Some of the challenges treasuries are confronted with include turbulent markets, complex company structures and a limited workforce. Meanwhile, financial departments are under increasing pressure due to growing responsibilities for new strategic tasks. Therefore treasury management systems (TMS) are used for the efficient handling of all financial processes in international companies. In general, state-of-the-art software covers the areas of cash management, treasury and risk management, payments and reporting. The main advantages of using a TMS are a centralised database, company-wide reach with one system, straight-through processing (STP), the electronic documentation of all workflows, as well as comprehensive analyses and new reporting possibilities.
The following seven steps sum up the best practice TMS selection process.
1. Composing a project team
In the system selection the treasury, IT, accounting and controlling department as well as the legal department are involved. Commonly, the project manager belongs to the treasury department.
The project manager works closely together with the system vendors’ project manager. Treasury experts at the software provider´s side support the project manager in customising and user trainings. A technical project manager is generally involved in the implementation project at an early stage. The project manager consults the IT department at the customer´s side to select the optimal hardware set-up. Where the TMS solution is platform-independent, different configurations are possible.
2. Definition of requirements
The evaluation of the new treasury system starts with setting up the functional and technical requirements. This is done in the treasury and IT department. External consultants often support the project team in the selection and implementation process. Within this stage it is also necessary to identify interfaces with other departments such as the accounting or controlling department. Therefore common workflows and existing IT infrastructure have to be examined in detail. As treasury software is often rolled out worldwide, the requirements of future users such as local cash managers or controllers also have to be taken into account. Furthermore, the IT experts have to decide how decentralised users can access the system.
In general, the software could be locally installed at the customer or provided as an application service provider (ASP) solution. The ASP solution could be hosted by the treasury system vendor or an external provider. Local entities can access the treasury system via intranet, intranet or a separate client. Afterwards the requirements have to be prioritised. At this point, distinguishing between knockout criteria, main functionalities and nice-to-have features is recommended.
3. Setting up the RFP
In general, all requirements are summed up in a request for proposals (RFP). The RFP is usually sent to a long-list of about 10 system vendors. As different as the companies are their RFPs. The tender’s complexity varies a lot, depending on the treasury organisation and the financial workflows. Questionnaires range from 10 to several hundred questions. Some companies prefer closed, others open questions – occasionally even ones that have to be filled out by hand.
4. Evaluation of responses
Next the RFP responses of the system providers are compared. Functional and technical strengths and deficits are identified and a short-list containing between three and five system vendors is set up. At this stage professional system vendors stand out due to sending back the RFP in time, comprehensive answering of questions and availability for call backs.
5. Workshop with system vendors
In parallel, standard financial processes and company specific reports have to be described. Consequently these case studies are sent to the vendors on the shortlist with an invitation to present their software in a live demo.
The system presentation should give an overview of the possibilities of the different treasury systems. Modern treasury systems can be adapted exactly to the customer’s needs. Even though there is no need to change processes, new systems often offer new possibilities and within the live demos new ideas for reorganisation come up. In this case, the processes should be redesigned in workshops with the consultants and vendors. In general, there is significant potential to improve the speed and transparency of the financial workflows.
Report samples should be reviewed as well. Some systems provide calculations and graphics directly on the user interface and offers a wide range of standard reports to evaluate information from every module. There may also be the ability to set up individual reports.
When selecting a vendor it is also important to assure that the software investment is future-proofed. Therefore questions on release cycles have to be discussed in the workshop as well. Besides the software demo, an additional way of getting a feeling for for the logic and usability of the system is a demo access. After a short introduction to the system, the future user can explore the software themself.
6. Customer references
Customer references are often requested. When talking to referees, information on the implementation process should be collected as well. Does the vendor complete implementations on time? Are they on budget? Some vendors may define a standard implementation process. This process can start with a kick-off meeting where the project plan is set up and responsibilities are defined. Then the requirements are specified in several workshops. When the customising is completed, the software is implemented and training starts. After a period of parallel operation of old and new systems, the new TMS goes live. Information from customers is mainly collected by telephone. Sometimes the customers are visited and asked to show the system live at their company.
After the decision for a vendor has been taken, the legal departments agree on terms and conditions and finalise the contracts. The treasury department simultaneously starts the planning of the implementation project with the system vendor, while targets and project details are fixed within a scoping workshop.
Tips and Tricks
- The better a company knows its requirements, workflows and reporting specifications, the faster a suitable TMS will be found.
- When the processes are analysed at the beginning of the selection process, additional optimisation potential is often uncovered.
- Static data such as information on affiliate companies, partner banks and bank accounts should be collected during the selection phase to assure a seamless transition to the implementation project.
- While selecting the new system business as usual (BAU) should be maintained, although staff must usually be set aside to meet the project deadline.
- Vendors have gained a lot of experience in all kind of implementation projects in international companies. Being open-minded to their input often is valuable for optimising processes.
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