This article was written by Mark Lewis, Corporate Treasury Markets Specialist at Bloomberg.
In increasingly complex markets, corporate treasurers need to manage their time more strategically by simplifying processes and using more efficient and automated solutions. Treasury management systems (TMS) are valuable tools for treasurers to achieve such results, providing significant cash visibility and financial controls in order to mitigate risk.
Aggregated vendor solutions, patchwork integrations and cost inefficiencies are all major concerns when it comes to procuring a new system. It’s a big investment in time and resources, and the wrong choice may cause treasury workflows to be even more complex than they are today. Here we present some insights on researching potential TMS vendors for the corporate treasury department.
If it’s out-of-the-box, don’t customize
Vendors prize the biggest companies and the millions they’ll spend on TMS and external consultants that customize them. Out-of-the box solutions may have much lower sticker prices, but trying to customize the system to provide the same reports each unique treasury was using before the implementation can end up costing a small fortune.
In order to obtain the reports and data a specific treasury team needs that might not be available on out-of-the-box systems, treasurers should inquire about the APIs a TMS vendor has with other technology solutions. If those other solutions can also be leveraged as part of their workflow needs, the customization effort required is significantly lower.
The ideal approach is to find the most adaptable solution that integrates into your existing treasury technology and fulfills your current treasury department’s needs. Attempting to customize too much can prove be an expensive, time consuming and convoluted endeavor that may not pay off in the long run.
Push for standardization to create efficiencies
The majority of corporate treasuries are still struggling with manual and inconsistent processes that can have an impact on their organization’s productivity. By primarily relying on Excel spreadsheets to manage their workflows and connecting with bank counterparties via telephone or platforms that don’t connect with one another, treasurers continue to engage in time-consuming and error-prone tasks. Adopting a TMS that automates these processes enables treasury departments to standardize their finance functions and increase overall efficiency.
A push for standardization can often be met with weary looks as treasurers and finance professionals may be hesitant to change their long time reporting processes and workflows. However, it’s all about the opportunity cost. A TMS with APIs built-in for functionality such as electronic trading, risk management and hedge accounting allows treasurers to spend time on more value-added activities and playing a greater role in strategic decision making, which ultimately benefits their organizations.
Implement in-house to avoid costly risk
A common practice of hiring third party treasury management systems is allowing the solution to be implemented by external consultants. While it may seem like a convenient approach that saves time, it may in fact leave members of a treasury organization unaware of the system’s mechanics and intricacies. As a result, future adjustments and changes become a costly and cumbersome task.
In order to avoid such risks, an alternative is to invest in training internal personnel and implementing the TMS solution in-house while using external resources to stand in for them on the day. Treasury management systems require significant training – even for the most experienced treasurers – in order to get up to speed on the new software and how to leverage it to a company’s treasury mandates. But doing so is an essential activity, as implementing such systems provides treasurers with the tools to effectively automate processes and simplify compliance, ultimately driving ROI.
By using the insights presented above, finding the ideal TMS become a less intricate task and allows treasurers to be more efficient in a business climate that is often volatile and ever changing. A strong treasury management system allows treasurers to become more strategic, increase controllership and add value to the overall organization.
This article is reproduced from the Bloomberg's Professional Services blog, and is licensed by The Association of Corporate Treasurers.
