The last few years have been good to Reall. Previously Homeless International, in 2014 they rebranded and relaunched, shifting their business model from a development charity reliant on grants, to a social enterprise. Using a business focused model to provide philanthropic support to their partner network, Reall expanded their operating budget tenfold and increased their expansion efforts by twenty fold over their 2010 numbers. Meanwhile their future growth projections have highlighting the need to standardize and modernize their methodology for tracking investments in partner companies.
Not a standard treasury
Reall does not initially seem to be the kind of company that would require a treasury management system. Operating by providing technical assistance, advisory and financial support to a series of partner organizations – known as “Community Development Enterprises”, or CDE’s – Reall’s goal is to build homes and encourage commerce in Asia and Africa. These CDEs operate locally, performing functions ranging from mobilizing poor urban communities; securing, processing and servicing land; developing vibrant, affordable residential neighborhoods; and managing efficient end-user Micro-Mortgage systems to enable locals to purchase homes. While Reall often will hold some share of them, they do not usually have controlling equity, and as such are almost entirely legally separated from them.
Homesless International becomes Reall
2014 marked a transformation in Reall’s operating philosophy towards the CDEs. Changing their scope from a charity to a social enterprise, Reall continues to offer loans and financing to the CDEs, but now does so with a focus on funding profitable business which they can collect a return on. This gives them the funding they use to reinvest into the CDE’s, but also assures that the money they invest supports another of their goals: building sustainable industry in developing nations. Combined with releasing bonds and seeking investors in their partner NGOs, this change has resulted in a 10 fold increase in their budget and a more than doubling of their efforts.
“Given our future growth projections, we needed to find a treasury system that was built-for-purpose rather than continuing to manage our treasury function using a variety of spreadsheets, “ Says Peter Mujtaba, Head of Systems for Reall. “Our aim was to find a system that was easy and quick to setup and intuitive to use. We followed a standard RFP process to research the marketplace and were quick to find a suitable solution for us with BELLIN tm5. We selected tm5 primarily because it was cloud based and met our business requirements out-of-the-box – and because the company came across as a good cultural fit. They were approachable, keen, knowledgeable and also experienced with working with other UK based charities.”
Standardization through implementation
At the heart of Reall’s operations are the CDEs, and as such a major focus of the project was a push for standardization in Reall’s investment contracts with them. There were 80 agreements, many of which had been written up with terms and conditions according to local rules and regulations, and interest rates that differ according to jurisdiction. These might take 3-5 years to mature, many required review of their interest calculations, and their details were captured in aging spreadsheets, making tracking – and much less change control – a difficult task. Using the implementation project as an opportunity to re-examine these agreements afforded Reall an opportunity rarely afforded organizations: not only could it define the standardization of their future agreements, but it also provided the opportunity to look at past agreements and review their structure.
With the CDEs not technically being subsidiaries, the CDEs and CDE Subsidiaries were set up as separate counterparties. Investments were done with CDE subsidiary entities, grouped in counterparty groups. This permitted Reall to track their investment projects, while still allowing for flexibility in special project arrangements. In addition, it enabled them to map and monitor programmatic data (building units, land etc.) against the investment projects.
“What we wanted to do was standardize their processes,” says Lena Pennington, BELLIN Project lead. “Our system is modular, so it was quite easy to deploy the required components to Reall’s partners. This allowed Reall to set standards centrally and have those reflect outward systematically.”
“One of our early tasks was to capture existing partner investment contracts along with their interest and repayment schedules. Now, REALL does not only track outstanding investment projects for current movements but also uses this data to forecast future cash flows, enabling REALL to monitor currency and interest exposures and plan for future investments and funding decisions.”
Under their new system , the TMS not only produces relevant project documentation it also serves as the complete repository of all project documentation as documents are attached to each of the investment projects directly. As all of this happens with the same sets of templates in the system, future agreements are then standardized and codified easily.
“It has been labor intensive but taking each contract one at a time and working methodically through each of them has resulted for me in a better understanding of not only the system but Reall’s contracts,” Explains Wesley. “The system is user friendly and flexible enough for us to be able to create the necessary investments. With the help of Lena we have successfully captured each investment contract within TM5 and each foreign exchange transaction. Phase one of the implementation process is practically complete and we look forward to working with Bellin to implement the next phase.”
Looking at the future
“Going forward, REALL will leverage the existing processes and establish a 3-5 year forecast in tm5 which will include all investment, funding and operational flows,” explains Pennington. “This will serve REALL as a basis for sensitivity analyses on foreign exchange and interest rate risks.”
“The reporting side of the system is going to be invaluable to the organization not only for seeking new investors but reporting back to current investors and donors and other stakeholders.” Explains Wesley “We have future plans for further phased implementations of other functions within the system, which will be advantageous for the organization.”
Reall’s shift in focus has been transformative, not least of which has come through the application of new technology. “We see this a lot,” says Pennington, “companies engage with us because they need software, but what the exercise provides is the organizational push to reorganize and standardize operations.” What lies at the end of all this? “We hope we’ll be able to continue to expand our efforts,” says Wesley, “creating livelihood, catalyzing economic development, and driving economic empowerment with each investment.”