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Designed to be used

For many mid-market corporate treasurers, having a Treasury Management System (TMS) has long been an unfulfilled desire, despite the obvious controllership and efficiency advantages in an integrated specialist treasury platform.

One of the sticking points for many mid-market companies has been the TMS’s image as the preserve of the large corporate or multi-national: too expensive, too complex to implement, too challenging for their IT resources and processes. This attitude is now out of date.

The market has seen a number of significant changes since the first TMS was deployed in the late 1980s. The market grew rapidly and then contracted almost as quickly as players jockeyed for position, leaving some very large vendors in the driving seat and quite a few casualties en route. But change is afoot.

The game changer

In November 2014, the Bloomberg TRM (Treasury Risk Management) system was announced with the intention of providing all the core functionality and workflow required by a middle-market treasury department. Bloomberg’s development team has taken a pragmatic approach to its new offering, prioritising simplicity and connectivity as much as value and ease of access.

Here is how Terry Beadle, Global Corporate Treasury Business Manager for Bloomberg, describes Bloomberg TRM: “It is a solution that has been designed, built and delivered for a middle-market that previously was under-served. It has waited a long time for a solution. Now it has one.”

The company is now offering a pre-configured Software-as-a-Service (SaaS) package running on the Bloomberg Professional Service platform targeted at mid-sized corporates (those in the circa $500m to $5bn range). While their treasury departments look to move beyond spreadsheets to a more professional system of management, they don’t want the total commitment of resources demanded by some of the other TMSs on the market.

Bloomberg TRM enables treasurers to manage their workflow – from cash management, risk management, electronic trading, hedge accounting and treasury accounting – and is fully integrated with Bloomberg’s news, data and analytics services. Much of what is on offer stems from the powerful Bloomberg Terminal but has been augmented and packaged to make it more accessible to the corporate treasury department.

A “new” entrant

Bloomberg has a long history of working in the corporate treasury space and today has more than 8,000 customers; its TRM is therefore borne out of an acute awareness of the needs of the profession, drawn from its work in areas such as valuation, risk management and trade execution. “We looked to the future and saw a need for a TMS for the middle market,” explains Beadle.

The existing TMS market, he feels, tends to focus on the problems and issues of the largest companies. The middle market may share many of the same issues – the lack of cash visibility, the threat of Excel hell, the confusion of multiple bank portals and so on – but where a large corporate can spend its way out of chaos, smaller companies have neither the time nor the resources to do much more than just firefight these issues. “If you were to look for a TMS to help, generally you would find that they are too complicated, too expensive and can be very difficult to implement.”

Plugging this gap, he states, is the raison d’etre of the Bloomberg TRM. “It’s a simple to buy, implement and use ‘one-stop shop’ that comes with all the expected Bloomberg values,” claims Beadle. To emphasise the point of its “switch on and go” capabilities, he states that go-live in most cases can be achieved in a matter of weeks and not the months or perhaps even years associated with traditional systems.

Functionality

The Bloomberg Professional service, or Terminal, is the technical platform upon which TRM is built. As a result, it has all the market data, valuation, news and analytics that are to be expected of Bloomberg. The suite of functionality within Bloomberg TRM, which encompasses liquidity, exposure management and accounting processes, includes core cash management with SWIFT connectivity (through Bloomberg’s own long-standing order management channel), and is capable of integrating with electronic banking and most ERP systems. Being browser-based, cash management can be delegated to treasury units without a Bloomberg Terminal, such as subsidiaries or back office functions – a key change from Bloomberg’s traditional operating model.

The next step in the workflow, the risk module, integrates the risk management functionality found within the Bloomberg Terminal. The electronic trading side incorporates Bloomberg’s FXGO platform for trade execution with banks, global exchanges and connectivity to clearing and settlement engines. TRM also has an advanced hedge accounting functionality providing a range of valuations which can be posted to the user’s own ERP. On the treasury accounting side it delivers comprehensive cash and month-end accounting journals and a pre-configured standard chart of accounts and account rule mapping, based on US GAAP or IFRS, helping to minimise implementation and testing cycles.

Chart 1: TRM workflow

What’s included, how it connects

Source: Bloomberg

Mid-market corporates may already have a range of services that are addressed by a number of bank portals, but this is very demanding to manage. Beadle notes, “one of the problems for smaller companies is that they do not necessarily have the IT capability and the budget to bring everything together. With Bloomberg TRM, all treasury functions are highly integrated within a single package.”

A key aspect of user-friendliness is TRM’s pre-configuration of these functions based on standard industry practices. “Processes that are set in stone tend to come from legacy systems. The treasurers we are aiming for will probably not have an existing TMS and will therefore tend to have a limited set of processes,” explains Beadle. “We are offering a ready-made ‘best practice’ model that they can migrate to either immediately or progressively, without the need to start from scratch.” TRM, he adds, is a proven platform upon which treasurers will build.

Keeping in touch

Best practice in the TRM context has been drawn from Bloomberg’s experience with the beta version of the platform. They took this to a closed group of existing clients to test and validate, with the feedback being used to develop each aspect. “We are not theoretical or academic in the way we view the market; we have taken a practitioners approach with everything,” says Beadle. Even with live clients on the full system, the work does not stop. To develop the products, he says Bloomberg has adopted a “high-touch” support model. In fact, the kind of relationship Bloomberg has with its clients allows it to engage in “rolling debates” around the full product set. It helps that Bloomberg also has the scale, reach and capabilities to address the middle market of corporate treasury across the globe; without these elements progress would be difficult because corporates are not all neatly clustered around the world’s financial centres.

Beadle adds: “We are able to have the level of face-to-face dialogue with our corporate clients that other vendors may find difficult to achieve”. At the heart of this model is the Bloomberg Corporate Symposium. This is a regular ‘Town Hall-style’ platform open for all clients to meet with each other and Bloomberg representatives to discuss issues. The vendor also arranges webinars and is prolific in its production of relevant white papers, commentaries and other communications.

Unprecedented economics

For a mid-sized corporate, the implementation of a TMS comes with a number of concerns that must be addressed. Treasurers are concerned about the risk of implementation, the complexity of the product in use and, not least, the cost, notes Beadle. “TRM is a system that has been designed for the middle market from the beginning. It is not a high-end product that we are trying to take down-market for sales leverage; this is a product designed for the market in which it will be used,” he explains. “We started with the concept that we wanted it to be simple to buy, simple to use and economical to own. We demonstrate that TRM can be deployed within as little a one week; there is no major upfront investment because we can show the client’s requirements and needs in action straight away.”

“We are not theoretical or academic in the way we view the market; we have taken a practitioners approach with everything.”

For existing Bloomberg terminal clients there is a competitively-priced annual fee plus a further nominal fee for SWIFT activity. For new clients a Bloomberg terminal is also required. The TRM fee includes up to four browser connections to Bloomberg which can be used to enable subsidiaries and other departments to connect to it. Crucially, it also includes the implementation cost – Bloomberg is essentially taking the risk of implementation away from the client.

“It appears economic in terms of a narrow TMS offering, but considered in terms of overall terminal value, what we are doing is increasing that value to the smaller company with the likes of built in investor relations, valuations tools for derivatives and downstream accounting and hedge accounting, M&A and procurement functionality, tools for developing FX exposure and risk management policies.”

The on-boarding of TRM, as Beadle explained, is typically a rapid process. This capability started with the solution’s purposeful creation as a SaaS offering, as opposed to being installed or hosted. For other vendors, he says, typically each implementation requires the solving of an individual set of issues. “What we try to do is solve problems for many customers at once.” As such, in the Bloomberg implementation process, there is an initial process of discovery where the team will spend time with the client performing a deep dive into their processes. This includes gathering the relevant data required for workflows, banking details, corporate structure, accounting standards and so on, taking a matter of hours to do so.

It is Bloomberg’s intention to provide continuity of care, allowing the same point of contact throughout the early stages of the relationship, at least as far as the client reaching the point of solo flight.

The implementation is then scoped, documented and shared with the client and when the client is ready the system is created. The client can validate it before going live, with all of its current records and open trades uploaded – historical data can be added if required but most clients ask for “a clean point of transition” between old and new processes. There may be some external lead times, such as arranging for transmission of electronic bank statements for example, that can delay the process. But, notes Beadle, “the banks are starting to react to us, thinking about how they can actually speed up the process”.

Up and running

It is Bloomberg’s intention to provide continuity of care, allowing the same point of contact throughout the early stages of the relationship, at least as far as the client reaching the point of solo flight. The learning curve for existing Bloomberg terminal users is minimal – TRM has a very similar interface – but Beadle says even non-users will be comfortable within a couple of weeks. This is another important design feature. “One of the key points of feedback we got when creating TRM is just how inaccessible some TMSs have become as their power and flexibility has increased. They try to solve every single variation of every single problem. The point of TRM is that it is simple; middle market treasurers want to automate and they want to integrate and that is precisely what it does.”

Having launched TRM, Bloomberg has been eager to discover just how effective its solution really is when used ‘in the field’. It has continuous dialogue with users and a full roadmap of future developments, but the industry response to date – from clients, analysts and commentators – has been remarkably positive. “The view is that it is game changing,” reports Beadle. “There has never really been a solution that has been packaged and priced like this.”