Treasury management systems and treasury transformation projects

May 15, 2018

Since the early 2000s, the rise in the treasurer’s profile and responsibility has led to treasury gaining visibility over other business units and taking leadership in areas beyond traditional cash management. This has increased the volume and complexity of treasury work. Add in events such as mergers, acquisitions, and new regulatory requirements and it is little wonder that large-scale treasury transformation projects have emerged as a way to make sense of the new treasury reality. Finding the right treasury management system to underpin this type of project is essential, as such a system can support and accelerate a treasury transformation project across a variety of areas.

Clarity to processes

A key task for a treasury transformation project is to map exactly how many different systems are currently used for treasury tasks. It’s common to find a company running on multiple legacy systems from a variety of vendors with inconsistent policies. This fragmented picture can be chaotic, ending up with processes being interpreted differently or sometimes not even followed at all.

Selecting the right treasury management system is vital to tackle this confusing picture. For example, cloud platforms can give treasurers oversight into their entire organization. Any data captured by the system can be accessed, from accounting information and new deals to trade information and reference data. Once the business processes have been created, they can be executed consistently, and everyone in the business has a single view and interpretation of the data. This can help align all core business functions with treasury. Systems like these also allow for real-time monitoring, which is essential for compliance.

A streamlined system

Traditionally, business processes such as currency hedging, hedge accounting, treasury, commodities procurement, and risk management have each had their own system. This way of working can be inefficient, as managing a variety of different systems can multiply IT maintenance and leave you with multiple sets of vendor fees. Treasury transformation projects provide a great opportunity to tackle this ad hoc environment and set up all business processes on one treasury management system. Not only does this create consistency of working practices, but it also gives treasury a single view over everything that’s happening under their remit.

A fully integrated system can cover treasury, debt and cash management, procurement, credit and risk management, and more on a single database. This allows in-depth data to be available from across the enterprise, which makes opportunities easier to identify for the treasurer. The consistency afforded by a single view means that reporting is accurate, while enhanced activities such as data analysis and predictive modeling are possible.

Fabulous forecasting

Accurate cash flow forecasting is essential for corporates to have a clear picture of their cash positions both in the short term and further into the future. Without this clear picture, large capital projects can be put in doubt, your cash may not be working as hard for your business as it could be, and even the company’s bottom line could be at risk. For large multinationals, forecasting can be particularly challenging, as individual subsidiaries can sometimes resort to unique processes for reporting cash flow. As such, forecasting is usually a key pillar of any treasury transformation project.

To ensure that treasury is receiving accurate and timely cash flow information from across the business, selecting the right treasury management system for the transformation project is essential. Ideally, you want a system that will allow you to create a standard automated format and process for all global divisions and subsidiaries to report their cash information. A real-time system with built-in configurability and flexibility can let you establish business criteria, as well as view and analyze the data quickly and conveniently.

Enhanced banking compliance

As part of implementing a treasury transformation project, many corporates are looking to provide in-house banking to their business units and subsidiaries. This must meet the needs of large organizations, where funding requests that arrive outside business hours require senior-level approval during business hours. The requests might be delivered over email or on the phone rather than through a bespoke treasury system, and spreadsheets might be used as the basis of any record keeping.

In this scenario, a treasury management system can be of great assistance in the transformation. An in-house banking solution can allow corporates to streamline and automate the process of setting up and managing internal banking relationships. If it has a drag-and-drop interface, it simplifies the creation of workflows, and the system can allow for the enforcement of policies on items such as the application of interest, charges, and fees—either across the whole company or specific local units.

Treasury Technology Analyst Report

Treasurers considering digitizing their processes often face a learning curve as they approach the complexity of many categories of treasury technology and the difficulty of navigating selection, buy-in and implementation efficiently. This analyst report from Strategic Treasurer can help.