In the last four years, US communications company Bandwidth’s growth ambitions have soared, from going public on the Nasdaq exchange in 2017 to setting its sights on international expansion with a major European acquisition completed late last year.
As the company marched forward, it recognised a need to improve its treasury operations, hiring treasurer Scott Taylor two years ago as the company’s first dedicated treasury professional. Previously, core treasury tasks were spread across different teams.
Speaking at a Treasury Dragons livestreamed Fireside Chat, Taylor said he immediately saw a requirement for greater automation of cash flow and forecasting as well as a more effective way of managing new foreign exchange payments due to start flowing in, with the company having acquired Voxbone in Belgium last November.
He also knew that he did not have the time, the team capacity or budget to implement a new traditional treasury management system (TMS) as he had done in previous roles, where it could take “six to nine months just to get our accounts connected to the TMS”, he noted.
“Spending my time on that almost exclusively wasn’t a good option or valuable,” he said, “But we did want to find ways to automate and reduce manual tasks as much as possible.”
Taylor soon approached California-based tech firm Trovata to set up a cloud-based cash-forecasting platform which makes use of API [application programming interface) technology.
“For us it seems like almost a no-brainer to do it – to join and partner with Trovata,” he said.
Implementing a platform with real-time access to cash flow data has changed the day-to-day running of Taylor’s treasury team. “[Before] It’s going in every morning and going into different bank portals and pulling down the previous day’s information. It is a manual process –not an exhaustive process. In my prior company which was a lot bigger – it took a day to get the cash report out,” he said.
Taylor recognised the benefits of even saving a few minutes on doing small tasks. “Anything you can do to save any time on things you don’t want to do - it frees up time to be working on the projects that I want to be working on.
“We have other projects this year. [There are] people who are resistant to this kind of change – and say ‘but this only takes five or ten minutes’. It never does – it always takes longer. All those five, ten, 15 minutes – it adds up over the day. If we can eliminate that, we can do more analysis,” he explained.
The use of APIs is a central component to the Trovata platform, allowing Bandwidth to directly connect with multiple banks to access data rather than relying on more clunky file-based methods. This was important as Taylor knew he would be working with an increasing number of banks as the company expanded.
The API platform works by aggregating bank balances and transactions in real time, helping to automate cash reporting and cash flow analysis. Joseph Drambarean, CTO at Trovata, likes to think of APIs as a kind of “pipe” with a lot of bandwidth to carry different data such as remittances and invoices. It provides, “timelier and near real-time data, and it is more ‘rich’… It is revolutionising the way you can capture data,” he said.
Many banks are now introducing their own APIs to provide connections for their clients. In the case of Bandwidth, it initially worked with HSBC on the set-up of an API connection to Trovata. Bandwidth had already been liaising with the bank on opening new international accounts.
Trovata’s platform has a natural language search capability which acts like “Google for your transactions,” said Drambarean.
“Natural language search is a big deal,” said Taylor. “Being able to type into a field and see your transactions filtered out that quickly. I have not seen that available in traditional TMS,” he said.
The use of API technology has played a vital role in how Bandwidth manages its short-term investments. Taylor had partnered with ICD, an independent portal of money market funds and other short-term investments, to support the company’s investment of excess cash.
To gain a better overview of its short-term investments, Taylor asked for ICD to be connected to Trovata. “We see all the funds we are in, they come in near real-time and it is all there. And it is there for anyone else to use too. It’s not just for us,” Taylor said.
Looking to the future, Drambarean sees a “sea change” towards greater adoption of APIs – which has been partly fuelled by the pressures of the Covid pandemic.
“[There is] a willingness to lean in and explore options,” he said. “With HSBC, we were the first in the world to implement that API – there was a lot of conversations - but once we got past those, it was quite efficient. Now HSBC has a playbook they can run every single time,” he said.
Taylor urged mid-market companies to seek out new technologies to improve their treasury functions. “Don’t just be open to new technology– but really seek it out. Be curious and don’t let internal IT departments tell you it’s not going to be that easy. Really seek it out and find the possibilities,” he said.