking Z

VAN

Internet

Leased line

Multiple Channels One Channel

1. Multiple transfer systems, platforms,interfaces, solutions and channels

2. Bank-driven solution

3. Inflexible design

4. Potentially unreliable channels

5. High internal and external cost

1. One: transfer system, platform, interface,solution and channel

2. Connectivity neutral

3. Highest level of security, reliability andresilience

4. Platform for growth

5. Cost effective

TMS

TMS

SWIFT for Corporates – After

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1. Focus on operational risk management (fraud, errors, dependence on staff,

non-standardized activities, over-dependence on single bank, unknown

activities, etc.)

2. Identify contingency strategies (“what-if” planning for both financial and

operational risk mitigation)

3. Measure financial risk holistically and in real-time

4. Automate the exposure gathering process from the

business units - ensure a full view of all financial risks

Risk Management

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Cash in globalbank accounts- visibility to allglobal accounts;converted tocommonreportingcurrency

Investments -time deposits,direct CP,money marketfunds

Derivatives - FX,interest rate andcommoditiescontracts -notional andmark-to-marketvalues (adjustedfor FAS 157)

Credit facilities -un-utilized

Credit facilitiesdrawn (revolvers,letters of credit,etc.)

Cash at risk Potential risk

Historical view of counterparty risk

Strategies for Effective Risk Management

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Cash in globalbank accounts- visibility to allglobal accounts;converted tocommonreportingcurrency

Investments -time deposits,direct CP,money marketfunds

Derivatives - FX,interest rate andcommoditiescontracts -notional andmark-to-marketvalues (adjustedfor FAS 157)

Credit facilities -un-utilized

Credit facilitiesdrawn (revolvers,letters of credit,etc.)

Cash at risk Potential risk

Broader view of counterparty risk management.

Strategies for Effective Risk Management

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Enhance all cash management functions by implementing stronger controlsand automated processes

• Reduce manual rekeying errors through automation of cash positioningprocess

• Automatically update cash position for projected cash flows related totrades and wires

• Minimize effort required to reconcile transactions on a daily basis

• Automate the booking of all journal entries within TMS

• Use TMS as repository for all static data including bank accountinformation

• Consolidate online bank platform functions and administrators within TMS

Treasury Operations Management

Benefits

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Cost Savings• Optimised liquidity• Minimized bank accounts• Early entry to markets• Accurate forecasting

Productivity Improvements• Straight-Through-Processing• Access to one central database• Real-time access to information• Reduced errors• Elimination of data re-keying

Strengthened Controls• Central visibility of all activity• Segregation of duties• Strong security measures• Assists with audit compliance

Benefits of Automation

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Risk Mitigation• Hedge activities• Counterparty risk• Improved reporting & decision-making• Reduced reliance on people• Disaster recovery

Value Creation• Confidence in decisions• Analytic and strategic role of treasury• Cross training and new employee training• Integration with entire organisation

Benefits of Automation

Next Steps

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Consolidate

• Implement a best-in-class, robust globaltreasury managementsystem

• Fully–integrated,completely automatedstraight throughprocessing

Com

bine Existing Systems

Bank AdministrationInvestment Portal

(Money Market Funds)

Netting System E-banking Systems

ERPBloomberg or Reuters(Market data, such as

FX rates, Interest rates)

Current TMS Treasury Portal

Multi-bank FX platform Excel Spreadsheets

STAND ALONE SYSTEMS

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The Future of Treasury

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Laurie McCulleyPrincipalLaurie_McCulley@TreasuryStrategies.com407.644.6202

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Questions?

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About Treasury Strategies, Inc.Who We AreTreasury Strategies, Inc. is the leading treasury consulting firm working with corporations andfinancial services providers. Our experience and thought leadership in treasury management,working capital management, liquidity and payments, combined with our comprehensive view of themarket, rewards you with a unique perspective, unparalleled insights and actionable solutions.

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