Vox Pop: A Panel of Treasurers Share TMS Tips

Dr Klaus Gerdes, Head of Corporate Finance and Treasury, Altana

gtnews Question (Q): What were the driving forces that made your company decide to introduce or renew its treasury management system (TMS)?

Answer (A): After the divestment of its pharmaceuticals activities, Altana AG had to establish treasury operations for a pure play specialty chemicals company. The growth path of the re-focused company required transparent and efficient standalone treasury operations, which can only be achieved by using a professional treasury management system (TMS). This is why we decided to go down the path of specifying a new TMS.  

Q. What were the crucial first steps you followed when deciding what TMS was suitable for your company?

A. The first steps were to detail the current processes that a TMS should support and the requirements that the system should cover in the future. These specifications were communicated to system vendors and the selection process was based on workshops with vendors in which the functionality of the various TMS solutions was demonstrated. 

Q. What TMS do you use and why?

A. We use the AvantGard Integrity TMS from SunGard. After completing our specification process, we were convinced that it best fulfils our current needs and were impressed with the modular structure of the system, which will make it extendable for future requirements. Taking a phased approach to implementation we decided to first implement modules that would significantly cut manual work and the probability of errors. We wanted to take advantage of existing system reports whenever possible, while also being able to build our own reports based on AvantGard Integrity’s extensive report library. It was also important for us to be able to interface the TMS with our enterprise resource planning (ERP) system, a trading platform, and internal Misys solution, so all of these considerations also came into play. 

Q. How easy is your TMS to use on an everyday basis and does it help improvement your cash management visibility and risk oversight?

A. The SunGard AvantGard Integrity TMS provides us with a single environment that consolidates all relevant treasury information in one place, such as deals, transactions, and bank balance information. Building a financial status for the group is therefore an easy task by simply printing the corresponding reports. The interface to the ERP system gives instant visibility over cash pools and provides the basis for cash management decisions. The management of intercompany loans, maturity profile, and hedging of foreign exchange (FX) intercompany loans is enhanced by the new system. Naturally, in-house mark-to-market valuation of outstanding derivative contracts, interest and FX, is also supported, and this has proven to be especially useful for the treasury. 

Q. If you were buying a TMS today, what additional functionality would you like to see?

A. The liquidity planning functionality on our TMS is not currently set up so that every subsidiary can plan each single cash flow in the appropriate currency of the cash flow. We are looking forward to receiving this functionality in the near future as part of a future upgrade. It is important for us to get a complete picture on the FX risk of the Altana group, and the ability to add in modules like this was one of the key attractions of our new system; flexibility is a key asset for us. Moving forward, we are intensely aware that the European Market Infrastructure Regulation (EMIR) and the regulatory reporting requirements that will come in with it – not to mention the need to interface with a trade repository – are all obligations that we’ll soon have to meet. Additional functionality to address these impending requirements will be available within the TMS as an add-on module within the next few months and we are looking forward to implementing this.  

Royston Da Costa, Group Assistant Treasurer, Treasury Systems and Development, Wolseley Group Services

Q. What were the driving forces that made your company decide to introduce or renew its treasury management system (TMS)?

A. A number of years ago, the new senior management team at Wolseley, a distributor of heating and plumbing products, were keen to improve straight through processing (STP) wherever possible in order to reduce duplicated data entry and realise time savings across the group. This applied to treasury operations as much as to any other department. In addition, the group-wide treasurer wanted to improve the visibility of our group cash using SWIFT MT940 messaging, which we now receive daily into our upgraded treasury management system (TMS). 

Q. What were the crucial first steps you followed when deciding what TMS was suitable for your company?

A. We conducted a full review of the current system and how we were using it with our TMS provider. Wolseley set out what additional functionality we would like to gain from an upgrade, and how much we would need to invest to ensure we could achieve the maximum potential from any new TMS. This process included a full review of our technical infrastructure and involved investing in new locally hosted servers, back in the late ‘noughties’. A report was produced by our TMS provider which formed the basis of our business case to senior management, and our plan for moving forward.  

Q. What TMS do you use and why? 

A. We use IT2, now part of Wall Street Systems since the turn of the year of course, which was originally selected by us seven years ago. The choice was made with the help of external consultants after a wide review of other systems available on the marketplace at the time. We’re happy with the choice we made and have been updating it ever since.  

Q. How easy is your TMS to use on an everyday basis and does it help improvement your cash management visibility and risk oversight?

A. The IT2 TMS we use is an integral part of our daily treasury processes. It interfaces with a number of other applications, such as our 360T trading system, Thomson Reuters’ data and Misys software. We are also importing SWIFT MT940 messaging daily into our operations to provide us with good visibility of our group’s cash position. 

Q. If you were buying a TMS today, what additional functionality would you like to see?

A. The key thing that I would like to see if we were to upgrade our TMS system again would be enhanced reporting flexibility. This is a crucial part of our everyday operations at Wolseley and to have enhanced functionality and data in this area would be an asset. 

Peter van Rood, Group Treasurer, AkzoNobel

Q. What were the driving forces that made your company decide to introduce or renew its treasury management system (TMS)?

A. When I joined AkzoNobel in 2007 I received a clear mandate to ‘bring the treasury back into the forefront of the treasury industry’. This triggered a treasury transformation project, which comprised of rebuilding the infrastructure of AkzoNobel’s treasury in four key areas. The four building blocks consisted of people; banks and bank accounts; systems; and processes. As we faced a highly fragmented IT landscape, which was also rather disconnected from the remainder of the group systems, we used the opportunity to pursue the implementation of a new treasury management system (TMS), connectivity and IT overhaul.  

Q. What were the crucial first steps you followed when deciding what TMS was suitable for your company?

A. The crucial first step in our treasury technology transformation project was to visualise what core functionalities we needed at AkzoNobel. Global capabilities in terms of payment processing, cash management and risk management were central priorities. Secondly, we asked ourselves the question of where the system needed to be strong. Should it have exceptional strength in its interface with the market environment, and be able to process many different highly complex financial products, or did our challenge rest more on improving the interface with our business community, with complexity in connectivity surrounding multiple enterprise resource planning (ERP) systems the prime concern? The latter connectivity issue was our prime concern we decided because we faced a group with over 600 entities and more than 200 ERP systems, and we did not anticipate a particularly high level of complexity in terms of the financial products we’d need to process. Finally, the treasury went through a professional and disciplined tender process to learn about what was available in the market place before making our decision. 

Q. What TMS do you use and why?

A. We went live with SAP ECC 6.0 in April 2010. SAP modules implemented at AkzoNobel include SAP treasury and risk management, SAP cash and liquidity management, SAP in-house cash, SAP EBS (electronic bank statements) for cash allocation, SAP bank communication manager, the vendor’s process integrator option and the SAP finance module. In addition, AkzoNobel implemented SWIFTNet, FXAll, Bloomberg FXGo and MyTreasury to increase our connectivity and technology capabilities. These packages are all integrated into our TMS, allowing for straight through processing (STP) of our treasury transactions. This includes confirmations to and from banks, bookings into our finance module, and automatic bank reconciliations. 

Q. How easy is your TMS to use on an everyday basis and does it help improvement your cash management visibility and risk oversight?

A. Anyone using SAP will know that the system needs to be operated by experienced SAP users. On the other hand, the STP functionalities have reduced starkly the operational effort required, which has improved the ease of executing treasury processes. In terms of ease-of-use – in particular, software change implementations – I would not rate the system at the very high end of the rating spectrum. On the other hand, the overall changeover of our infrastructure has improved visibility considerably and control over cash significantly, which was a core aim. 

Q. If you were buying a TMS today, what additional functionality would you like to see?

A. With regard to SAP we would value additional functionalities for booking single debits multiple credits to process payment badges, in a private and personal confidential way. Other software developments that we are interested in relate to dynamic discounting, where the front office liquidity management tool gets connected to the working capital management of the businesses. All in all, though, one should not expect a software supplier from a robust and highly integrated TMS to be at all times a front runner in terms of supplying innovations. Others may be more agile and adaptable to be pursuing this position, especially in smaller market segments. We concentrate on the core functionality and we need our technology to do the same.   

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