Choosing a treasury management system

Published: Jan 2011

When it comes to choosing a treasury management system (TMS), the treasury team is faced with a number of decisions. In this article, we explain how to get the best out of the selection process.

The systems landscape

If ever proof were needed that keeping tabs on cash is imperative for businesses both large and small, the credit crisis provided compelling evidence. It has never been more important to maintain visibility over cash and liquidity positions than it is today.

Whereas in the past the humble spreadsheet was often used for this purpose, treasurers today have access to a more sophisticated range of treasury management systems. These systems consist of a suite of software applications that facilitate the management of all aspects of treasury – from cash and liquidity management to FX and transaction accounting. The big three providers of TMSs are SunGard, Wall Street Systems, and IT2, but there are a number of smaller, regional players operating in the market.

In addition, ERP systems like Oracle and SAP offer treasury modules which can provide much of the functionality of a TMS. When selecting a TMS, treasurers of companies which are already using an ERP system may wish to consider the ERP treasury module alongside standalone treasury management systems.

TMS vendors offer both client-hosted and vendor-hosted solutions so it is useful to have in mind the architecture of the required system. Although the client-based solutions are still the standard means of deploying a TMS, corporates are increasingly turning to vendor-hosted systems – namely, application service provider (ASP) and ‘software as a service’ (SaaS) solutions. With these vendor hosted solutions, the TMS doesn’t physically reside at the client’s premises. As the name suggests, they are hosted by the vendor.

While the two solutions share this characteristic, they differ in one important aspect. ASP solutions provide the user with their own TMS software and are hosted on a per-customer basis. With a SaaS solution, on the other hand, the software and the associated database are shared by a pool of the vendor’s customers. Their individual data and instance of the TMS software are separated by security software.

Know yourself

Once the IT budget has been secured and the go-ahead has been given, the preliminary commissioning stages can commence. In these early stages it is important to carry out a full review of the company’s treasury department, systems, and its technology.

Whether the treasurer is choosing a TMS for the first time or reviewing the current system, it is important to keep a few key points in mind. A thorough assessment of the current system is essential. This will allow the project leader to get a good feel of the current set-up and its benefits and drawbacks. It is at this stage, too, that an inventory of the technology within the department might be done.

Once the failings of the current TMS have been identified, the next step is to consider carefully what the future needs of the department will be.

“What a lot of corporates do is look at their existing process and ask, ‘what am I doing now?’ They send out laundry lists of requirements on what they’re doing right now. They’re not stepping back for a minute and realising they’re going into the market for a reason,” says Tom Nelson, Cash Management Specialist, Wall Street Systems.

Without a good understanding of the current system’s failings and the ‘must-haves’ for the new system, it is easy to botch the process at an early stage.

“The last thing you want to do is put a band-aid on today’s problem as before you know it, you’ll be looking for a new system,” says Brent Callinicos, VP and Treasurer at Google. “It is harder, of course, to define your longer-term strategy and choose a system based on that. It is also harder to sell this internally, but it is very much worth the effort.”

Defining requirements

If these preliminaries have been carried out properly, a requirements definition document should be easy to draw up. This document will provide an outline of the treasury’s requirements and provides an opportunity to flesh out the company’s TMS needs. It is important to speak to stakeholders on the periphery of the treasury department, too, in order to establish a well-rounded picture of the current system.

Once the requirements have been determined, the next step is to start looking at the TMS market to see which vendors might be able to meet the company’s requirements. The number of vendors from which information is solicited at this initial stage really depends on the company’s specific requirements. However, four to six prospective vendors is usually about right.

Between drawing up the requirements definition and the next stage, the request for information, it is important to glean as much information as possible about the solutions offered by short-listed suppliers and how successfully they have bedded-in at other companies. Conferences and trade literature are the best source of this information.

Request for information (RFI)

An RFI is typically a short document that invites TMS vendors to provide more information about their solutions. The RFI should include an overview of the treasury function, including details of its needs, and a brief description of the larger business.

At this stage, those providers who are unable to meet the company’s key requirements can be eliminated from the process.

To facilitate this, vendors can be invited to demonstrate how their systems work in the flesh. This is typically a half-day presentation in which the vendor shows their TMS operating under real-life circumstances and gives the treasurer an opportunity to ask questions while the system is up and running.

For example, if an FX web interface is required for the company’s subsidiaries, then the treasurer should ensure that the look, feel and functionality of the interface are suitable for the company’s needs. If this is not the case, the vendor can be removed from the shortlist.

The responses received during this process will give the treasurer a better appreciation of the TMS landscape. At this point, it should be possible to draw up a shortlist of two or three vendors. It is then time to move on to the next stage of the TMS selection procedure: the request for proposal (RFP).

Request for proposal (RFP)

The RFP is a more comprehensive document than the RFI. It should describe in some detail the treasury’s specific requirements and should outline the strengths and weaknesses of the current system.

Questions that may be asked in the RFP include:

  • How will the implementation be managed?

  • What sort of team will install the system?

  • How long will the implementation take?

  • Who will lead the implementation?

  • What kind of systems support do you provide?

  • Where are your support centres situated?

  • How often do you issue updates?

  • What kind of TMS training do you provide?

“Define how much customisation you need,” suggests Brent Callinicos. “There are more vendors that offer one-size fits all models than those that customise. Time spent fully vetting the flexibility of the vendor upfront will avoid frustration later.”

It is a good idea at this stage to draw up a scoring matrix which can be applied to the responses received. This will make the final decision that much easier.

The scores of the competing TMSs are usually tallied up on a spreadsheet. It is often the case that a treasury team will draw up a set of weightings that they can apply to the various scores so they can keep an eye on their priorities.


At this stage, it is good practice to set up a workshop in which the treasurer can test-drive the shortlisted systems.

  • This workshop should be built around the treasury’s specific needs and should follow a predefined agenda.

  • The vendor should be given ample time to set up the workshop so that the test systems are ready to process the required data.

  • Specify which TMS modules you are particularly interested in.

  • Identify the kind of data you would like to see the modules fed with.

TMSs can be vast systems with numerous modules and plug-ins, so it is important to keep them focused on the specific areas that are being evaluated in order to avoid being overwhelmed with too much information.

The workshop should include all stakeholders, not just the treasury team. This means that it might be a good idea to include the CFO and IT department at this stage of proceedings so that they can have their say in the direction the system is taking.

During the workshop it is important to ask questions about the TMS while it is working, about how the vendor expects to execute and manage the implementation of the TMS.

The end of the workshop is an opportune time to ask the vendors for references from companies who are already using the TMS. These can provide a good understanding of how the system bears up under real-life conditions. In order to be relevant, the references should be from companies in a similar industry.

The issue of updates and support should also be addressed at this time. If 24 hours a day TMS support is needed, is the provider able to meet your needs? Does the vendor have support centres in the countries in which your treasury department operates?

Outside help

Navigating the waters of TMS selection can be a daunting task for a treasury department. It is therefore sometimes advisable to bring in outside help in the shape of an external TMS selection adviser.

He or she will know the ins and outs of selecting and installing TMSs and should be in a position to help the treasurer to optimise the RFI and RFP processes. Importantly, too, the consultant will also be able to cut through the sales patter of the vendors and pinpoint which of the prospective providers meets the treasury’s requirements.

Reaching a decision

After the workshop, the information submitted in the RFP responses should be evaluated, together with feedback from the workshops and the supplier’s pricing proposals. The treasurer should now be in a position to select the most appropriate TMS for the company’s needs.

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