Who’s afraid of TMS

The main concerns surrounding the introduction of a treasury management system
Whos afraid of TMS_HEADER
Martin Bellin author pictureAuthor: Martin Bellin

People often ask who our main competitors are. The answer to this question is as simple as it is surprising: our main competitor is not a specific company or a specific solution, but a lack of conviction. It is the disbelief that a TMS will truly live up to its promise. Many companies are simply not convinced that a specialized treasury solution would provide added value for their business.

The following 10 concerns are often raised and keep companies from a truly efficient and powerful treasury setup.

1) We’re perfectly happy – what’s wrong with Excel?

Where there’s no perceived need, there will be no demand. The question is whether people would remain unconvinced if they were aware of the full potential of a treasury solution. Excel is a great calculator and a tremendous help when it comes to compiling long lists. However, no one would dream of structuring processes this way; this is simply not what a spreadsheet is for. Treasury solutions on the other hand are process tools that cannot only create lists but make sure that information and authorization, decisions and responsibilities have an underlying structure and are recorded, processed and ideally even shared in a structured manner. This is evident when it comes to topics such as payments or treasury deals. More often than not both are done manually and don’t receive the necessary support. People may be content with Excel but it’s not a tool that will organize your treasury properly.

2) Our ERP system can do all that

The finance section of an ERP system is intended for accounting. But treasury is not the same as accounting. Accountants rely on meticulously detailed documentation about what happened yesterday; a treasurer needs to come up with forecasts for the future based on a number of internal and external sources and estimates allowing them to make informed decisions. This is not just different in terms of workflows but also in terms of the kinds of systems that are used. Using an accounting system for treasury activities would be as pointless as using a treasury system for accounting. In fact, this is not actually necessary as all decisions made by a treasurer will sooner or later show up on an account statement and will then enter the accounting process. With few exceptions, this is the lowest common denominator of two separate fields that only receive the support they require when they get to work with tools that were created for them and suit their needs.

3) We don’t want another non-integrated solution

Treasury is no island and treasury solutions aren’t insular solutions – quite the contrary. Modern, internet-based treasury platforms are generally used groupwide. In fact, treasury applications are often the only solution that is really used by all group companies. Accounting systems are dependent on the size of a company and the local framework and only rarely get used groupwide. It follows that treasury systems are by no means non-integrated, insular solutions but tie groupwide finances together. If a TMS is integrated to its full potential it links all group companies with the parent company and creates immense added value.

4) Interfaces are so complicated

Interfaces can really be complicated but not so in treasury. People who raise this objection based on their prejudices would be better of asking themselves which interfaces are actually necessary. In nearly all cases we’re talking about two kinds of interfaces:

  • Account statements
  • Payment files

Fortunately, both are by now standardized to a degree that treasury doesn’t need to consult accounting and vice versa. The standard format for account statements is MT940 and in the US BAI and they’re processed in the TMS before being transmitted to the ERP (if need be), the latter also able to process these standard formats.

The same is true for payments, only with data going the other way. They’re generated in the ERP system and the TMS processes the files to be used for cash management or authorization to then transfer them to the banks for execution.

Any other requirements should be evaluated on a case by case basis and are usually either very simply or, in the vast majority of cases, are never needed.

5) We don’t have the capacities

Again, it pays to clarify which capacities we’re talking about here. You can often establish the basic features for day to day business so quickly and easily that this frees up plenty of time that can then be dedicated to the further rollout and expansion of the application. It is also possible to use external capacities and such investments can help make a company more efficient. Foregoing efficiency based on a lack of capacities doesn’t make sense economically and is not a decision that creates value or provides sustainability.

6) The costs are way too high

15 years ago, TMS were very expensive. There were few and complex systems made available in small numbers to experts only. Nowadays, TMS are a standard tool for any professional financial department. In turn, prices have dropped and the scope of service has increased. Costs are only too high if they’re not set off against the resulting added value. Basic TMS functions are now available as part of rental or subscription schemes and prices are well within many manager’s budgets.

7) Our IT doesn’t have time for that

Everybody is talking about SaaS and the cloud and this has also had an impact on treasury. All efficient treasury applications are offered as SaaS, meaning that internal IT is neither responsible for installing nor for maintaining these systems.

8) We’d have to force subsidiaries

This is a powerful argument when it comes to groupwide rollout, particular if a certain solution is prescribed to all company that ultimately serves headquarters. This sets clear limits to subsidiaries’ independence. This is why good platforms are set up in a way that provides added value to the day to day business of all group companies. This can be processing payments or simplifying reporting. It is possible to leave it up to companies if they want to use the application for a certain task or not. What matters are the results! Only having to handle data once and data collection being a side effect of process support promises the highest potential for savings. This means subsidiaries no longer need to be forced to participate.

9) You can’t include all banks anyway

This is mainly true for exchanging payment data or account statements. The latest Trade Finance trends in particular are concerned and it is true that not all banks offer the same solutions here. However, this should be an argument for a TMS rather than against. Only TMS encourage banks to adapt to market standards and not insist on proprietary, non-integrated solutions.

10) We still need to finish other projects

No company really has time to spare. This is why you should start with those tasks that free up the most time. The support systems provide to everyday treasury activities can help create the capacities needed for other, more extensive projects. Waiting for a complete ERP system to be set up before making a start on treasury means losing time, money and capacities. The ROI, particularly when it comes to capacities, will have a positive effect in no time and it would be a waste to go without.

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