Treasury System Landscape: A Comprehensive Guide by Koen De Smet
Welcome to the world of corporate finance, where everything moves fast, and every tool counts. One tool that stands out is the treasury system. It’s like the superhero bridge, connecting your grand plans to your day-to-day tasks and helping your company manage its money as efficiently and effectively as possible. But picking out and setting up this superhero tool might feel a bit intimidating.
You’re in luck because we’ve got Koen De Smet on our side. Who is Koen, you ask? He’s an expert in treasury systems, working as a director at a top-notch Big Four consulting firm. Koen’s magic trick? He helps companies turn their treasury systems into high-performing powerhouses with a keen eye on treasury tech. With all his years of experience and a deep understanding of the twists and turns in corporate finance, Koen’s bringing a treasure chest full of practical tips, tech insights, and strategic advice to our conversation.
By diving into this article, you’ll discover the following:
- The typical timeline for implementing a treasury system and the factors that can affect it
- The lifespan of a treasury system and when it might be time for a change
- Essential characteristics of a successful treasury system implementation
- The importance of continual system maintenance post-implementation
- The exciting future of treasury technology, including the possibilities with robotic process automation
- Insights on how a collaborative approach with your system vendor can enhance implementation success and satisfaction
- Strategies to ensure that your treasury system remains a robust, efficient tool that evolves with your organization’s needs.
Whether you’re a seasoned treasury pro or a newbie just starting, this conversation will surely have something valuable for you.
So, buckle up, and let’s discover the secrets to making a treasury system work wonders for you.
What is a Financial System in a Corporation, and Why is it Important?
Let’s take a step back for a moment and understand what a system means in corporate finance. Our expert, Koen De Smet, describes a system as a place where transactions get recorded. Now, you may be wondering, “What transactions?” Well, the answer is many different types. For instance, standard transactions like accounts payable (AP) and accounts receivable (AR) are the usual invoices you have to pay and the ones you’re expecting money from.
In the treasury, however, the transactions being captured are a different breed altogether, focusing more on money management at a corporate level. But let’s break it down even further:
Unraveling Financial Jargon
When we talk about ‘accounts payable’ and ‘accounts receivable,’ we refer to the invoices that a company has to pay to its suppliers (payable) and the money that’s owed to the company by its customers (receivable). Everyone’s come across an invoice in their lives, right? It’s the same principle here but on a bigger scale.
Capturing Treasury Transactions
Now, moving on to the treasury side, a system is used to capture treasury-related transactions and data points. These are important because they’re like breadcrumbs that paint a picture of the company’s financial health. Imagine this system as a huge, digital basket where all the important financial stuff (transactions, data points, etc.) gets stored neatly for later analysis.
Digitizing the Workflow
But there’s more! Systems in treasury also aid in digitizing or ‘making digital’ the various financial workflows within a company. Imagine replacing all the paperwork, manual labor, and time traditional methods consume with a streamlined, efficient, hassle-free digital platform. That’s what we’re talking about!
Why Capture Transactions?
You might ask, “Why must we capture these transactions?” Let’s paint a picture here. Imagine being a corporate treasurer managing hundreds or even thousands of bank accounts. Tough, isn’t it? To keep track of all these accounts without a system would be a logistical nightmare.
A system brings all the bank account information into one place, so you don’t have to bounce between different platforms to manage your accounts. It’s like having a personal assistant who brings you all your bank statement information neatly arranged in one folder.
And capturing these transactions isn’t just about convenience. It provides you with the correct and necessary information to drive your treasury activities effectively. For example, it helps with an essential function of corporate treasury: financial risk management. But that’s a topic for another time.
So there you have it! A financial system in a corporation is essentially a tool that captures and organizes crucial financial transactions, making your job as a treasury professional much easier. It not only saves time but also helps manage risk and ensures your company’s financial health.
Why is Digitization Necessary in Finance, Especially in Treasury?
In the financial world, digitization is like the superhero that makes managing large amounts of data and transactions easier. So, why is digitization so important in finance, specifically in treasury?
Well, let’s begin by understanding that treasury teams handle many transactions. Keeping track of all these transactions offline, say in an Excel spreadsheet, is tough and prone to errors. Imagine, if you will, juggling hundreds of balls at once; chances are you’ll drop a few. Similarly, managing vast data offline raises the risk of mistakes.
Automate for Efficiency
Koen De Smet explains that a treasury function is a lean operation with a tight team. So, to make the most of the available resources, you’d want to automate as much as possible.
Think about it: would you rather have people spending their time on repetitive tasks that a computer could easily handle or focus on value-adding functions? Exactly. Automation helps streamline processes, reducing manual labor and minimizing errors.
The Bigger the Company, the Greater the Need for Systems
The larger the company, the more bank accounts it tends to have, making treasury systems all the more important. Koen mentions a common scenario where fast-growing companies often find their treasury functions lagging, still operating as if they were small or medium-sized companies. To keep up with the company’s complexity, upgrading to an efficient treasury management system is essential.
Tackling Financial Risks with a Treasury Management System
Now, let’s tackle the concept of financial risk. There’s a Treasury Management System in the treasury world, sometimes called a Treasury Risk Management System. It plays a crucial role in helping manage these financial risks.
Understanding Exposure Risk
Firstly, the system helps manage exposure risks. These exposures come in different forms, such as foreign exchange risks (both on and off the balance sheet), interest rate risks from floating rate debt, and commodity risks, depending on the nature of the business.
The system also helps manage hedges. If you want to protect yourself from market volatility, hedging is your go-to strategy. And these hedges and the transactions that come with them are managed within the Treasury Management System.
Unveiling the Balance Sheet Mystery
So, what are these on and off-balance sheet exposures Koen talked about? Let’s simplify it:
- Exposure refers to exposures you can see on a balance sheet, like the invoices on your balance sheet. Think of it as something that’s already happening and can be hedged.
- Off-balance sheet exposure: These are forecasts or future sales or receipts predictions. These are not set in stone and carry more uncertainty. That’s why companies often hedge only a part of this exposure.
There you have it! Digitization in finance, especially in the treasury, isn’t just a fad. It’s an absolute necessity. Not only does it streamline operations and reduce manual labor, but it also helps manage financial risks more efficiently.
What Additional Roles Do Treasury Systems Play?
The treasury system is like a Swiss Army Knife; it does much more than track transactions and manages financial risks. Wondering what these other roles are? Let’s dive in.
Tracking Investments and Funding
Koen De Smet brings up an important role of treasury systems: tracking investments and funding. Every company has its own cash situation – some have excess cash, while others might have a shortage. And that’s where treasury systems come in handy. They help you keep track of your loans, debt issuance, investments at banks, and even your money market funds. So whether your company is swimming in cash or barely staying afloat, a treasury management system helps you stay on top of your financial game.
Managing Cash Flow
Cash management is another crucial role of a treasury management system. Picture a company with thousands of bank accounts. Keeping track of all these accounts manually would be a nightmare, wouldn’t it? But with a treasury management system, it’s a breeze. The system manages these accounts, typically part of a pooling structure, ensuring you have a clear view of your cash flow.
Taking Care of Treasury Accounting
Once you’ve recorded all those transactions, it’s time to account for them. And guess what? Your treasury management system has got you covered there as well. These systems act as a sub-ledger to the general ledger, creating the accounting entries and then connecting to an Enterprise Resource Planning (ERP) system. The aim is to record and track everything, making financial decision-making more efficient.
Unveiling the Treasury Accounting Process
Now, let’s break down the treasury accounting process a bit.
Imagine you have a forward contract. A forward contract involves buying and selling a currency against another currency at a future date. This trade needs to be accounted for in your books. Typically, at the end of the month, you would do a mark-to-market, which means understanding the current value of your forward contract.
The difference between the market rate and the rate in your contract will give you an unrealized profit or loss, which has to be recorded in your books. The treasury management system manages this process.
The treasury management system acts as a sub-ledger, capturing only the treasury-related accounting entries. These entries are then passed on to the general ledger, which records everything else – your balance sheet, profit, loss, etc.
And where is this general ledger? It’s usually found at the ERP level.
In a nutshell, the treasury system wears many hats. It tracks investments, manages cash, handles treasury accounting, and acts as a record-keeper. All this shows how vital treasury systems are in managing a company’s financial operations effectively.
When Does a Company Need a Treasury Management System?
Not sure when your company should get a treasury management system? Koen De Smet shares his insights.
It’s Not About Size; It’s About Complexity
The first thing to understand is that the need for a treasury management system is not about the size of your company. There’s no golden rule saying that you need to get a treasury system if your company’s turnover reaches a certain number. Instead, it’s about how complex your operations are.
Let’s consider a scenario. Say you’re running a company that only operates in one country, Belgium, for example. You’re only dealing with transactions within Belgium; you have no foreign exchange risk and only a handful of bank accounts. In this case, getting a treasury management system might be overkill.
But what if your company starts to grow? What if you start importing and exporting goods from various countries, creating foreign exchange risks? And what if you now have bank accounts all over the world? Suddenly, managing your treasury operations without a system becomes quite a challenge.
When Does It Become Critical?
The next thing you might be wondering is when it becomes critical to have a treasury management system. Let’s say you’re in multiple countries, dealing with various currencies, and have different loans with variable interest rates. At this point, a treasury management system could be crucial.
It’s important to remember that every company needs to decide for itself when a treasury system becomes critical. As a general guideline, when your company starts to outgrow your supporting functions, those functions likely need to grow too.
Now, you could increase your team to 10 full-time employees and continue to manage your treasury operations manually. But remember, human errors can occur. A treasury management system, on the other hand, provides a more controlled and centralized process.
In conclusion, the need for a treasury management system depends on the complexity of your financial operations. While size can be a factor, as larger companies tend to have more transactions and bank accounts, it’s not the primary determinant. Ultimately, the decision lies with each company, based on their own unique needs and circumstances.
Understanding Treasury Management Systems: From On-Premise to SaaS
Curious about the nuts and bolts of a treasury management system? Koen De Smet sheds some light on this subject.
The Evolution of Treasury Systems
Like many other systems, treasury management systems have evolved. Around 10 to 15 years ago, most corporates installed these services on their server sites, similar to how ERPs were typically done. This is what’s known as an “on-premise” system.
However, we’re shifting towards two options: private cloud and Software as a Service (SaaS).
Private Cloud Vs. SaaS: What’s the Difference?
Private cloud and SaaS are terms often used interchangeably, but they differ. With a private cloud system, a vendor hosts the application on their server sites, and you have your private application and database at the vendor’s site.
On the other hand, with SaaS, you’re accessing Software that other corporates are also accessing. Everyone has their part of the database, but the vendor manages the entire system.
One of the significant differences between the two lies in system upgrades. In a SaaS application, upgrades are done automatically by the vendor, typically over a weekend. However, upgrades are mini projects requiring specific handling for on-premise or private cloud systems due to the nature of their deployment or installation.
Why Would Anyone Opt for a Private Cloud?
Given the need for resources for each upgrade, you might wonder why anyone would opt for a private cloud system. There are two main reasons:
- Some applications are not yet offered as a SaaS solution, so there’s no other choice.
- The second reason is customization. With SaaS applications, customization’s limited because everyone uses the same Software and functions. On the other hand, private cloud and on-premise solutions offer much more flexibility for customization. This means you can create your custom solutions within the system.
So, in a nutshell, it’s about whether you prefer a standard product that everyone uses the same version of (SaaS) or whether you want to customize your system to fit your specific needs (private cloud or on-premise).
Customization in Treasury Management Systems: Balancing Business Requirements and System Limitations
Wondering how much customization you can have in a treasury management system? Koen De Smet offers insights.
Customization vs. Standardization: The Trade-off
When it comes to treasury management systems, customization, and standardization often walk a fine line. Traditionally, corporations have tried to tweak the vendor’s system to meet their specific needs, resulting in a fair amount of customization. But as time goes on, more and more corporations are becoming hesitant to request too many customizations.
Why? The answer is simple: the more customization there is, the more work needs to be done when an upgrade is required, making the process more complicated. Instead of forcing changes onto a system, corporations are beginning to embrace the vendor’s standard solutions more readily. They are now more inclined to adjust their processes to fit the system rather than trying to alter the system to fit their processes.
Shaping the Core Product: The Power of Negotiation
But don’t get the idea that customization is dead. If a corporation has a strong enough standing or a requirement relevant to other corporations, it might be able to negotiate with the vendor to include that requirement in the core product. This benefits all parties involved, as the requirement becomes part of the vendor’s standard offering.
Customization in SaaS: The Possibility of Optional Modules
One question that comes up when talking about customization in SaaS is the idea of optional modules. Could a corporation unlock certain parts of the SaaS for an additional cost to get the customizations they want? As far as Koen De Smet knows, this isn’t generally practiced.
However, there are other ways to customize, such as adding add-ons to your treasury management system or Robotic Process Automation (RPA) tools to pull data in and out of your system.
Another effective method is engaging with user groups of vendors, which meet periodically to share requirements. Engaging in strategic discussions with your vendor, presenting your needs, and collaboratively thinking through potential solutions can add your needs to the vendor’s development roadmap.
This approach, although slower in execution, is often a better way to go for a longer-term solution. But initial workaround solutions, such as RPA or add-ons, can be considered if speed is of the essence.
Exploring the Different Systems in the Treasury Landscape
Need to know more about the types of systems at your disposal in the treasury landscape? Koen De Smet helps us uncover it all.
The Core Treasury System: The Backbone of Your Treasury Team
At the center of your treasury operations, there is what De Smet calls the core treasury system. Think of this system as your treasury team’s backbone or control center. It’s your go-to tool for treasury functions, providing the foundation for the other applications and tools you might use.
Specialist Applications: Streamlining Interactions and Processes
Beyond the core treasury system, you will also find specialist applications. These are designed to interact with your treasury management system and other organizational tools, providing an extra layer of functionality and streamlining processes.
One key example of a specialist application is the payment factory solution, the bank connectivity hub. This platform is designed to be bank-agnostic, working with multiple banks to process payments and retrieve account information. This includes end-of-day and intraday bank statements and distributing this information to the relevant system.
The Payment Hub: Streamlining and Processing Company-wide Payments
Now, you might wonder, doesn’t the treasury management system already retrieve information from bank accounts? Yes, it does. However, a payment hub does this more efficiently and streamlined. Moreover, a payment hub handles treasury transactions and operates and processes company-wide payments, like accounts payable (AP) and payroll.
These payments originate from different sources, such as ERP systems or other payment tools. Think about payroll solutions or even expense management tools that reimburse employees. All these transactions are channeled to the banks through a single solution – the payment hub.
Satellite Applications: Specializing in Specific Treasury Functions
In addition to the core treasury system and specialist applications, there are also what De Smet refers to as ‘satellite applications.’ These are specialized tools designed for a specific purpose within treasury functions.
For instance, trade finance platforms allow for multi-bank interactions, and trade execution platforms facilitate the execution of foreign exchange hedges in the market. While decades ago, these transactions were typically made over the phone with a bank, nowadays, they are usually performed on a trade execution platform where you can ask for a trade price from multiple banks.
How Do Various Treasury Systems Interact and Integrate?
Guillaume asked a pertinent question about the interactivity and interdependency between different treasury systems. How does the integration of the entire landscape occur? How is the connection made between different platforms and systems? Koen’s response shed light on the typically centralized role of the Treasury Management System (TMS) and the interfacing technologies used.
The Role of a Treasury Management System (TMS)
At the heart of this financial ecosystem, you find your Treasury Management System (TMS). It’s like the sun in our solar system – central and influential. The TMS doesn’t work alone; it interacts and interfaces with other solutions.
These could be:
- Specialist Solutions: Tools with a specific focus, like processing payments or trading foreign currency.
- Satellite Applications: These are the “planets” around the TMS “sun.” They each serve their unique purpose.
The complexity of these interactions depends on your treasury needs. A seamless interface between these solutions is essential if you’re dealing with many transactions. But if you’re handling a small number of transactions, you might be fine doing some tasks manually.
The Shift Towards Specialist Solutions
Koen noticed a trend where Treasury Management Systems are stepping away from trying to be a one-size-fits-all solution. They’re focusing on what they do best and partnering with other specialist solutions. The result? A suite of applications, each honing in on its strengths but working together seamlessly.
However, this comes with its challenges. Implementing multiple satellite applications might seem higher, but considering the risk and time associated with manual tasks, the cost may be worth it.
The Interplay of Systems and Technologies
So, how do all these systems connect? Think of them as different parts of an orchestra. They each play their unique part but come together to create a harmonious melody.
If you’re dealing with high-frequency tasks, like daily money market fund transactions, you’d probably need an interface for efficiency. You wouldn’t want someone manually moving data daily from one system to another. But if these tasks are infrequent, a manual process might suffice.
The goal is to ensure all these systems communicate efficiently, with technology playing the conductor role in directing the flow of data and interactions.
Remember, each organization needs to weigh up the costs and benefits for themselves. But with a well-integrated treasury system landscape, you’re setting the stage for a smoother, more efficient operation.
What Does a Best-In-Class Treasury Department Look Like?
Guillaume’s next question touches on an interesting point: what does a ‘best-in-class’ treasury department look like? The answer, given by Koen, gives us a broad understanding of what a top-performing treasury department is like, and what roles the TMS and Payment Hub play in such a setup.
The Golden Rule: 10% Transaction, 90% Analysis
Koen explains that there’s no one-size-fits-all description for a ‘best-in-class’ treasury department. It can vary based on a company’s size, industry, and specific needs. But one aspect is crucial: the balance between processing transactions and analyzing data.
The treasury team is often lean but highly skilled. It’s a pity if they spend most of their time on transaction processing and have little to no time left for data analysis and strategy optimization.
Here’s Koen’s golden rule for a best-in-class treasury department:
- Spend only 10% of your time on 90% of the transactions.
- Dedicate 90% of your time to the remaining 10% of transactions, analyzing data, optimizing strategies, and providing valuable insights.
Though not scientifically proven, this rule serves as a helpful guide to striking the right balance in a treasury department.
The Role of TMS and Payment Hub
What part do TMS and Payment Hub play in this setup? A great TMS should effectively execute all treasury functions and be completely linked with other interfaces and applications. On the other hand, the Payment Hub should take care of all the payments, running smoothly and accurately.
The Indicator of a Best-in-Class Department
If your team of 10 people spends all their time processing transactions because your processes aren’t automated and require lots of manual intervention, you’re likely not running a best-in-class treasury department.
The key is automation and efficiency, which frees up your team’s time to focus on tasks that add more value. That’s how you create a top-performing, best-in-class treasury department.
How Important Is Cash Flow Forecasting in A Treasury Management System (TMS)?
Guillaume’s next question revolves around the importance of cash flow forecasting in a TMS and Payment Hub. With his broad experience, Koen De Smet shares some insightful observations about this function.
Cash Flow Forecasting: A Top Priority
Cash flow forecasting is a vital task for treasury teams. Over the past 5-10 years, it has consistently been among their top three concerns, especially during times of crisis. Koen mentions how the importance of cash flow forecasting heightens in tough times, such as the 2008 financial crisis or the COVID-19 pandemic.
This makes sense because, in hard times, companies want to keep a closer eye on their money coming in and going out. Koen notes that many corporate treasuries still struggle with cash flow forecasting despite its importance.
Using Specialized Applications for Cash Flow Forecasting
Many corporations are still relying on Excel for cash flow forecasting, Koen points out. Why is this? Cash flow forecasting requires data not just from your TMS but also from other applications in the organization and even manual input from business teams.
Because of these needs, cash flow forecasting tools are often separate tools that can interface with large amounts of data from ERPs, which may not be suitable for a TMS. For example, capturing all your accounts receivable and payable data—needed for cash flow forecasting—in a TMS wouldn’t be practical.
Specialized cash flow forecasting tools also focus more on dashboarding and Business Intelligence (BI) tool applications, making them more tailored for this function.
TMS: Good for Basic Cash Flow Forecasting
Guillaume suggests that while a TMS could ensure basic cash flow forecasting functions, a more detailed, integrated, and precise tool would require a specialized application. Koen agrees, adding that while some TMSs handle cash flow forecasting quite well, it’s worth questioning whether a TMS is a right tool for pulling in all the data needed for insightful cash flow forecasting.
In short, cash flow forecasting is critical for treasury teams, and while a TMS can cover the basics, specialized applications may provide a more comprehensive and insightful approach.
How Do You Integrate and Implement Systems Like Cash Flow Forecasting Tools into A Treasury Department?
Moving into the nitty-gritty, Guillaume asks Koen De Smet about integrating and implementing systems, such as cash flow forecasting tools, into a company or treasury department. Koen shares his expertise on this intricate process.
Step 1: Define Your Needs
Every successful system implementation starts with defining what you need. You and your team need to understand your current state or “as is” description, not to copy your current processes, but to comprehend the scope and complexity of your operations.
Understanding your current state can give you a clearer vision of potential problems. It can also provide insight into future complexities. For instance, if your company plans to enter new markets that may introduce new financial risks, this could generate new system requirements.
Step 2: Visualize Your Target State
After defining your current state, envision your “target state” – where you want your processes to be in the future and the requirements to reach there. This requires looking beyond the present and preparing for possible scenarios in your company’s future.
Step 3: Request for Proposal (RFP)
With your needs and target clearly outlined, you’re ready for an RFP, inviting relevant parties to submit a proposal to provide the required system. This stage is crucial because the best system for your company might not be the best for others. Remember, there’s a multitude of software solutions available in the market.
Step 4: Implementation
The typical system implementation phases come – design, build, testing, and ultimately going live. You must have a good understanding of these phases when starting such projects.
A roadmap is highly beneficial at this stage. It guides you toward where you want to go and the milestones you wish to achieve. Without one, you might be running in the dark, unable to see results and progress.
In summary, the process involves:
- Assessing your current treasury landscape (and broader financial and company landscape)
- Identifying where you want to go
- Conducting an RFP process to select the system vendor that meets your requirements
- Implementing the system
This roadmap ensures a successful system integration and implementation, setting you up for efficient treasury management.
What Does the Testing Phase Entail in The Implementation of Treasury Systems?
In the following discussion, Guillaume explores the importance and process of the testing phase during the integration of treasury systems with Koen De Smet.
The Role of the Testing Phase
The testing phase is an essential part of implementing a new system. Once your needs are shared and a detailed design of your processes is created with the system vendor, they will configure these designs into the system. Sometimes, you may need to support or complete this configuration with the vendor’s help.
After the configuration, the system is handed over to the end users. Here’s where the fun begins – your team will run the new processes in the system to test its functionality. This could include executing day-to-day treasury tasks in the new solution, ideally using real production data. You’ll be checking whether the system functions as desired.
User Acceptance Testing (UAT)
Once the system proves functional and efficient, it’s time for the User Acceptance Testing (UAT) phase. At this stage, all users should have successfully executed their test cases, and no significant defects should remain in the system. After everyone signs off on their comfort level with the system, that’s the trigger to go live with your new tool.
From Testing to Going Live
So, you’ve tested and accepted the system; what next? The next step is often parallel testing, where you replicate day-to-day treasury tasks in the system to confirm that you get the expected results. Depending on the company, This process can take a few weeks to several months.
In addition, you also engage in penny testing, which involves making a tiny, real transaction, say a $1 trade, to verify that the system functions as it should in a live environment.
The Real-Life Environment
This testing process culminates in the production phase, where you switch from the test environment to the real-life environment. At this point, you can start using the new system to manage your day-to-day treasury functions.
In summary, the implementation of treasury systems involves:
- Designing and configuring the system with the vendor.
- Testing the system using day-to-day treasury tasks.
- Engaging in User Acceptance Testing (UAT).
- Doing parallel testing and penny testing.
- Transitioning into the real-life environment for production.
This structured approach ensures that your system meets your requirements, operates efficiently, and aligns with your team’s day-to-day tasks, giving you the confidence to manage your treasury functions effectively.
How Does Parallel Testing Evaluate the Effectiveness of a New Treasury System?
In this part of the conversation, Guillaume and Koen delve into the relevance and benefits of parallel testing in the context of treasury system implementations.
Parallel Testing and Business Case Evaluation
In the journey of treasury system implementation, parallel testing plays a pivotal role. But you might wonder, can parallel testing validate the business case for a new system? Absolutely!
While performing parallel testing, you compare the system’s performance against your previous way of working. It helps you see if the new system is faster, more accurate, or less risky. It quantifies whether the system is making savings, decreasing risk, or enhancing productivity, as predicted in the initial business case.
Use of Key Performance Indicators (KPIs)
But how can you measure these improvements? Koen recommends leveraging Key Performance Indicators (KPIs) for this purpose. Your new treasury system can provide reports displaying metrics like average processing time or the number of errors. For instance, if you have 100,000 transactions yearly, and only 2,000 get rejected, that signals a high success rate. You can then use this information to set ambitious targets and monitor trends over the years.
Post-Implementation Hyper Care
So you’ve gone live with your new system, but what if a bug or an issue arises? That’s where hyper care comes in. Following the system go-live, it’s a support phase, where you have dedicated assistance from your system integrator or treasury vendor consultants. It ensures any unforeseen issues are swiftly addressed, ensuring a smooth transition.
Importance Of Road Mapping and Phased Implementation
It’s also worth mentioning the potential for phased implementation. Some companies choose to initially go live with a certain scope of functionality and plan for a phase two expansion. Following your roadmap is crucial here, as it guides you in implementing additional functionalities in subsequent phases.
In some cases, treasury systems can have extensive functionalities that may be too complex to implement in one go. This is when phased implementation comes into play. However, some companies do it in one shot, depending on the complexity. But remember, an optimization phase is usually beneficial as it helps you get more value and return on investment from your system.
In summary, implementing treasury systems isn’t just about installing and running the system. It involves parallel testing, monitoring KPIs, providing post-implementation hyper care, and potentially phased implementation. This comprehensive approach helps validate the business case for your new system and ensures that it delivers the intended benefits.
How Long Does It Take to Implement a Treasury System and What Defines Its Success?
In the podcast section, Guillaume asks Koen De Smet about the duration of system implementation, the lifespan of such systems, and what makes the implementation successful. Let’s break down the information shared by Koen.
The Timeline for Implementation
Koen explains that the timeline to implement a treasury system largely depends on the complexity and size of the company and the type of system to be installed. The process can take as quickly as three to six months or as long as 12 to 18 months, sometimes even longer. Here’s why the time varies:
- SaaS (Software as a Service) solutions usually take less time because they are pre-configured and don’t need as much configuration from scratch. They aren’t a ‘toolbox’ but rather a ready-to-use system.
- Complex solutions demand more time because they have intricate functionalities that need to be configured and typically serve a larger user base.
Koen also highlights the importance of change management and training during the implementation, which can increase the implementation period. This part is crucial because you can’t just install new Software and expect your team to use it without proper training and adaptation.
The Lifespan of a Treasury System
When asked how long these systems typically last, Koen suggests that they could serve the company for five to ten years or even longer if it satisfies its needs. He advises that companies regularly engage with their system vendor, discuss evolving needs, and explore new solutions to ensure the system remains relevant.
What Makes an Implementation Successful?
Finally, Koen shares his views on what makes a system implementation successful. He emphasizes the importance of defining guiding principles and objectives at the start of the project. Here are a few factors that contribute to successful implementation:
- Measuring your results: Evaluate the final product against your objectives and requirements.
- Regular satisfaction surveys: Surveying not just job satisfaction but also satisfaction with the tools helps understand if the implementation has been effective.
- Scope achievement: Implementing around 90-95% of your project scope can be seen as successful. But don’t stop there!
Koen stresses the importance of maintaining and optimizing your application and brainstorming future strategies with your vendor. This proactive approach will keep you satisfied with your application even after several years.
The Importance of Following up and Maintaining the System
Koen brings attention to the importance of implementing a system and maintaining it post-implementation. This maintenance and follow-up are crucial for your system’s longevity and efficiency.
He wraps up the conversation by touching upon the evolution of treasury tools over the last 15 years and the emergence of new technologies like robotics process automation. He encourages treasury professionals to consider these new tools, try new solutions, and focus on agility and speed in the market.
Wrapping It Up
As we draw to a close, it’s clear that implementing a treasury system is a dynamic process that needs thoughtful planning, careful execution, and diligent maintenance. It’s not just about installing Software; it’s about adapting to change, nurturing team capabilities, and aligning with strategic objectives.
Remember, the timeline for implementation is variable, shaped by factors such as your company’s size, the system’s complexity, and the need for user training. Yet, once implemented, these systems can efficiently serve your company for years, even a decade, provided they meet your evolving needs.
Successful implementation relies heavily on the upfront setting of clear objectives, regular evaluation against these goals, and continuous optimization. Even when the system is up and running, keeping it updated and relevant is crucial, emphasizing the importance of post-implementation follow-up and maintenance.
Lastly, the treasury landscape continually evolves, and staying agile is key. The advent of technologies like robotics process automation suggests that the future of treasury systems is about core systems and broader tools that offer agility and efficiency.
As treasury professionals, it’s essential to navigate this journey with a balance of foresight, strategic planning, and willingness to embrace new technologies. The future is exciting, and the tools at our disposal are ever-expanding. With a clear roadmap and an open mind, treasury system implementation and maintenance can be a game-changer in your organization’s financial health and stability.
