How a new TMS can benefit an entire business

Improving treasury and cash management activities can mean looking across a whole corporate entity, rather than just the treasury function

In many cases, companies setting out to manage cash more effectively – or embarking on a treasury management system (TMS) implementation – regard the exercise as a self-contained treasury function project with perhaps some information requirements from subsidiaries.

But when one company needed to transform its cash and treasury management activities, the treasurer opted for a more far-reaching approach.

“The business is growing quickly by acquisition and has quite a decentralised culture, with a lot of bank accounts and disparate financial and banking systems,” says David Stebbings, director, treasury advisory at PwC.

“At the same time, the company operates in a constantly changing business environment. As such, they needed to have a better handle on their cash and risks, and improve central oversight over their banking arrangements globally.”

Objects of the exercise

The treasurer, therefore, initiated a project to improve visibility over cash and enable more effective management of financial risks and positions.

The goals of the project also included streamlining processes, moving users away from older systems and spreadsheets, implementing global standards around the newly formed group and achieving efficiencies through automation to better enable time to be spent on more value-add insight activities.

With a clear view of the desired outcome, the company sought advice from PwC about how to achieve its aims. This involved developing a revised treasury and cash operating model, with the implementation of technology being used to facilitate the change.

The chosen technology solution included a new TMS aligned with a SWIFT component, and a bank account management module.

Seeing the bigger picture

The key challenge for this project has been implementing a more centralised treasury and cash operating model in a company that is well served by its decentralised business model.

Hence, this project involved looking at the TMS not as an isolated system for use by one department, but as a technology with many interfaces, processes, users and requirements all around the business.

“It’s not a treasury project as such – it’s a treasury and cash activity project for the whole businesses wherever those activities occur,” explains Stebbings. “A few of the users do sit in central treasury, but the vast majority of them work in shared service centres and finance teams around the world.”

As a result, such an exercise is actually a more complex business change project. As Birgita Gjirja, senior manager, treasury advisory at PwC, observes, “In designing the operating model and systems landscape, it’s important to take a step back and think about where those interactions are between treasury and other finance and business functions and systems worldwide.”

In order to achieve success, the company’s treasurer needs to look beyond the scope of their own responsibilities, becoming more strategic and working closely with other senior stakeholders across the organisation.

While this added project complexity and challenge, the benefits to the treasurer can be considerable – not just in achieving the desired level of visibility and overall control, but allowing the treasury remit to move more easily to a strategic level.

Widening the scope also helps build a more compelling business case for change.

The treasurer found this to be a highly effective approach for this project, which is currently due to go live in the coming months.

Key lessons

When treasury is positioned as a central function serving a decentralised business, achieving the required oversight of risk and cash can be a challenge.
Implementation of technology can often be a good agent to change disparate processes that may be developed over time.
Think outside the box – many treasury, cash and banking activities may fall outside the treasurer’s remit yet should be included in the change.
The business case for change can be stronger if the scope of the change extends beyond the remit of the treasurer.
If you are taking this approach, make sure you bring the necessary people on the journey with you. They will need to embrace the new technology and associated processes, which means involving them in the project from the outset and giving them a clear understanding of how it will help them to achieve their goals, as well as those of the treasurer.

Above all

Remember that a TMS can be a very powerful tool and change agent if designed and implemented appropriately. So make sure you invest the required time and resources into the project, particularly if you are including treasury and cash activities outside of treasury.

As told to freelance treasury journalist Rebecca Brace