University of British Columbia Cash Management CAUBO June 2006

1. University of British ColumbiaCash ManagementCAUBO June 2006 Clint Meyers Assistant Treasurer Cash Management

2. Cash Desk implemented in 1993 Portfolio balance (March 31, 2006) Short Term $290M Long Term $250M USD $12M 571 transactions in 2005 Total Dollar amount of transactions $2.15B Background

3. Guardian of Corporate Cash for Management & Investment Maximize Returns associated with Investments Risk & Insurance Manager Leases, mortgages, non-research agreements, off-campus properties What is UBC Treasury today?

4. Faculty Housing, UBC Property tax collection Face of UBC Investment Management Trust Presentation will focus on the first two points Treasury will be synonymous with “Cash” What is UBC Treasury today?

5. Increased data gathering & utilization requirements Optimizing cash resources (just-in-time cash) Improving productivity Increased regulatory requirements Greater audit and control standards e.g. SOX Focus on risk management Greater competition for limited product Drivers changing the role of cash management

6. Spread sheets Bank software Client Server Treasury Management System (TMS) Web based TMS How do you manage your Cash information?

7. Typical treasury process Other Financial Instruments Manual Entry Manual Fax Fax Manual Entry Confirmation Confirmation Entry Manual Entry Manual Manual Manual Entry Entry Entry Manual Manual Entry Manual Entry Receipts & Entry Manual Disbursements Daily Cash Entry Position 12 Month Forecast Spreadsheets Spreadsheets Spreadsheets Spreadsheets Spreadsheets Debt Investments Banks Accounting

8. Cost of Non-integrated System

9. UBC found the following: Usage is error prone & complex Manual data entry wastes time & leads to errors Spreadsheets can easily get out sync Maintenance is difficult, if not impossible Cost of non-integrated system

10. Information can be scattered Segregation of funds can be cumbersome Control & audit standards are compromised Ad hoc information request takes too long No central cash position Cost of non-integrated system

11. Integrated System

12. Long Term Cash Sheet Investments, FX Accounting Long Term Debt Daily Cash Sheet Short Term Debt Integrated Treasury Environment

13. Software solution designed to integrate cash management, trading into one consolidated repository of treasury information. Automate manual tasks; eliminate multiple data entry Cash and exposure forecasting Effective portfolio and disclosure reporting Risk performance monitoring Automatic creation of all by products of a single transaction Built in controls, segregation of duties What is a Treasury Management System (TMS)?

14. Cash Management Enhances cash forecasting capabilities Automates multi-bank balance reporting Provides a real-time, global cash position Operational benefits of a treasury management solution

15. Debt/Investment Speeds access for product availability for trading Aggregates positions for efficient management and reporting Facilitates audit and control Operational benefits of a treasury management solution

16. Risk Management Allows auditing of investment parameters e.g. counter party exposure Improves decision making & “what if” analysis Operational benefits of a treasury management solution

17. General Increases time for value-added activities Automates interfaces to other internal/external systems Facilitates timely access to accurate information & other ad hoc reporting Operational benefits of a treasury management solution

18. Summary of Data Sources In Current Position Float Models Forecast Recurring Items CRM Forecast ERP - A/P & A/R Payments Financial Deal Flows

20. Reduced morning reconciliation time from 2 1/2 hours to 1/2 hour Minimized excess cash/borrowings Extended borrowing/lending terms Enhanced reporting capabilities needed to disseminate information & measure performance Efficiencies gained

21. Hard financial benefits Soft financial benefits Soft benefits Calculating an ROI for technology investments Barriers of an Integrated System Measuring performance

22. Reduces Daily Balances available Improves the Timing of Financing Decisions Improves the productivity of CORE Treasury Functions Hard Financial Benefits

23. More Accurate scheduling of Debt & Maturity Enhanced Long Term Maturity Spreads Avoids Sales & Related Losses Soft Financial Benefits

24. Reducing dependence of a simple Cash fore-caster Improving credibility within organization Managing your relationship with other groups in the organization Flexibility of utilizing a database system for manipulating data Soft Financial Benefits cont.

25. Improved Treasury Dept Confidence Improved Image Improved Forecasting credibility Reduced Startup time for new employees Reduced number of errors in daily activity Other Soft Benefits

26. IT System reliance Specialized training of staff e.g. Crystal Reports Non-compatibility with Financial Management Systems System crashes High Start-up and on-going costs Barriers of an Integrated System

27. Increased Investment Revenue Redirected Costs Calculating an ROI

28. Reducing the daily forecast variances = $1M * 5% Reduction of collected funds left in bank accounts on a daily basis (idle balances) = $1M * 5% Higher investment yields due to improved timing of trading activity = $5M * 0.5% In-house management of funds = $290M * .001% Total Net Revenue Increase of $225,000/yr Increased Investment Revenue

29. Workload on a treasury analyst reduced by 50% e.g. verifying daily bank balances Redirected staff effort of 50% of 1FTE (@60K/year) =$30,000 Work load by Treasury Dept is cut by 30% Redirected Costs: $30,000/yr  Redirected costs

30. Conservatively 2 years Increased yields of approx. 10 basis points of self-managed funds Estimated Payback Period

31. TMS does not have to be an expensive proposition Payback can be almost immediate Minimum float required to offset implementation costs - $50M Conclusions