Treasury automation. Three employees for 1,000 daily payments

December, 2013
proto$ gen VI mod 3FFECA (Londinium)
All the payments pass automatically, with guaranteed checks for budgetary limitations and sufficient cash coverage, and with lower priority payments postponed to a later date if needed. And with all the beauty of machinery order and control to which your human treasurers pay lip service only.
Key factors for the success of any commercial organization, regardless of how big it is, are associated with what it’s doing, first of all, at the strategic level, i.e. the job it does positioning its products in the market, and, second of all, at the operational level, i.e. proper realization of these products (in a broad sense).

We may notice that the activities of the back office (mean the units not directly connected with the final-say decision-making within the company, e.g. cleaning personnel, accountants, admins, etc., as well as the Treasury Department, which we’ll be talking about below) does not fit in with either the strategic or operational level.

Even a brilliantly arranged team of accountants, true virtuosos at manufacturing your quarterly balance sheet, won’t make you a single dollar if your candy floss equipment is not competitive as a product. Even if a team of dedicated cleaners keep your selling area beyond reproach the company is unlikely to get any gain in sales if the product range is poor or the prices are not market based.

But face it: if you turn things 180 degrees around, the same Accounting Department of yours may just ruin your operational paradise, which will significantly affect your business results, if your clients and suppliers constantly have trouble documentation-wise, whilst your poorly "optimized" annual reports may result in the tax agency suspending your operations. Precisely likewise, you may end up having fewer and fewer customers, especially new ones, visiting your shop, if your selling area is decorated with filth welcoming herds of humming creatures to infest it.

Let’s take the Treasury, for instance (which is mundanely subsumed under the middle office, but, considering a relatively narrow range of duties performed in a single-specialty trade organization, we can confidently categorize it under the back office). While it can’t really be of much use overall, we must keep in mind that it’s equally capable of hurting you no less than other back-office subspecies.

The entire work of the Treasury revolves around what’s called a "payment request". Payment requests for product shipments (when there is a sale going on) are created automatically subsequent to the receipt of the product and the entire set of relevant documentation, in alignment with the terms and conditions of partnership with the supplier, which are reflected in dia$par as well.

The payment requests for goods/services purchased for the company’s internal needs can be generated both automatically (e.g., rent, paychecks, etc.) and manually by the initiator.

Depending on the initiator, office, cost item, and percentage of the budget used on it, each payment request has its own sign-off sheet (approval form) and its own roster of signers. It is possible there will be no signers at all, which, for instance, is the case with requests created automatically based on incoming shipping lists from the Purchase Department, which are considered as approved at the moment they are created, since the product has already got to the warehouse. When it comes to design work, custom approval routes are set up.

At Ulmart, there are over 800 staff members empowered to initiate requests for payment. While there are over 100 employees involved in approval routes as signers.

Each payment request has mandatory fields for those responsible for the provision of accounting documentation and deadlines. The fields are filled in at creation. Consequently, the Bookkeeping Department is conveniently provided with an automatically generated list of document debtors. Additionally, the system is equipped with a piece of functionality that allows the user to mail out notices and reminders. There is an inquisitor robot that can issue a fine and/or block salary pay-outs to the more flagrant debtors. The launch of this functionality has reduced document debt (the accountant’s nightmare in any large organization) by as many as 5 times.

In August 2013 mobile clients running on iOS and Android were equipped with payment coordination functionality. Since then, the request signing rate at Ulmart has risen as much as 30%.
The company’s annual economic benefit has amounted to 14 million rubles.

The system provides you with instant access to information related to how much has been paid so far and how much is due, with a breakdown into offices, departments, cost items, and projects. When these data are factored into forecasts on the movement of your funds, you’ll be able to detect potential cash deficiencies or, conversely, identify excess liquidity periods. These data (as well as all of your reports) can be viewed on an iPad.

Requests Journal

In case of cash shortage for all payments on a given day, dia$par has the capacity to optimize on its own, in alignment with an order of precedence for payments and preset rules for the length of acceptable delays across counterparties/cost items, the package of requests in such a way as to ensure it is executed in full, by moving those that haven’t been resolved to later dates.

At the end of the cycle, the system unloads requests that have been approved and resolved into the client bank for execution.

Approval of Payments on the e-Trade Mobile Client

As a result, Ulmart’s Treasury is capable of handling nearly a thousand payments per day. The entire flow is processed by one treasurer and two operators. Most of the time, the latter are there just "in case" — to take care of non-standard situations or fill in for a colleague in the event of sick leave or vacation. Quite a soft job, isn’t it?

Being inside dia$par. Some stories
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