There has been massive innovation in treasury and payments technologies in recent years and this has, like many tech trends, been accelerated by the pandemic. We have become significantly more interconnected and so have many of the tech tools we rely on, including the treasury management system (TMS).
“You should think of your TMS as the centre of the universe,” says Tom Leitch, director of sales and business development for treasury at Bottomline TreasuryXpress. With a strong design, a TMS can offer flexible, secure payment functionality and insights that deliver value across the whole business and not simply the treasury function or even the finance department.
The key to achieving this – with an existing or prospective TMS – is connectivity. “A multibank TMS has the ability to capture data, on a single platform, from various sources and complex processes,” continues Leitch.
To maximise its potential, the reach of that TMS needs to extend not just to banking partners and payment service providers, but internally across the business – quickly, easily and automatically exchanging data with other internal systems with data feeds from enterprise resource planning (ERP) systems, trading platforms, expense management systems, invoice management and so on.
Benefits accrue when your TMS can automatically bring in, for example, future book transactions from your ERPs, forwards from your trading system, and data on interest and principal payments from your debt portfolio. “Once you’ve got all of this interconnected, it’s going to optimise your cash and liquidity management,” says Leitch.
There is real value in combining the enterprise data and the bank data, and getting that single overview and summary of all this in a visual dashboard, showing business key performance indicators. “Without a TMS that makes it easy to integrate the data streams from multiple systems, software, physical locations, divisions and so on, this is almost impossible.”
In achieving and sustaining this, the importance of extensive, flexible and automated connectivity cannot be overemphasised. It’s not enough for your TMS to connect to two of your main banks and not the other six, just one of many ERPs, or the relevant enterprise systems at head office without your 15 subsidiaries.
While a company with a multibank TMS has the potential to capture data from various sources and complex processes on a single platform, not all TMSs provide for that functionality readily – and for a variety of reasons. Some of these relate to constraints upon a company’s legacy non-TMS tech infrastructure; some are TMS-specific.
You should think of your TMS as the centre of your universe
A large organisation with myriad complex systems and processes can find integration challenging, despite increasing availability of application processing interfaces (APIs) and other software connectors. Even an established ERP system with different version numbers can create integration barriers.
Additionally, some software providers are more prescriptive than others, meaning that integration across systems could be more challenging. When evaluating TMSs, find out what can be connected and how easily. Maybe you should also be asking your current TMS provider: How easy is it to connect everything?
To future-proof your TMS, it is helpful if treasurers can be involved in procurement, implementation and systems development. Without that involvement it might prove costly and complex – if not impossible – to achieve 100% connectivity between the TMS and the systems with which you want to exchange data.
The better connected your TMS is, the better you will be able to respond to the changing demands of treasury. During the pandemic, many treasurers have been asked to report on cash positions daily and intraday, with questions on different iterations and forecasts coming thick and fast throughout the day.
As the world of business and payments becomes more complex and more automated, so will providing accurate responses to questions such as: What is our position now? and: What has changed between this morning and this afternoon? Answering such questions will require more and better data, and a TMS that can access, unify and share it quickly and easily, without presenting reformatting issues.
Being able to access more data can allow treasurers to make more intelligent working capital decisions and provide better-informed insights to colleagues. But the flexibility that underpins interactivity between systems and the data it can liberate will also be necessary if treasurers (and their TMS) are to embrace and exploit future tech-enabled developments and possibilities.
Smarter systems that rely on quantities of quality data are evolving within the treasury ecosystem. “Data-analytics techniques like machine learning and predictive analytics are coming to the forefront and enabling treasurers to make short-term and long-term decisions that have a vast amount of power behind them,” says Leitch.
You need a TMS that will provide and retain the maximum flexibility
Business and payments are in very different places from where they were a year ago and where they will be tomorrow. The arrival of regulation in Europe around Open Banking and the associated APIs have, for example, already reshaped possibilities regionally, and their use is spreading both globally and evolving.
“There are now lots of different payment options,” says Leitch, who anticipates a hybrid future with APIs, API bureaux, SWIFT service bureaux, secure file transfer protocol and other options. “The ideal solution is to create a payment factory, where you can choose the least expensive or the quickest approach and have that logic already built into your TMS.”
Changing bank requirements, regulations, tech and so on can create lots of moving parts. Ideally, your TMS can and will be updated to reflect such things, before you become aware of them. “You need a TMS that will provide and retain the maximum flexibility,” says Leitch, “because you don’t know what is going to happen or what will work best for you in the future.”
What treasurers can do:
• Decrease time spent on manual tasks;
• Streamline processes;
• Automate as much as possible;
• Feed your TMS the data it needs;
• Connect it to all relevant internal and external systems;
• Involve treasurers in procurement, implementation and development of internal systems that might exchange data with a TMS;
• Unify your data from enterprise and bank systems;
• Partner with providers that do not limit your connectivity and payment options; and
• Use your TMS as a payment hub.
Barclays Bank PLC is registered in England (Company No. 1026167) with its registered office at 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority (Financial Services Register No. 122702) and the Prudential Regulation Authority. Barclays is a trading name and trade mark of Barclays PLC and its subsidiaries. Find out about the Financial Services Register.
