Question Answered: Setting up a TMS

Published: May 2024

“What should treasury consider when implementing a TMS?”

Business finance data analytics software

Shailesh Bettadapur

Treasurer & VP, Investor Relations
Mohawk Industries

Mohawk Industries installed a TMS (Kyriba) in 2012, and I am consistently surprised that treasurers are still talking about the pros and cons of this technology. I’d guess conservatively that around a third of my peers don’t have a TMS. The company has a reputation for being lean and, for treasury, this would be impossible without a TMS. Our treasury team is only five to six people which is quite small for a US$1bn company.

The main purpose of a TMS is to automate and, while at least in this still pre-AI environment it won’t eliminate human tasks entirely, it does automate a number of non-value adding tasks that would otherwise require more people, resulting in both cost efficiencies and lower error rates.

For example, in our pre-Kyriba days, our treasury staff would have to use a few hours in the morning to download bank files to be used for positioning. Now, post-Kyriba, this is all done automatically prior to the start of the workday. We don’t have to access multiple bank portals, we can see all of our cash and debt in one place, and it makes reconciliation must easier and faster. It also automatically posts transactions into our ERP system, getting rid of yet another manual process. We also manage our debt and investments through Kyriba, including both external and intercompany debt.

When we were searching for the appropriate TMS, we anticipated that the company would grow internationally, requiring us to buy for tomorrow rather than the status quo. At the time we thought we might go into China, so we also planned for the ability to see information in non-Roman letters. Also at that time, the cloud was a relatively recent concept, so we had to decide whether to store information on our own servers or put it in the cloud.

We ended up going with Kyriba which was a relatively young company at the time but, more importantly, a company for whom the TMS was the main product.

In the intervening years, we have had to update the system and add new capabilities. For example, none of us ever anticipated issuing debt at negative rates. And yet we did in our euro commercial paper programme, which became a problem for Kyriba – it would view it as a mistake and kick it out – requiring Kyriba to rewrite part of the code. We have also added in functionality around cash investments.

It doesn’t have to be particularly costly to integrate or run a TMS, and in any event, the cost should be viewed in the context of the people you don’t have to hire and the errors you don’t have to fix. Our fee structure works whereby we pay a fee for the system and a fee for each module, as well as transactional costs. But that’s pretty standard. One of the good things is that we can get help from Kyriba when we need to add on functionality. For example, we didn’t have to rely on our own IT team to write the new code around negative rates, which was a great benefit to us. IT departments have other things to do and have their own resource issues.

My final piece of advice is to make sure that your internal treasury group is actively involved in the implementation. You don’t want to put out the entire implementation to your provider because, while they know their system and how it connects to the ERP and banks, they cannot really understand your business. They’ll need your guidance on that.

Alex Wong, Head of Product Management for Corporates, GTS EMEA, Bank of America

Alex Wong

Head of Product Management for Corporates, GTS EMEA
Bank of America

The main reason treasury introduces a TMS is for efficiency and to reduce errors. There comes a point in corporate growth when treasury needs better control over cash management and liquidity beyond what they can maintain either via spreadsheets or manual processes. The ability to process and utilise data to influence decision making is also a driving factor.

A typical new client exploring a TMS for the first time is an MNC with a turnover north of a billion. They might run several platforms off their ERP system and are now considering a step up to a full blown TMS. Scalability is also important – it’s important to choose a TMS that can accommodate future needs and an increased volume of transactions from new markets.

The costs can vary. At the top of the range, a TMS can be fully integrated with a suite of functionality, risk management and reporting capabilities that include connectivity to payment processing. Maintenance, licencing and professional services costs come on top. Some TMS systems may be cloud based, and SaaS will reduce hardware costs. A third, hybrid system, will comprise components in the cloud and on-premises, depending on what kind of infrastructure treasury needs.

Implementation is guided by clear business needs and objectives and what treasury is trying to achieve. We spend time with clients advising them on similar projects and discussing the long-term strategy of the company itself. Choose a partner that has a track record and can provide references that check out.

TMS doesn’t function in isolation; it needs to be integrated with the company’s existing systems like the ERP, accounting software, and the processes around how the company communicates with its banks to manage liquidity, transaction processing and funding. Treasury teams should also consider the extent to which they want to customise their TMS. Many companies don’t leave enough time for implementation. In our experience it can take a few months to several years. But even if it takes several years, treasury will start to feel the benefits within a few months. For example, some of the data aggregation capabilities bring efficiencies quickly. Treasury should factor in time for pre-implementation, vendor selection, contract negotiation and project planning.

Typically, TMS implementation is overseen by at least one person who can liaise with the vendor and the internal tech team. Treasury needs to be there in the initial phase of customisation and validation to check implementation is done correctly, and don’t overlook implementation complexity. Governance is also important, because TMS implementation requires a secure budget and support around information security and fraud protection. Other important partners include accounting because they will provide the data off which the TMS runs. Some elements of implementation can be time consuming like importing historical data, testing and training. Ensuring user adoption, and that people feel confident using the platform and don’t stick to old habits is also important; effectively using a TMS requires coaching.

Matt Hook

Systems & Process Manager, Group Treasury
IHG Hotels & Resorts

At IHG Hotels & Resorts, the current TMS was not implemented as a direct result of our growth but rather from a general business review and audit into the systems we were using. In 2020 we introduced the current TMS which took around 18 months of planning and RFP work before we signed the contract. There were two main reasons for introducing the new system. Changes were coming up in Libor rates which we knew our ERP system wouldn’t be able to adapt to without significant modification. Additionally, the swift platform IHG used was reaching its end of life.

We’re generally really pleased with the functionality around payments, controls and auditing is made a lot less complicated when there is one central place to audit and report on instead of pulling reports from 20 or so different banking platforms. One point of access also gives us greater control and means better security when combined with a SSO system.

At IHG we have our own corporate swift code which means we receive bank statement messages directly into one central hub which helps with our cash visibility. Every day we receive a message from each bank account which gives us full visibility of our account balance which we can then pull into a report from the TMS. Another key functionality advantage is that TMS integrates very well with existing platforms that we already use, such as those for FX dealing, deal confirmations and money market transactions.

It’s always a balance between costs versus benefits. Essentially, it’s a case of evaluating whether the benefit of the system matches the cost of implementation. Our original expectation was that implementation would take around a year but with unique challenges posed by the pandemic this became nearer to two years. With offices closed, there was no physical collaboration meaning all demonstrations took place on video call which was a slight barrier to integration.

IHG has a very complicated business structure with hundreds of entities and so this will naturally incur a longer implementation time. Setting out a clear project plan from the offset of the process which is communicated across the business is important to ensure processes are followed and helps keep everyone on track.

Plan well and make sure you have the right people on board the project that fully understand the system and the ways to successfully implement it. A TMS can impact many parts of the business so having people with specific internal knowledge is incredibly helpful. As with any system change, there are some risks involved. For example, a worst-case scenario could mean the loss of vital functioning, data and a lack of understanding around the system.

The main risk is the loss of vital functions such as making payments but the way to mitigate this is parallel running. When we moved our payments, we did this in two stages, all of our payments were being made through the ERP and so we took the basic payment files initially and moved them to the TMS to make sure that the transmission and acceptance of the file was successful, all the time keeping the ERP available. Another major risk posed is if the brief and the system hasn’t been fully understood. This issue is twofold – it may be that the provider hasn’t fully understood what your needs are, or it could be that you haven’t fully understood what the system can and can’t do.

Involving subject matter experts is really important but striking a balance here is also crucial. The saying ‘too many cooks in the kitchen’ comes to mind – if there are too many people feeding back their opinions on the implementation of the process, it can become lengthy and there’s a risk key information will be lost in translation.

Next question:

“How big a problem is trapped cash and what are the solutions?”

Please send your comments and responses to by 20th May 2024.

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