Ordering Up Treasury Management Systems

So, it is yet another night in, and as much as I like to cook, I figure that it is time to take a night off and get delivery pizza. I started thinking about where to order it from and then stopped myself. I know myself. I’m a pizza snob. I really need to think about what type of dough and what toppings I am in the mood for and let that determine where I get the pizza from.

I am always in the market for a new metaphor, and this all reminded me about the process of selecting Treasury Management Systems (TMSs). I’ve seen system selection projects jump to the choice of a TMS product without enough due diligence.

When we’re running system selections for clients, how do we ensure the client ends up with the right system? 

We like use cases (some use the term user stories) to describe what one needs the system to do. For instance, does the system allow me to group the balances of my accounts in different ways such as by currency, location, bank, or type of account? It’s helpful to organize them into logical sections (cash management, reporting, payments, and so on) to ensure you have really thought it through.

We’re detail-oriented at Actualize and we phrase our questions to be specific. We don’t just ask if the system can support hedge accounting at a high level. We ask for evidence of the type of methodologies it can support, the underlying calculations used, and the outputs it produces. Done correctly, its relatively straightforward to objectively determine capabilities against these questions. Just make sure you design all the questions thoroughly.

From our experience with the various treasury management systems out there, at this point, we can typically already start narrowing down our focus to a few systems to review in more detail against these requirements. In pizza terms, from my extensive memory of eating (too many?) of them, I already know certain pizzas just won’t cut it. To stretch the metaphor, it’s not enough to request a generic pizza. You need to specify thin crust, thick crust, or Chicago style.  

Intuitively we know that not all requirements are equally important. So, we need to score our questions appropriately by applying weighting. How important is it that bank statements are integrated automatically versus manually? How necessary is it that external loans can be correctly valued – and can this be done using LIBOR replacement indices? Understanding your business processes is key to being objective in your weightings of priorities. So why is this part of the process necessary? Well, because sometimes a system being excellent in one area compromises functionality in another area.

In pizza terms, adding pineapple to an otherwise perfect Margherita just ruins it.  

It’s this last point that interests me as a treasury management systems nerd. Some TMSs do a great job with bank integration (covering both payments and statements). Others have nailed the functionality for forecasting, and others still have specialisation in valuation and hedge accounting. I don’t see that it’s possible that one system can be all things to all people. I mean, ask six people what their favourite pizza is, and I have to believe you’ll get six different answers.

Match the appropriate TMS to the set of prioritised requirements, and you’ll get the right system for your needs.

Back to my pizza order, and unfortunately for me I realised what I really wanted was prosciutto pizza from Mother (mother.dk) in Copenhagen, and they do not deliver to me in the UK. There is another story here about compromising on pizza and TMSs, but we’ll save that for another day.

Vendor Selection is a key service offering for which we’ve developed accelerators and a proprietary methodology along with templates and accelerators to both expedite the process and to ensure an objective evaluation covering both qualitative and quantitative measures. As a firm, our team has implemented and evaluated the majority of the key treasury management systems in the market. In other words, we’ve tasted all the pizza.

So please do check out https://www.actualizeconsulting.com/vendor-selection.html which outlines our approach in detail and without the pizza distraction...We’d love to help you.