Treasury Today Country Profiles in association with Citi

Ten steps to TMS success

Stepping stones out in the water

Treasury management systems, despite the clear benefits they bring, are not found in all treasury departments. But for those looking to move away from spreadsheets, here are ten steps to success.

Treasury needs an acute level of control and visibility over its operation and the data that flows through it. It is highly unlikely, however, that treasury will be able to achieve this using basic tools such as Excel spreadsheets.

It might then be time for an upgrade to a standalone Treasury Management System (TMS) or ERP treasury module. If so, then here are ten practical steps that can help treasury be successful:

Executive management support

At the outset of the project, it is essential that treasurers should garner the support of executive management and at least secure their willingness to consider investing in a new treasury system. Funds allocated to a treasury project may be channelled from investment destined for core business areas.

This may be difficult to justify, especially if treasury is not a profit centre, but the results of the TMS assessment process will help to develop a strong business case, particularly from a compliance and control perspective.

Although the final investment decision may await completion of this business case, executive management’s awareness and interest in the project will do much to persuade other business areas of its importance.

Corporate strategy

Corporate plans for the future should be ascertained and the implications of any merger and acquisition (M&A) activity or divestment plans should be considered. Are more branches to be opened or additional subsidiaries likely to join the group? How will these impact treasury operations? The TMS system must be flexible enough to cope with changes and expansion/contraction, whether through M&A or organic growth, and accordingly must be easy to upgrade and replace.

However, it isn’t just about the future and other questions should be asked. What is the current situation? Are there any corporate projects already in progress that may prevent treasury from achieving its goals or will it be possible to factor in such changes within the scope of the TMS project?

IT department

It is important to seek IT participation from the start and invite a designated representative to join any TMS project discussions. IT will be closely involved in the installation and ongoing support of a new system (depending on the solution chosen) but faces competing demands from all areas of the business.

Their early involvement promotes their understanding of treasury requirements whilst giving them the opportunity to provide expert guidance on the technological details of the TMS project, eg on integration issues with other business systems and the type of solution to choose (such as outright purchase, license, application service providers (ASPs) and hosted options).

Other departments

Open communication channels should be maintained with all the stakeholders. How will the implementation or upgrade impact on other departments, such as accounting, legal, audit and sales? Will their systems be affected? In addition, if those departments are planning their own internal changes or installing new systems, how will this impact on the TMS project?

External relationships

Treasurers should be aware of any issues that may surround the integration of bank reporting mechanisms, payment systems or other external feeds with a new TMS. It can be helpful to discuss the TMS project with bank relationship managers as they may be able to provide useful insight into TMS technology and how it can help specific clients’ needs.

A TMS project also provides an excellent opportunity to review the use of banking technology across the organisation to ensure optimum configuration of all treasury technology. Existing treasury system vendors will, of course, need to be handled sensitively if there is a possibility they will lose business.

Treasury structure

It is important to consider which areas within treasury operations will be impacted by system changes. This will depend on a treasury’s structure – decentralised, centralised and/or in-house bank – and on whether payment/collection factories or shared service centres are used. In a large global operation, it may be necessary for numerous treasury employees to have web portal access to the TMS.

The project presents a good opportunity to review interaction between head office and business units. The TMS should provide benefits to the business units through ease of reporting cash flows, treasury tools and centralised dealing facilities, and head office will receive more regular and reliable information flows from the business units.

In addition, external influences on treasury should be taken into account. For example, how will the European Market Infrastructure Regulation (EMIR) impact on treasury?

Treasury employees

Any employees who are likely to be affected by the project should be informed. Where appropriate, it can be useful to involve them in the assessment process related to their particular activities (eg helping with workflow analysis). They can provide useful insight into the jobs they perform. This includes treasury staff at branches and subsidiaries.

A major exercise of this nature puts strain on day-to-day activities. The treasurer should be clear about the staffing levels and other resources necessary to achieve the project’s objectives and how this can be delivered without impacting adversely on daily operations. The employment of temporary staff and perhaps an interim treasury manager as cover should be considered carefully, as it is important that knowledge acquired about the new TMS should remain with the treasury team.

Treasury operations

The systems and procedures currently in use should be assessed in detail and relevant documents such as the treasury policy, treasury mission statement, job descriptions and user manuals should be consulted. Workflow analysis can be undertaken to identify current inefficiencies, weaknesses and control and security issues that may expose treasury to greater risk.

Areas of strength should also be noted, as these efficiencies must continue (or even be improved further) under the new system. The treasury’s future plans should also be taken into account.

System integration

The flow of information into and out of the TMS should be assessed. Company expansion results in a complex mix of systems and technology. Automated links or integration between the TMS and other systems will be necessary with market feeds (eg Reuters and Bloomberg), bank systems, dealing systems and accounts payable/receivable. The TMS can also interface into confirmation matching systems and other software so these options should be considered.

Defining TMS requirements

Finally, a definitive list of requirements should be drawn up using the information collated. These requirements can then be divided into areas of activity or sections within the treasury department, eg dealing, confirmation, settlement, cash-flow forecasting, treasury control and risk management, differentiating between the essentials and the ‘nice-to-have’s. The requirements definition should also include known or likely future requirements.

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