The sun has set on another AFP annual conference, and the insights, education and networking, as usual, were invaluable: detailed discussions with hundreds of customers, prospects and partners; jam-packed customer presentations; and a big announcement from Kyriba on the launch of new industry first capabilities for payments fraud detection. Here’s a quick recap of our experience at the conference:
HCSC’s Strategic Evolution
On Tuesday, Health Care Services Corp. (HCSC), the nation’s fourth largest healthcare insurer, discussed in detail how it changed its treasury operations into a highly strategic unit -- with results far beyond expectations -- thanks to smart thinking and innovative technology.
During the session, “How Health Care Services Corp. Transformed Treasury into a Best Practices Treasury,” Forrest Vollrath, Executive Director of Treasury Operations at HCSC, discussed how passage of the Affordable Care Act (ACA) and desire to be more strategic sparked a need for change. To enable this transformation, the company decided it needed to ditch its on-premise solution for a more flexible and easier to use cloud solution: Kyriba.
According to Vollrath, HCSC’s initial objectives were to boost cash visibility, enhance payment controls and boost the productivity of its treasury staff. “I wanted people to be analyzers, not processors,” Vollrath told the audience. “I was very adamant that we needed to automate the cash position.”
The results have been spectacular, including:
- 100 percent cash visibility, including automated connectivity to all HCSC banks
- Reduced working capital balances from $4B to $50M through improved forecasting
- A 5 percent increase in investment returns through more strategic investments
- Savings of $2.4M in bank management fees through optimized bank relationships
- Automation of key capabilities and comprehensive business continuity planning
The company has earned widespread recognition for its transformation, including the coveted Adam Smith Award. “The industry is acknowledging what we are doing, so that goes a long way,” he said.
Kyriba Launches New Payments Fraud Module
On Monday, as part of the conference, Kyriba announced new industry first capabilities for payments fraud detection. The new module delivers real-time fraud detection and prevention using scenario-based rules. The offering received high praise from attendees, who have long struggled with the issue, while also garnering coverage in CTMfile, Pymnt.com and other publications.
During an on-site interview with Strategic Treasurer, a prominent consultancy, Kyriba’s Bob Stark talked about the value of protecting against questionable payments outside the purview of standard controls (e.g. international payments to a country where there is no known supplier, or first payment to a new bank account).
Financial leaders need “scenario-based protection, where you can say, here are some rules that are aligned with my payment policies, I want to make sure I have a backstop to protect all the activity going on, in addition to the standard payment controls I have in place,” Stark said.
Finding Value for Cash
The value of cash is hard to find in the current low interest rate environment. At a session on Monday entitled, “Trapped Cash and Other Pitfalls of a Managing Global Balances,” three treasury professionals discussed how to unlock the value of idle cash. They included Tom Wolfe, CTP, Senior Director of Global Treasury at Marriott Vacations Worldwide; Sam Pallotta, CTP, VP Treasurer at Rockefeller Group International Inc.; and Josh Ormond, VP Liquidity Product Manager at JP Morgan. Both Marriott and Rockefeller are Kyriba clients.
The panel collectively defined trapped cash as “cash that an international business has generated overseas, but is unable to repatriate to their own country.” The panel agreed there are multiple reasons for why cash can be trapped overseas, including foreign exchange controls, capital requirements, restrictions on intercompany lending and punitive withholding taxes. If treasury can move the cash back to the U.S., the organization benefits “by reducing interest expense and freeing up cash to pursue additional investment and earn greater corporate profits.”
With a burdensome repatriation tax, most overseas cash either sits idle or is used to invest in local projects. However, treasurers are now incentivized to look for ways to unlock trapped cash due to rising interest rates. While intercompany loans, in-house banks and global earnings credit programs were suggested methods to mobilize cash, knowing where your cash is and how much you have is fundamental to finding value for cash, they said.
Additional reading: Proposed U.S. Tax Cuts May Give Treasurers Reason to Celebrate
Making the Business Case: Accenture & Halyard Health
Also on Monday, Accenture and Halyard Health teamed up for a session entitled, “The Art of the Business Case,” which detailed how to sell the value of a TMS to internal stakeholders. The key elements of a winning business case are: framing the challenge, describing the current state, assessing the solution landscape, and providing estimated ROI, according to presenters David Lieber, Senior Treasury Manager at Halyard, and Phil Capodice, Treasury Practice Manager at Accenture.
When it came to technology, Halyward ultimately chose a cloud solution -- Kyriba -- because of the quick implementation and the ease of use. Halyard was able to show how Kyriba could reduce risk, reduce labor costs and support the overall business strategy.