TRANSFORM YOUR TREASURY FUNCTION

Craig Chapman, Manager, Treasury & Capital Markets 

To transform your treasury function, focus on the priorities below:
​
1. Determine what is driving the need for change, and create a blueprint for the future.

The need for a change could be fueled by one or more of the following:

• Too many bank relationships or bank accounts
• Multiple ERPs and different versions, need to standardize
• International growth
• Outdated treasury technology or no system at all
• Payment decisions and execution are being actioned locally
• Foreign exchange exposures not managed correctly
• New regulation and compliance requirements
• No risk management program

2. Develop business requirements, and gain approval for the treasury initiative and sample initiatives.

To properly plan for the treasury initiative, a business case should be created and socialized to evaluate the current state and future state business requirements. It should prioritize the future state initiatives in order to align the effort and the impact. A cost benefit analysis can be conducted to efficiently depict the effort and impact of the initiative. The business case should then be presented to management for approval and sign-off on the scope.

When developing a business case, you should include work hours, fixed cost for connectivity, bank fees, paper check processing, and maintenance of systems for your total spend on treasury processing. You should also include the costs associated with implementing treasury technology: license fees, maintenance fees, and consulting fees.

It is important to measure the potential saving resulting from implementing technology; this includes staff reallocation or elimination, less overall space and equipment and fewer office expenses, as well as the reduction in vendor management and technology maintenance across all business units.

The business case will also incorporate the benefits resulting from the technology transformation: improved control over the payment process, elimination of re-work correcting errors, savings from global visibility of company cash flows, transaction processing efficiency that minimizes risk and ensures regulatory compliance, and standardization.

3. Evaluate and select the right vendor (if the initiative involves technology).

Once a business case has been developed and approved, a treasury technology vendor can be selected. Prior to requesting information from vendors, a project kickoff meeting should be conducted to review the feasibility and business and technical requirements. The first phase of the project includes requesting information from the various vendors through a Request for Information (RFI), an RFI scoring methodology, vendor demonstrations, and vendor pricing. The second phase entails narrowing the vendor selection to a short list, gathering the use cases, determining the use-case results and validating them, and checking the vendor references. Finally, an evaluation and decision can be made, and the contract can be negotiated.

4. Identify the implementation methodology to follow.

Now that you have determined the right treasury technology vendor for the job, you can implement a high-level process plan. This entails mobilizing and planning the project, team structure, charter, and governance. The development requirements, detailed configuration, and environment management are designed, so the system can be built. The system build will entail configuration and unit test interfaces, development, and data migration. The final prep and testing will be done before going live with the technology. Once the system is live and a post-live assessment has been completed, the system will require support for unexpected issues and/or defects, and the project can be closed.

5. Measure the success of the initiative/project.

Finally, measure the success of the Treasury Management System. Potential benefits include the following:

• Minimizing manual processing
• Automating repetitive tasks
• Integrating with external financial systems
• Reducing risk exposure from timing and input errors
• Improving the ability to strengthen financial positions
• Increasing effectiveness of financial decisions
• Centralizing audit trails
• Providing a single source of truth for treasury data