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Finance Best Practices
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suppliers: SunGard Treasury Systems (www.sungard.com), Selkirk Financial
(www.selkirkfinancial.com), or Integrity Treasury Solutions (www.integra-t.com).
Cost: Installation time:
11–20 OPTIMIZE CASH MANAGEMENT DECISIONS
THROUGH THE INTERNET

The accounting and finance staff is confronted with a daily quandary—what to do
with any excess cash that is spun off by operations? Should it go into a simple
money market account, or perhaps commercial paper? How long should the
investment periods cover—1 day, 10 days, a few months? The people doing the
daily investing rarely have enough time to make these determinations, and do not
try to—they have generally settled into the use of a few tried-and-true investments
that cover the same investment period. In short, the same investment strategy is
used all the time, even if there is a better approach for making investments that
will result in more interest income.
There is a better way, and it can be found at www.treasurypoint.com. This
Web site contains an analytical tool called the Optimizer that reviews a wide array
of investment choices, using as inputs a company’s current cash position, its short-
term (up to 90 days) cash forecast, and a user-updated set of risk criteria. It then
spends from 5 to 15 minutes churning through thousands of possible investment
variations, guided by a rules-based expert system, before arriving at an optimal
set of investments that will yield the best possible return, given a user’s invest-
ment criteria. The Optimizer makes no attempt at estimating short-term changes
in interest rates; instead, it bases all calculations on current rates, thereby avoid-
ing any risk due to incorrect estimations. These investment choices will vary
daily based on the current interest rate structure of the market and changes in user
cash positions, so the investing staff should access the site every day to glean new
recommendations.

Cost: Installation time:

11–21 OPTIMIZE THE ORGANIZATION OF
TREASURY OPERATIONS

A large multinational company typically became large at least in part through
acquisitions, which leaves it with a complex set of banking relationships and
accounts, as well as a highly dispersed treasury management group that resides in
a multitude of locations. This results in the inefficient use of cash, which in turn
reduces interest income and does not allow a company to pay down the optimal
amount of debt.