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How Lone Star College Manages Cash and Investments with PeopleSoft Cash and Treasury

At RECONNECT 19, Lone Star College’s Katy Holloway, Business Analyst, and Tammy Cortes, Associate Vice Chancellor, spoke about how the college manages cash and investments using PeopleSoft Cash and Treasury solutions.

Managing day-to-day cash is critical to the Treasury organization, and they need the tools to accurately forecast cash requirements, efficiently process payments and manage the investment and debt portfolio accurately. PeopleSoft Cash and Treasury is a robust solution that provides the flexibility to better manage cash, project current and long-term forecasts, reduce costs and meet regulatory and accounting requirements for investments and debt.

At RECONNECT 19, Holloway and Cortes showcased Lone Star College’s use of PeopleSoft Cash and Treasury in the areas of payments through the Financial Gateway, as well as Deal Management for managing and accounting for their debt portfolio and much more. Lone Star shared the huge value in the areas of efficiency gains, reduction of manual work, and actual reduction of debt. The pair also discussed the roadmap that Lone Start College has in place for this robust solution set.

About Lone Star College

Lone Star College was founded in 1972 and has roughly 95,000 student enrollments. There are around 7,000 part-time and full-time employees. Lone Star College is the largest institution of higher education in the greater Houston area.  It consists of seven colleges, two university centers, and eight additional centers and is one of the fastest-growing college systems in the United States. Lone Star College encompasses eleven school districts, 1,400 square miles, and a population of over 2 million. It also has a significant economic impact of $3 billion dollars. Lone Star College is more affordable than other state institutions, so attending the college saves students and their families thousands of dollars per semester.

How Lone Star College Uses PeopleSoft Cash and Treasury

Lone Star College uses PeopleSoft Treasury Solutions for Cash Management, Deal Management, and a Financial Gateway.

Within Cash Management, the college uses PS Treasury Solutions for:

  • Banking (bank statement processing and reconciliations)
  • Treasury Accounting (automated accounting and templates)
  • Investments (pool position and participant transactions)
  • Settlements (net deal settlements)

Within Deal Management, PS Treasury Solutions is used to:

  • Administer deals (facilities for issuing debt and define instruments)
  • Capture deals (deals, estimated interest accruals, and Portfolio Manager)

Within Financial Gateway, PS Treasury Solutions is used for:

  • Payments (dispatch to a bank, import bank acknowledgment, and review transactions)
  • Administration (utilities)

Bank Reconciliations

Banking is a key factor and component in any business. Lone Star College needed to identify their requirements for processing PS payments. They also needed to leverage inheritance rules to ensure cash transactions followed source transactions. Finally, they needed to make sure that the system provided bank statement processing for system-generated bank reconciliations.

When iStar Financials went live in 2010, banking configuration primarily defined banks for integration with other PeopleSoft products. However, future development of PS Banking functionality will eliminate recon processes that rely on external databases and manual reconciliations. iStar hasn’t fully made it to this point, but they are increasingly working toward that goal. Some of the challenges that Lone Start College faces are time, resources, stakeholder buy-in, and many sources.

In regard to BSP Automatic Reconciliation, a script was created and scheduled daily to pull the prior-day BAI file from bank servers vis SFTP onto the Lone Star College network, where it could be used by BNK_RCN to import, reconcile, and create treasury accounting entries. It is important to note that Treasury accounting templates were configured for the exception items resulting from bank statement processing to facilitate external transactions.

Bank reconciliation set up involves Administering Bank Integration and Reconciliation before bank statements can be reconciled. BNK_RCN is scheduled to run daily.

The reconciler resolves any exceptions to complete automatic reconciliation. Compared to Lone Star College’s prior ERP, BSP offers improved visibility and is extremely more user-friendly. A benefit to this is daily scheduled auto-recons and timely payment statuses in iStar are a major improvement from the monthly process run prior to PS.

Lone Star College finds the benefits of accomplishing full BSP automatic reconciliation to be huge when factoring in time, effort, accuracy, resiliency, and reporting.

Inheritance Rules

There are a few important things to note in regard to keeping track of inheritance rules. Lone Star College uses inheritance rules as a means of matching cashflows to revenue and expense transactions. In Banking, external accounts can be configured at the “Bank Account Ledger Types” level to select “Always Inherit” on the desired chartfield. LSC configured the rule on the Fund and Project chartfields. The benefit of this was accurate reporting on bond funds and sponsored billing. The external bank account integrates with AP and is used during pay cycle processing. Choosing an external account dictates the accounting for the cash side of the transaction – taking into account any defined inheritance rules.

Treasury Accounting, Deal Management, and Financial Gateway

Treasury Accounting works well for Lone Star College. It saves time by generating entries for BSP, DM, BAX, and IP using TR accounting templates. It also saves time by offering the capability for approval requirements on treasury entries, which reduces the risk of posting errors.

Run Control Criteria Selection allows for the segregation of accounting entries if that is desired.

The Treasury’s upgrade to FSCM 9.2 began with Phase One of Deal Management and then Phase 2 of the Financial Gateway. In Phase One, Lone Star College wanted to record the $1 billion bond portfolio into iStar and improve data accessibility. They also wanted to reduce the risk of input and calculation errors. Creating a single source of record and streamlining the principle and interest payment processes were also part of Phase One.

Their approach to the DM implementation project started by identifying the debt to go into the system. This decided the configuration of the Facilities and Instruments for both debt and investments – allowing a 1:1 relationship per CUSIP. As Lone Star College worked through the DM Implementation project, a discovery related to the manual amortization calculation of premium/discount on bonds identified the need for a significant adjustment to the liability account, resulting in a favorable impact on the financials.

There were a couple of challenges that arose with the DM Implementation. One problem arose with how to include the project with DM auto-accounting lines.  They resolved this issue by defining CM substitution rules mapping attributes to the project chartfield. The other problem was sending auto-accounting lines to multiple ledgers. They resolved this problem by customizing a new GL Journal Template.

Migrating the debt service payment process from manual to system-generated eliminated the manual task of preparing wire initiation forms and provided more control on the timing of releasing cash. Now the system does all the work and they just click to run and verify the results. With DM, Treasury manages investment and debt transactions within the system but initiating P&I payments or settling investment purchases requires an assist by the Financial Gateway.

Financial Gateway was Phase Two and had several benefits. The integration makes multiple system-sourced payments possible. It is also a way for secure delivery of payment and acknowledgment files between Lone Star College and the bank. Financial Gateway minimizes the use of online bank services. It also provides ease of tracking payments from source to settlement.

For Lone Star College, Phase 2 was supposed to begin at the same time that a transition was underway from one depository to another. This presented an opportunity to rethink their payment outputs. It was important to identify all the stakeholders and bring them together to form a collaborative team. They wanted to increase buy-in and be sure they looked at the process from all perspectives.

The Financial Gateway implementation proved to have two problems that needed to be resolved. The volume of principle and interest payment lines coming from DM was resolved by updating settlement instructions on Treasury Counterparty to net by Instrument Type. The other problem of suppliers with multiple payment outputs was resolved by considering a configuration update to include ACH, WIRE and EFT locations and work around process using the Supplier location additional payables option.

Lone Star College’s next targets for PeopleSoft Cash and Treasury are a development of Cash Position functionality, to build on to existing auto-bank reconciliation, and to provide customized Reporting for DM and CM.

To learn more about how Lone Star College manages cash and investments with PeopleSoft Cash and Treasury, check out the RECONNECT 19 presentation attached below.

Additional Resources

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