By Morne Klynsmith, Head of Treasury Technology
Making choices is complicated. Here’s what to know to make more informed decisions when selecting a Treasury Management System
Increased risk and security management, complete audit trails, automated reports, bank and ERP integration and one version of the truth are just some reasons when building a business case for a treasury management system vs Excel. The treasury management system will have several components which need to be reviewed harmoniously to achieve optimal results. These include:
The treasury management system (TMS) is the control hub that connects, schedules and manages all treasury transactions and provides the required reporting to fulfil operational, management, audit and regulatory requirements. When evaluating different TMS solutions, a detailed set of functional and technical requirements need to be listed. Each TMS vendor should be meticulously measured against these criteria to ensure the organisation selects a solution that will best meet needs now and in the future.
Although functionality is usually the main driver when organisations decide to select and implement a TMS solution, aspects such as upgrade cycles, security, embedded bank connectivity, costs associated with monthly/annual licence fees, first-line support, as well as its ability to integrate with the business’ current ERP/BI/3rd party systems in various formats cannot be overlooked.
Integrating the organisation’s ERP is particularly important as the TMS can replicate the necessary general ledger entries for all treasury transactions and automatically post them to the general ledger – further enhancing straight-through processing, control and transparency and relieving the administration pressure on typically a small treasury team.
With fraud and cyber-attacks being executed with greater sophistication and many staff working from home, it is crucial to ensure that treasury information is protected.
Thus, the treasury management system selected should strengthen the business’ security protocols by providing the following functions as standard functionality:
- Two-factor authentication (2FA) to create a randomly generated one-time password that is delivered to a predefined hard token (YubiKey) or soft token (via SMS to a user’s smartphone).
- IP filtering to restrict login to the TMS to predetermined users.
- Enterprise single sign-on (SSO) for authentication so that each user’s security credentials (such as Windows user ID and password) is used for logging in to the TMS.
- The TMS should also monitor workflows and treasury activities within the application to detect unauthorised use and potential fraud. As a general guideline, it should be able to monitor and analyse:
- Bank connectivity failures, including files expected but not received
- Payment files where final acknowledgement was not received
- Escalation and summary of pending workflow approvals
- Real-time status alerts of additions, deletions or modifications of data
- Stoplight status for detection of task errors
The TMS infrastructure initiates and controls the required information flows between third parties such as banks and accounting systems.
An optimally implemented TMS setup allows the treasurer strategic freedom to negotiate banking relationships and incorporate new territories seamlessly into the group, knowing that the TMS will handle the required connections and transformations quickly, thus avoiding significant disruptions to operations and very little reliance on IT internal resources.
It is therefore vital to review the connectivity experience and bank relationship capabilities of your implementation partner. Choose a partner that can demonstrate their connectivity capabilities locally as well as in Africa. Cash management is at the heart of a corporate treasury department’s core functions. If nothing else, treasury is expected to stay on top of its cash position, future cash needs, and cash outlook. However, treasurers can’t think about those until cash management is under control. And that remains a challenge if connectivity is not robust and your partner is not experienced in ensuring 100% visibility.
Implementation and Support Partner:
Many treasury management system implementations fail once the implementation team signs off and return to implement other projects. The system’s complexity makes it difficult for the users to understand and then communicate across geographical areas and time zones become a major hurdle in the success and further rollout of the TMS solution.
A local implementation partner with a support SLA that can be independently verified will ensure that your TMS implementation runs smoothly and that continuous training are provided to new employees.
Because of the time and effort spent selecting a TMS, as well as an implementation and support partner, rigorous reference checking is critical. Few treasurers get the chance to implement a TMS more than once in their careers, and many have burned their fingers on botched implementations.
The following are some questions/points to consider:
- Senior employee stability and succession planning at the TMS solution and implementation partner.
- The technology enhancements that are in the pipeline for the next 24 months.
- Service level agreement and penalties should be standard in the agreement.
- The bank integration and relationship experience of the implementation partner.
- Support desk – No of treasury users supported, the average time to close call, support SLA
- Support in a local language, local time at local rates.
- Training, training manuals and ongoing training options and costs.
- Implementation partners project scoping and management abilities.
- Disaster recovery plans and testing results.
- Other products/support services offered.
When verifying implementation partner references, try to align your priorities and operating environment with the provided references. For example, if you plan to deploy a SaaS solution, be sure to talk to a SaaS client. This step is strongly encouraged as performing it can help save significant time, money and frustration in the long run.
Take care to ensure that the treasury management system selected for your organisation gives greater independence from ERP systems and banks, is scalable to incorporate new functionality, incorporate best practise security protocols and seamlessly integrate with your ERP, banking partners, online dealing platforms and market rate providers.
Finally, your implementation partner should be experienced in various TMS platforms, and be able to assist in building the business case so that the ROI is a logical and reachable KPI for the treasury team.
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Read: ROI of a TMS