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.
