San Francisco’s Bay Area is a cradle of technological innovation and home to some of the best-known companies on the planet. It’s no surprise the culture of digital transformation that defines these companies has invariably trickled down to shape highly efficient treasury functions too that in turn fuel growth. An exploration of treasury in the region also reveals a close camaraderie, sense of community and collaboration, and social responsibility.
The treasury function at Workday which provides cloud-based software solutions for companies’ HR, payroll, finance and supply chain needs, amongst others, is certainly cutting edge. But it is not just attributable to VP, Treasurer, Alice Xu’s self-confessed aversion to manual processes.
Workday’s tech savvy treasury underscores the trend in the region of corporate treasurers integrating their own, homegrown technology. Like the way Workday’s cash management is automated using a Workday product that supports daily liquidity management, cash forecasting and bank account signatory management. “When there is a chance to use a new product, we always raise our hand,” says Xu speaking to Treasury Today from the firm’s Pleasanton offices. In another example, she explains how Workday Prism has provided a dashboard that gives her 100% cash liquidity globally, daily.
“It was the weekend on the eve of the pandemic, and I was hiking. My CFO sent me a text asking how much cash we had. I went to the Workday app, opened the dashboard and sent her our investments and cash position.”
Despite the integration of already vanguard technology, she says her key priority remains harnessing technology and processes that will support future growth at the company, grown from a US$200m business to a US$7bn company during her 11-year tenure. “My focus is on finding the technology the company needs to do things more efficiently. We have set up processes that worked well in the past but now it’s a question of stepping back and seeing if the technology that got us to where we are today will work tomorrow.”
Large companies like Workday can apply their own tech in treasury, but it’s not the case at smaller firms where more often than not, treasury tech budgets compete with other departments and many struggle to fast- track efficiencies. For Tobias Miarka, Head of Corporate Banking at Coalition Greenwich it’s a source of surprise that companies that understand the power of tech are slow to integrate it in their own processes. “Often it is a case of treasury knowing what they need, but not getting the funds,” he says.
He also notices that although the region’s tech companies know the power of technology, acquisitive groups are slow to integrate new treasury systems of acquired companies into a single, overarching treasury function. “In many cases, acquired companies in the group continue to use different systems bought together on spreadsheets so most of the reporting bridging different systems will be done on Excel.”
Strategic treasury
Treasury in the West Coast is often defined by a strategic and central focus and many treasurers enjoying a seat at the corporate table. Treasury is asked to look further into the future and viewed as a centre of analytical excellence: treasurers are asked to not just run the firm but transform it, acting as a catalyst for change and innovation, says Miarka. “The day job is being compressed to make room for strategic tasks.”
However, the concept of strategic treasury is relatively new. Workday’s Xu observes that young companies in the area don’t always know when to set up a treasury and at many smaller firms, people still struggle to understand what treasury does. These companies may not feel the value of treasury, requiring treasurers to explain its value, getting involved as a risk and business partner via collaboration and communication. It could manifest in cross functional projects like providing finance for an M&A transaction, supporting the capital structure or risk mitigation, she suggests.
“It’s my job as a treasurer to help people understand what our role is. We don’t just make wire transfers and manage bank accounts. We are a strategic partner to the business.”
A data dominated future
One word unites all interviewees pondering the biggest influence on Bay Area treasury ahead: data. Treasury teams in the region are taking a leading role supporting companies to store, access and interpret data to drive corporate growth across different divisions. “The focus has shifted to not only thinking about having a better machine but also thinking about what you put in that machine,” says Miarka.
Witness how data management at San Jose-headquartered tech group Cisco has become a central function within treasury that is transforming how the company utilises banking information. Treasury is now compiling a data lake for the benefit of different divisions throughout finance, explains Debbie Kaya, Senior Director, Treasury, Global Cash and Operations at the company. “When it comes to banking data, data consolidation and use, treasury is leading,” she says.
Brett Turner, founder and CEO of Trovata, is also banging the data drum. The San Diego-based treasury solutions provider has the largest library of direct corporate banking APIs and Turner believes many companies still struggle to access rich, real-time multibank data.
He explains bank data is often accessed through outdated methods like file-based services (SWIFT, ISO formats) or direct host-to-host connections, all of which are difficult to onboard, maintain and update. These methods lack the modern tech benefits that APIs provide, and even when legacy treasury solutions claim to support APIs, they often convert the data into traditional file formats, losing valuable metadata.
He argues that companies shouldn’t bear the burden of ensuring their IT and treasury systems can access timely operating data for cash flow and liquidity management. “You never question whether your company has all your emails, but this is the reality for corporates with their bank data,” he says. “Yet cash is the lifeblood of every business, and data is the foundation for creating the next generation of services.”
He expects CFOs and CIOs to increasingly rely on their treasury teams for real-time data to inform daily decisions. Treasury teams that adopt cloud-native solutions with API-based connectivity methods can then leverage AI to gain insights, improve efficiencies, reduce costs and manage risks, he says.
Skills
New technology like AI is driving efficiencies that will impact hiring in the region – a survey by Coalition Greenwich found only 10% of treasury respondents are planning to add additional staff to their treasury department. Moreover, strategic treasury in the Bay Area also requires new skills. “There is an element of change in the type of person firms are looking for,” reflects Matthew Noujaim, Senior Consultant – Corporate and Investment Banking at Coalition Greenwich.
“Excel on its own is not good enough,” agrees Xu, who explains next generation treasury skills have evolved to require business acumen and strategic thinking. New technology means teams spend less time compiling and reconciling data and more understanding and interpreting it to support the business make the right decisions. “The ability to think outside the box and collaborate are key skills.”
She needs a team that embrace and understand new technology; she doesn’t require the ability to write Python code, but she does want curious minds, open to exploring the evolution of treasury from TMS to AI. It means a preparedness to change from old to new practices and embrace new product offerings in a fresh mindset.
“It is more about attitude,” agrees Cisco’s Kaya. “Curiosity, flexibility, critical thinking, the ability to connect dots and people, and a willingness to learn regardless of the mode. It’s about jumping into the deep end. A person can be taught skills, but they can’t be taught attitude.”
Competition for skills in a small community (fanned by the fact most graduates seeking a role in finance favour investment banking and tech over treasury and Noujaim and Miarka’s observations that treasury does need a rebrand to reflect its strategic scope) is also accentuated by centres of tech innovation springing up in all major US cities.
Digitisation, the emergence of modern tech stacks and the cloud means it is possible to build companies anywhere. “Entrepreneurs can set up shop wherever they like,” reflects Turner, himself a serial entrepreneur.
“It used to be the case that VCs wouldn’t want to go to, say, Florida if they were based in Palo Alto but now everything is remote and board meetings are on Zoom.”
Other issues shaping treasury in the region include challenges raising money, and companies having to do more, with less. Today’s leaner times mean corporates are focused on profitability and staying disciplined around core fundamentals.
The collapse of Silicon Valley Bank has also reshaped treasury thinking, visible in ongoing concerns about the viability of banking partners.
Treasury teams are more questioning of counterparty risk management in a new landscape where Fintechs now compete for cash management and payments business, and private finance has muscled in to put pressure on smaller banks.
As the cost of banking creeps higher, partly in consequence of regulation, many treasury teams are striving to reinforce relationships by offering additional business in a deliberate attempt to support trusted partners.
“Treasurers are conscious of the economic stress on their banking counterparties and want to make the relationship work,” says Noujaim who underlines that rather than paying higher fees, companies are seeking to give more opportunities and wallet share to their existing banking partners without increasing their own total spend.
At Cisco, the collapse of SVB reinforced treasury strategy to always transfer legacy bank accounts of acquired companies to new, central processes.
“When we acquire it is our goal to move these companies quickly into Cisco processes, systems and global banking partners. Sometimes we would get push back or requests for extended integration timelines, but we don’t anymore,” says Kaya.
Similarly, Xu concludes the crisis left long-lasting change at Workday where her team always track how much risk treasury has with each counterparty, and she regularly counsels on the importance of maintaining multiple bank relationships, “not putting all your eggs in one basket” and the importance of “a Plan B” in another affirmation of treasury in the region being able to change, innovate and adapt.
