Treasury Management Systems How CFOs Can Avoid System Shortcomings & Choose a Business-specific Solution for Your Treasury Needs

By Kevin Mitchell & Thomas Alexander I Rochford Group

---

Treasury is often a lightly resourced business unit. Even with skilled personnel on board, there are numerous reasons why operational gaps still exist. This leads companies to seek external solutions, often in the form of strategic advice from treasury consultants or products from technology providers; the latter typically being a Treasury Management System (TMS).

These systems are exceptional at capturing and consolidating diverse data sources and storing them in a structured, secure format. 

When working efficiently, they can boost your daily productivity, reduce overheads, and minimise the potential for human error.

However, investing in an ‘off-the-shelf’ third party cloud solution and expecting them to solve all your treasury problems is a common mistake that can cost your business hundreds of thousands of dollars.

Standard TMS processes may not be best suited to your company’s specific needs or provide the appropriate output, which means you’ll be forced to adapt to the system’s shortcomings. For example, in the last 12 months, an ASX listed firm had to pull their TMS implementation project completely just before going live, having already invested well over $300k in fees.    

With many software subscriptions costing over $80k per annum plus initial professional services fees, often with minimum lock-in contracts of three years, it’s a decision that requires considerable preparation, analysis and expert guidance.

How to choose the right Treasury Management System for your company.

Gain clarity on your business-specific processes first.

From a design perspective, the external development of a TMS has been taking place for decades by treasury software companies, creating a wide range of operational outputs. 

However, the technology also needs to offer purpose-built features to fully meet your business needs. So, before engaging with potential software providers, you first need to clearly articulate your end-to-end processes which the TMS needs to empower. 

These processes should ideally be ‘mapped out’ in planning sessions and then nimbly developed. MS Excel is a great place to start; where you can refine the required steps, calculations, and actionable outputs. All treasury stakeholders should be involved in this step, as the size, flexibility and number of stakeholders interacting with the new system are key considerations in its efficiency, implementation and successful adoption.

Once you have documented your processes, you should be able to identify any limitations they present and be well-positioned to define the non-negotiable functionality required from your new TMS, to resolve these issues.

As an example, operating an Excel-driven process where all stakeholders consistently input and then make decisions based on the outputs for 2-3 months, making slight (and low cost!) process improvements each month, could save years of misplaced license commitments. You may even conclude that the marginal value of making this commitment does not cover the marginal cost of licenses. In this way, you maintain commercial optionality while still progressing your treasury over the short term.

Selecting the right software for your process needs.

Once you are clear on your processes and have a working MS Excel example of what your TMS needs to provide, the next step is to choose the right software. It is easy to become distracted by the impressive functionality of today’s treasury management systems, which is why your list of non-negotiable, custom-built processes are crucial in informing your decision.  

You may consider engaging an experienced Treasury advisor for the selection process. With industry insight, they can assess your processes against the available functionality of each TMS on the market, and shortlist suitable providers on your behalf. They can also streamline and optimise your processes, to ensure you’re getting the most efficient output. This may even result in identifying an alternative option to a fully functional TMS (for example, combining a more refined Excel model within a lower cost cloud-based platform).

However, should a TMS be the best option for you, having an independent expert in the room during interviews will also enable more thoughtful and unbiased assessments of the treasury systems.

Implementation and on-going, proactive management.

Before making a final decision on your TMS system, other points to consider are the implementation process and how the system will improve the treasury operating environment on-going. 

Implementation can be a time-consuming process, taking resources away from the day to day treasury operations. An external Treasury Advisor can assist as a ‘technology partner’, bridging communications between the software provider and your key stakeholders to:

• Manage a realistic timeline for implementation,
• Set clear expectations for the system,
• Help with contractual negotiations so you are adequately protected in areas like ‘non-performance’,
• Ensure all users are engaged and adequately trained with process notes as required,
• Minimise disruption to daily operations.

Often when implementation is complete, one of the common shortfalls with a new system is a ‘set and forget’ approach. It’s important to ensure your TMS continues to deliver the appropriate output and address any new shortfalls that may arise.  A Treasury Advisor can ensure the system is proactively updated to align with future commercial strategies and financial market movements while offering further guidance on enhancing your treasury processes.

Authors:

Kevin Mitchell, Partner I Rochford Group

Kevin is a highly experienced Chartered Accountant and treasury professional. His expertise spans end-to-end accounting functions, including financial control, system analytics, hedge accounting, financial statement preparation and treasury operations.

Thomas Alexander, Partner I Rochford Group

Thomas specialises in the improvement of business processes and systems, with emphasis on risk in treasury and trading functions. His approach prioritises early-stage stakeholder alignment and leveraging existing resources towards clearly articulated outcomes.

Rochford

Rochford is a global treasury advisory firm, specialising in financial risk management, hedge accounting and currency overlay services. 

With decades of experience, the Rochford team are trusted advisors to private equity, financial institutions, corporates and not-for-profits. They equip CFOs with 360-degree awareness of financial market risk on their business, enhancing cash flow and profitability.

To learn more about how Rochford can assist your organisation, visit: www.rochford-group.com