Technology Review: 3 Tools to Manage Complex Debt Structures

Has your debt portfolio grown to a point where your current tools can’t keep up and you start losing the overview and control? Are you already at risk of missing key payments? Let me tell you, you are not alone. Many companies outgrow their technology, before they realize they have to do something to take back control. Here´s what commonly happens.

As companies grow, their debt structures become more complex. After entering a new market, opening a new subsidiary or acquiring another company, the treasury team is challenged to monitor credit lines in multiple currencies, work with global bank partners, deal with inherited debt from the acquired company or issue commercial paper and bonds outside their domestic market.

Handling complex debt structures with inadequate tools can lead to inefficiencies and errors. Let´s review how spreadsheets, ERP systems and treasury management systems can help you with this challenge:

Working with spreadsheets, it is difficult to capture highly complex debt structures, keeping an overview on interest and debt payments is challenging, but doing valuations in different currencies with these simple tools is just not possible.

Using an ERP system, you may be ok with basic debt and interest rate management. However, capturing more complex debt structures or hedging liquidity, FX and interest rate risk will exceed all customization budgets you might have secured. ERP systems are just not designed for treasury´s specific needs. That´s why you should consider complementing your ERP software with specialty treasury software.

Working with a treasury management system, you will be able to increase efficiency and control in debt management, while improving visibility into enterprise-wide cash and risk. Treasury management systems help you to:

  • Capture all short-term and long-term debt contracts, including bank loans, revolving lines of credit, commercial paper, bonds, senior notes and many more
  • Set up authorization workflows for different types of debts
  • Keep an overview on interest and debt payments and automate payment execution
  • Automate denomination and valuation for multiple currencies
  • Manage working capital and liquidity in alignment with your debt policy
  • Set up intercompany financing structures and processes
  • Mitigate liquidity, interest and FX risk through natural hedging and hedge accounting
  • Simulate long-term debt contracts as basis for evaluating financing opportunities
  • Report on bank limits, debt maturity, interest payment schedules and more

Aligning debt and interest rate management with your treasury technology can help you master the complexity around different types of debt, debt accounting and interest payments resulting from increasingly global operations. Don´t wait until you miss the first payment - start reviewing your technology set-up today.

Listen to our webinar recording to find out more about leading practices in debt and interest rate management.