Treasury Hot TopicWhat your treasury system must do to cope with the next crisis

www.pwc.com

Thomas Jerolitsch, SunGardHans Candries, PwCGunter Geysens, PwC

PwC 2

Agenda

februari 2011

Background

Sungard’s perspective on what your Treasury System must do to cope with the next crisis.

PwC 3

The crisis and its effects has led Treasury to consider lessons learned and set its agenda accordingly.

februari 2011

What are the long-term Lessons learned?

“Best Practice” still holds true.

What do we need to do to implement it in a sustainable way and “make the change stick?”

What challenges did the crisis pose for Treasury?

Liquidity crunch, commodity & FX volatility, counterparty risk, accounting “fair valuation”

Were we prepared?

Some were, some weren’t.

Few had all risk areas adequately covered.

What did we change during the crisis?

Many quick fixes “just to survive”

Opportunity for treasury to shine

What are the long-term Lessons learned?

“Best Practice” still holds true.

What do we need to do to implement it in a sustainable way and “make the change stick?”

What challenges did the crisis pose for Treasury?

Liquidity crunch, commodity & FX volatility, counterparty risk, accounting “fair valuation” Were we prepared?

Some were, some weren’t.

Few had all risk areas adequately covered.

What did we change during the crisis?

Many quick fixes “just to survive”

Opportunity for treasury to shine

Background

PwC 4

Liquidity and risk are now at the top of the Treasurer’s agenda – systems are seen as a key enabler.

februari 2011

Global banking

Accounting

Cash flow forecasting

Reviewing/improving risk management policies

FX

Enterprise wide risk management

Liquidity

New technology/systems

Cash management

Funding

0 10 20 30 40 50 60 70 80

Key Issues for Treasuries - Source PwC Global Treasury Survey 2010

Background

PwC 5

Against the backdrop of increased demands on Treasury, the current technology environment at many companies is lacking.

• Over-reliance on Excel or manual work-around – Many Treasury organizations utilize a patchwork of systems with limited automated interfaces requiring manual intervention and work-arounds mitigating the benefits of the technology.

• Sub-optimal use of existing technology – Many companies have historically made poor decisions in technology selection and/or implemented the technology in such a way as to not take advantage of the functional capabilities of the systems.

• Systems often require information not available – A functioning Treasury usually will need information from outside sources, or information that is not readily available. Even with better integration tools, turning data into useable information is always a challenge in most environments.

• Performance management Treasury dashboards – Performance reporting is not usually a core function of Treasury systems and management dashboards are still in their infancy.

• Commodities – Functionality is limited in most systems for commodities and information for valuation is sometimes not readily available.

februari 2011

Background

PwC 6

Therefore, many companies are looking to improved technology as a key enabler to meeting their treasury objectives.

februari 2011

Treasury Objectives Advanced Practices

Ensure short and long term liquidity at low cost

• Timely global cash position tracking• In-house bank for cash management and

intercompany lending• Enhance cash forecasting• Global banking

Mitigate financial and operational risk

• Fine-tune hedging programs• Implement straight through processing of

transactions• Timely mark-to-market and hedge

accounting• Enhanced controls / compliance

Support efficient financial operations of the business

• Centralize execution of common processes, (e.g., bank account management, guarantees)

• Establish shared services centers• Implement payment factory• Implement new electronic payment

mechanisms

Background

PwC 7

Agenda

februari 2011

Background

Sungard’s perspective on what your Treasury System must do to cope with the next crisis.

What your Treasury System must do to cope with the next Crisis.

Thomas Jerolitsch

24/02/2011

Agenda

Introduction

Working across the EcoSystem

Cash and Liquidity Management Receivables Payments Risk Management

Additional Services

Summary

Introduction

When talking about crisis, what do we think we need to do…

Identification of Cash and Risk

Cashflow Forecasting

Operational Efficiency and Control

Investment Performance and Risk

Treasury Resourcing

Bank Relationships

Value of Centralization

Working across the EcoSystem

Working across the EcoSystem

Optimize Receivables, Treasury and Payments

Foster Collaboration between Trading Partners

Provide Market-neutral and Vendor-neutral Trading Platform

Communicate from Receivables, Treasury & Payment Solutions as well as ERP and in-house banking systems.

Cash and Liquidity Management

Identification of Cash Interfaces to banks Global End of Day / Intra Day Real time cash information Investments / Funding

Cashflow Forecasting Collection of Forecasting Data Integration of Subsidiaries Consolidation process

Global Cash / Liquidity position

Access to Money Market and FX Portals

Cash and Liquidity Management

Treasury Management…the role of the Treasurer is changing, there are increased regulations and more demand for control…

SunGard helped… Gain Visibility for Decision Making Provide Scenario Analysis Improve Bank Connectivity Reconcile Cash and Transactions

“SunGard helps us determine our daily cash position early in the day, allowing us to take advantageof prime market rates for investing and borrowing.’’

Joann ProtopapaManager - Treasury,H. J. Heinz Finance Company

A practitioner’s view…

Cash and Liquidity Management

“While treasurers have always been closely involved with ensuring the day-to-day liquidity of the company, their ability to influence the different elements in the financial supply chain is gradually increasing. “

Market viewpoint

Receivables

Foster Connectivity across the EcoSystem

Optimize Cashflow Mitigate Bad Debt Expense Consistent and structured processes

& workflows

Receivables

Receivables Management…treatment of trade receivables is as an important measure of a company's financial health…

SunGard helped… Mitigate Corporate Credit Risk Lower DSO Reduce Past Due A/R Decrease Manual Processing

“With SunGard, our DSO

went from 60 to 55 days,

while we watched our

industry climb to 70.”

Jerry Drake

VP Financial Services

Viracon

A practitioner’s view…

Payments: Challenges

Business Challenges Multiple banks & multiple cash management services End of day & intraday Risk compliance

Technology Challenges Separate connections to each bank Complex to manage Costly to maintain Unreliability Lack of portability

Payments: Corporate to banks communication

Receivables

Treasury

Payments

ERP In-house Systems

SSB

SSB

SSB

2

1

3

NORMALIZETRANSFORMMONITOR

DATA MANAGEMENT

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CIA

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Payments

A practitioner's view…

EXECUTE PAYMENTS FROM ANY SYSTEM AND IN ANY FORMAT AND IN ANY CURRENCY

Payments Processing…many corporations rely on a fragmented approach to payments – lacking infrastructure, connectivity and control…

SunGard helped… Harmonize Payment Flows Establish Business Rules / Workflow Utilize Least Cost Routing Execute in Any Format

Risk Management

Measuring Market Risk Adjusting valuations for counterparty Risk Exchange traded vs. OTC instruments

Measuring Counterparty Risk Creation of visibility Definition of limit policies Real or Near time monitoring Mitigation of Credit Risk through Receivables Management

Balance Sheet Exposure management

Additional Services

Aggregate Analyze Decide

FX Trades to be Executed

Summary Level Hedge Data Executed Trades

Better Data Better Decisions

“With FiREapps we are confident of our ability to manage FX risk, regardless of the complexity of our

business, or the prevailing market conditions.” Kristen L. Magnuson, Executive Vice President and CFO

JDA Software

TreasuryWorkstation

TradingPlatform

Additional Services

Corporate-Bank

Services Electronic Bank Account Management (eBAM) Q4 2010

Interface from your Payments & Treasury solutions (with SWIFT inside) to manage bank accounts (opening, closing, signatories …)

Bank Account Statement Portal Q2 2011

Manages bank accounts for account statement receipt, performs validity checks, creates dashboard and reporting

Bank Fee Analysis Q2 2011

Track and manage bank fees from your Payments & Treasury solutions (with SWIFT inside).

Ongoing development & delivery of additional services for Corporate-Bank, Corporate-Corporate and Corporate-Trading Partner Communications

Summary

Treasury can influence different elements of the financial supply chain

Looking at the financial EcoSystem Cash Management Receivables Payments Risk Management

Additional Services

Software as a Service (SaaS)

Questions?