How do corporate treasuries manage liquidity and forecasting
Ali Curi: Treasury ConversatION is an ION podcast where we discuss topics of importance with CFOs, group treasurers, and treasurers. Join us as we explore critical topics with industry leaders, product owners, and subject matter experts providing insights and strategies tailored to the dynamic world of treasury management.
Hi everyone, and welcome to Treasury ConversatION. I'm Ali Curi. On today's episode, Chris Jackson and Ryan Dame from ION Treasury help us explore corporate treasury liquidity management and forecasting. As businesses navigate the complexities of global markets, effective liquidity management has become more crucial than ever.
This episode will explore how companies manage their cash flows, maintain liquidity, and utilize forecasting to make informed financial decisions. We'll discuss the strategic importance of cash positioning, the role of technology in automating processes, and the challenges faced by treasurers in ensuring financial stability.
Join us as we unravel the essential practices that help organizations optimize their liquidity and prepare for future uncertainties. 
Let's get started. 
Chris Jackson, welcome to the podcast. 
Chris Jackson: Hi, Ali. 
Great to be here. 
Ali Curi: And joining us for the first time, Ryan Dame. Hi, Ryan. Welcome. [AS1]
Ryan Dame: Hi, Ali. Thanks so much for having me today.
Ali Curi: We're happy you're here. Chris, let's start with you. Briefly share with us your background and your role at ION. 
Chris Jackson: Thanks, Ali. So, in terms of my background, I'm a reformed corporate banker. So, I started my career in London. I spent 11 years in corporate banking, some of the major UK banks specializing in cash management, payments and liquidity.
I moved after that to Bloomberg where I started doing treasury risk management for them as well as some KYC and bank account management. And I spent five and a half years there, both in London and then in San Francisco as well. And then moved to ION just over two years ago now. So, I'm a sales director for North America.
So, my role is to work with new clients interested in either adding a TMS or moving from one solution to another to make sure that we're giving them the right solution, understand their needs and giving them a long term scalable future with the TMS. 
Ali Curi: Sounds great. Thank you, Chris. 
And Ryan, please tell us about your background and your role at ION.
Ryan Dame: Yeah, thanks, Ali. I graduated college with a degree in accounting, tried my time in the public accounting space, realized it really wasn't for me. I then kind of landed in a role in a treasury department for a global insurance company, really liked the role, enjoyed working with cash and understanding how treasury works within a global company.
So, I kind of stuck with that and you know, changed to a different company later on, but still within treasury, still within the insurance space, did a lot of building my own Excel files for managing cash operations. And then I kind of changed roles, started working for ION as a Treasury Management System Provider, so I worked on a product management team and then did that for a number of years, and for the past four years, I've been a Solution Consultant. So, demoing our products to prospective clients. So, I've been doing that for the last four years and I currently head up the solution consulting team here at ION.
Ali Curi: Great. Thank you, Ryan. Let's continue with you.
Ryan, TMS, liquidity management. Let's start with some foundational information, explain to us the primary objectives of liquidity management within a corporate treasury function. 
Ryan Dame: Sure, I think at the start and the very forefront, it's you know, ensuring there's adequate liquidity within the organization, right?
So, making sure I have sufficient cash to meet my obligations such as payroll, supplier payments, debt servicing. That's key, making sure I have adequate liquidity for these future needs. And then off of that, you know, there's also the idea of once I understand what my needs are, how can I optimize my cash and make the best use of it?
Whether it be through investing, paying down debt, whatever my organization may need. And then I think lastly, it goes into mitigating risks associated to liquidity. Do I foresee or forecast gaps in liquidity that I need to fund if I run into specific events and I want to stress my forecast? Will I have adequate liquidity to make it over those gaps in extreme circumstances?
So, all of that kind of funnels into a liquidity management within organizations. 
Ali Curi: Ryan, you talked about cash forecasting. Can you include some background on how does cash forecasting contribute to effective liquidity management and what are its main benefits? 
Ryan Dame: Yeah. So, cash forecasting is really integral to liquidity management because It's all about anticipating future cash needs, but doing so with the highest level accuracy as possible.
Because once I understand the requirements around cash at my organization, what my inflows and my outflows look like, and I have a high level of confidence within them, I have a really solid foundation to then work off of and understand, all right, do I have any excess cash or that I can then potentially invest and earn income on or pay down debt and reduce debt servicing fees?
Or if I'm short, what levers do I have available that I can start pulling? To make up for that shortfall. So, cash forecasting is really about getting accuracy and confidence in your cash needs so that you can make very well-informed decisions about that excess or shortfall that you may have. 
Ali Curi: Excellent. Chris, over to you. What are some common challenges that companies face when managing liquidity, especially in volatile market conditions like we're having now or always? 
Chris Jackson: Most clients, the key for them is visibility and control, right? And especially with visibility, getting visibility in a timely manner, there's no point finding out too late that you've got a problem.
So having that control and making sure that you're understanding your business in plenty of time so that you can make an informed decision. Is really what we're talking about here. A lot of clients will still use Excel to do this, but when you're trying to do that across multiple business units, potentially multiple different geographies as well, potentially with different formats, the data that you're getting is potentially not the most up to date.
It might be in different formats that need reworking, and therefore being able to pull all that information into one place, ingest it all, make some key decisions from it, and move forward confidently is a big problem. So, the point that Ryan was making with his last answer. The less confidence that you have in the numbers, the more caution you're going to take.
So, you're going to give yourself bigger buffers, whether that's drawing down more debt or leaving more money in an account rather than investing it elsewhere. And all of those have knock on effects in terms of extra cost or lost opportunities within the business, particularly when you're talking about volatility as well.
Being able to analyze different scenarios and, you know, to Ryan's point, stress test what might happen so that you're ready if something changes. Doing that on Excel is, is not easy. TMS can make that a lot easier for you. 
Ali Curi: Interesting, Chris, you talked about Excel. Let's, let's continue in that vein for a minute. Could you discuss the role of technology in automating liquidity management processes? 
Chris Jackson: Absolutely. I think the first point to make is that technology is not designed to replace a human being. It should be there to, to augment what a human's already doing. So either saving them time, making things faster or giving them a new way to look at information that they might not have been able to do themselves.
But the key there really is to draw on the... the value that a human adds and make that much simpler. And a lot of the time people are forced into doing nonvalue added roles, like data input, for example, which can be very timely, leaves you open to risk. If you've miskeying information, which then has a ripple through the business, if that's being analyzed.
So being able to take that information, automate all of that. So information from a bank is feeding directly to a TMS or via an ERP to a TMS. So that you have much more confidence in that information, freeing up the human user to actually make strategically informed decisions that align to the strategy of the business, allow you to move forward much more quickly with confidence.
ION Ad: This episode is brought to you by ION. ION offers treasury management products like Reval, which is a SaaS-based treasury, risk, and payment solution, supporting bank connectivity, market data, and more all backed by award winning customer service. To learn more, visit us at iongroup.com/treasury or email us at treasury@iongroup.com. 
Ali Curi: Thank you, Chris. 
Ryan, we've learned a little bit about automation. We've talked about cashflow forecasting...from your perspective, what are potential risks or downsides associated with relying heavily on automated treasury management systems? 
Ryan Dame: Yeah, it's a good question. So I think, you know, there's risks with any type of technology that you're using.
So if you're thinking about, you know, very basics of Excel and building those out, like building out kind of complex models, you always have the risk of key person risk, or specifically like corrupt files or files getting too large and crashing. Those are all things that you always have to worry about.
And when you get into a treasury management system, a lot more is automated for you. So you, like Chris had mentioned, you have a lot more automation around bringing in balances and reducing rekeying errors. You still have the risk that users need to understand how the system was set up and designed for your organization.
So making sure that everyone is aware of processes, how things are set up and why they were set up in that manner so that they can make sure that they're maintaining it going forward with the level of accuracy that's required. You know, the big thing with forecasting is that it's usually referred to as an art, not a science.
So as you go through, you want to make sure that you have kind of that flexibility. And as technology has advanced, there's new things that can be used to help automate more of your forecast and get you out at a better starting point. So in terms of connections to the bank to bring in your bank balances, well, that gets you started a little bit further down the line, when you start your day. I already have all my banking information in my forecast automatically. Well now, with machine learning, I can now start analyzing past historic data and having that get projected automatically for me into the future. So now I'm taking further analysis out that I would have to do, which again, frees me up more time to do deeper level analysis on the general forecast and my liquidity plans without having to get bogged down into those details.
Ali Curi: Ryan, and what you just discussed, does it help companies with their liquidity management strategies? Does it help align them with their overall business strategies? 
Ryan Dame: In general, I think whoever is going to be doing the forecasting and the liquidity management is always really in tune with the business objectives, you have to consider all of those objectives and plans for the organization when you're doing that forecasting.
So I need to understand, yeah, what are our growth prospects? What are our risk appetites for debt? What is maybe a way that we want to grow the company? I have to keep all of that kind of in the back of my head while I'm doing the forecasting to make sure that I'm accounting for all of those needs with how tightly I manage my cash or my liquidity to make sure that I am keeping those kind of goals in mind and having different paths to adjust to as inputs change, but I'm working within those kind of general parameters.
So whoever's doing the liquidity management is tightly wound into the business objectives and on the strategy of the business. 
Ali Curi: Great. Thank you. Chris, given the benefits that Ryan mentioned, you yourself mentioned earlier, clients might already have a level of automation. So, why would a client have stopped short of full automation to support their liquidity management given the benefits that Ryan mentioned earlier?
Chris Jackson: So the simple answer, Ali, is cost benefit. Can you as a corporate treasurer justify the returns in terms of liquidity management that you can unlock by spending more money? So, if you look back over the last few years, borrowing's been cheap, investment returns have been low or nil. So, on that basis, if you can borrow money at almost nothing, and you, if you've got excess cash, you can't really get any value from it.
How much value can you demonstrate in terms of a business case with spending money on a TMS that will allow you to do that better? If you go back to COVID as well, there were a lot of budgets really tightened up. People started hoarding cash, more anyway. So, liquidity management wasn't the focus of businesses.
In the same way that it perhaps has become over the last couple of years. So as economic conditions change, people start to think differently, but it just hasn't necessarily been the key driver of a TMS in the past. 
Ali Curi: Thank you, Chris. And is that why we've seen forecasting really come to the fore in the last couple of years?
Chris Jackson: Correct. Yeah. Again, interest rates have risen sharply since 2022. There's now much more pressure to make your cash work harder. As Ryan mentioned previously, debt's much more expensive. Investments now give a return. So in terms of being able to unlock that cost benefit analysis, it makes much more sense. It's far easier to build that business case than it has done previously. 
I think volatility is much higher now than it has been as well. So having tools that can help you prepare better for that and with more confidence, again, just further augments that business case. And I think when you then blend that with technology maturing, there's much more proof now, much more evidence out there that technology can add value, there's far more referenceable clients around that, there's far more online rather than anecdotal evidence that people can point to. So as that treasury continues to mature and the technology behind it matures, it's much easier to say, look, I can unlock this value for this much money, and that's much better cost value than hiring more bodies into my team to spend more time doing nonvalue added work.
Ali Curi: Great. And Chris, if we could summarize, what is the one big thing you hope listeners would take away from the episode? 
Chris Jackson: It's an old adage, Ali, but I think cash is king. So, the better that you can control your liquidity management and forecasting, the better you're going to be able to run your business.
You're going to get a lot more efficiency out of it. And so, I think spending time to understand how liquidity management and forecasting can help your business specifically, make it tangible to yourself, the more value you're going to get in the long term. 
Ali Curi: Ryan, what are your thoughts?
Ryan Dame: I think the main thing I want people to think about is when you're looking at forecasting and liquidity management, that it can be a little bit overwhelming, especially if you're doing a lot of things manually.
So, to really think about it, no matter what size your organization is, there's technology out there that's able to help you and help you automate further and use that technology to get you kind of to the next level. It doesn't matter if you're small or large, technology is out there, it's constantly advancing to help you and can make your life a lot easier.
And I even think about it on the personal side is, you know, there's budgeting software out there that didn't used to be there years ago. Or it's using an envelope system now, I have a lot of API feeds that I can use. So, it's constantly evolving. The technology is out there. Definitely look into it to help yourself out and take advantage, right?
Like Chris said, of better forecasting. 
Ali Curi: Great. That's a great analogy. Now, let's take a quick sidebar. Ryan, I've asked career advice from our other guests in previous episodes. My question for you today is how do you stay motivated and inspired in your work? 
Ryan Dame: That's a great question, Ali. Yeah, I think it goes back to kind of what I enjoy doing.
I personally enjoy solving problems. I always have, even when I was a kid. So, whether it be puzzles or mazes or Sudoku's or working on my bike. I always like to solve problems. It's what I enjoy doing. So currently working with clients and hearing about issues and problems they have, being able to provide them with solutions and help them and help them discover ways that they can be more efficient is always very satisfying.
It brings me joy understanding that a client's issue has been resolved and their life is now easier and better because of it. So, I always really enjoy that. And that's what keeps me motivated. 
Ali Curi: Great. Thank you for sharing that. And Chris, same question. How do you stay motivated and inspired in your work?
Chris Jackson: Yeah, thanks, Ali. I mean, Ryan's right. I think to stay motivated and inspired, you've got to find enjoyment in what you do. And so, for me, I get very caught up in my own personal development. How do I get better every day? It was something that my first boss told me would get me a long ways. How do you improve? Are you better than you were the day before? 
And so with that in mind given today's topic in particular, I spent a lot of time trying to look at the bigger picture with clients. What is it that they personally are trying to achieve? What are their pain points? How can we kind of really help move forward with that?
TMS is going to do an awful lot of things. I talk to clients every single day about TMSs, but it's really understanding the person at the personal level, what will really add the value. One of the things that I've learned most over the last couple of years with ION is that a TMS is part of a bigger solution that the clients are looking for.
We didn't really touch on it today, but communication within a treasury team is critical. And so, making sure that the information that you're getting to feed a TMS or whatever system it might be is high quality, because if it's not, TMS is only going to help you so much if the data that's coming in is of limited value.
So having those bigger conversations with people about their treasury landscape in general, how the TMS fits into that, has really helped me really up my own personal game because you suddenly start talking about the client and what they need rather than talking about a solution. Once you realize where the solution fits in, it becomes much more valuable to everybody.
Ali Curi: Well, I think that's some great advice. Thank you for sharing. Chris Jackson, Ryan Dame. Thank you both for joining us on the podcast. I look forward to our next episode. 
Ryan Dame: Thanks so much for having us, Ali. Really appreciate it. 
Chris Jackson: Thanks, Ali, been a pleasure. 
Ali Curi: And that's our episode for today. You can follow ION Treasury on X and on LinkedIn.
Thank you for joining us.
[AS1]Ali