Treasury Review Guide for Aligning Technology and Processes
In today’s financial world, companies face constant technological, market, and regulation changes. These changes are challenging, but a regular treasury review can help. It ensures that your systems, processes, and policies align with your organization’s needs. This process involves looking at technology, assessing risks, and finding areas for improvement.
Katja Franz, a Senior Manager in Global Treasury Advisory at Deloitte, offers valuable insights on this topic. She has extensive experience in treasury management, having worked with leading firms like Coupa Software and BELLIN. Katja focuses on optimizing treasury processes and technology, making her an expert in this field.
In this article, we discuss how to conduct an effective treasury review. We will learn about key areas such as technology assessment, process optimization, and risk management. Moreover, we will share practical advice for handling policy changes, system upgrades, and overall process improvements. If you aim to streamline your treasury operations, this guide will provide the necessary tools.
How to Review Treasury Technology Effectively
Reviewing treasury technology is a complex task that requires a comprehensive approach. The process involves assessing the technology and related processes, requirements, and organizational setup.
Here’s how to effectively review treasury technology:
Key Components of a Comprehensive Treasury Review
- Processes and Requirements:
Start by evaluating your current processes and requirements. Technology in treasury is not standalone; it must align with processes and meet organizational needs. Examine the organizational structure and operating model to ensure they fit your current needs and goals. - Technology Fit:
Assess the current Treasury Management System (TMS) to see if it aligns with your organization’s size and complexity. Smaller organizations may need simpler systems due to limited resources. Larger organizations might require more complex systems that can handle diverse operations. Always consider whether the TMS can evolve with the organization. - Banking and Market Landscape:
Review the banking landscape in which your company operates. Your technology must support the specific banking requirements related to your markets and currencies. If you have diverse banking needs, like trade finance, decide if one system can handle everything or if you need specialized solutions. - IT Landscape Overview:
Map out the entire system landscape, including interfaces and involved departments. Identify what each system does and why. Check for changes since the system’s initial implementation, like organizational growth or process updates. This helps identify outdated practices, manual processes, or tasks that could be automated.
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Frequency of Treasury Review and Triggers for Change
Regularly review your treasury technology to ensure it remains aligned with organizational needs. Major changes, such as organizational transformation, shifts in IT strategy, or changes in the macroeconomic environment, can trigger a review.
However, a review doesn’t always require external consultants. An annual or biennial internal review can help identify if there are areas needing adjustment. External consultants may only be necessary for larger, more complex changes.
The Impact of Policy Changes on Treasury Technology
Policy changes, such as the shift from on-premise systems to cloud-based solutions, can significantly influence treasury technology. These changes often open up new opportunities previously unavailable due to company restrictions.
For example, companies that once prohibited cloud technologies have lifted these bans, creating room for innovation and system integration. Organizations can connect with new systems, tweak their existing setups, or add strategic components to improve functionality when such changes occur.
The rapid pace of technological advancements continuously brings new opportunities for businesses to enhance their treasury systems. However, the key lies in actively exploring how these policy changes can benefit your technology infrastructure.
Risks of Failing to Review Treasury Technology Regularly
Neglecting to review treasury technology regularly can lead to several risks:
- Reduced Responsiveness:
Outdated systems hinder your ability to respond quickly to market changes or unexpected events, which can negatively impact business operations. - Increased Costs:
As requirements change, teams often create manual workarounds to fill gaps in the system. This leads to inefficiencies and high costs. People may use spreadsheets outside the system to handle tasks, which increases the risk of errors and complicates the workflow. - Misjudged System Capabilities:
Over time, employees may believe the system cannot handle new requirements when, in fact, the system could have been adjusted. This misconception leads to unnecessary calls for a complete system overhaul, which can be costly and time-consuming. - System Overload:
Implementing small fixes without an overarching review can create a patchwork IT landscape. Over time, this makes the system more complex and prone to breakdowns.
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SaaS Solutions and Their Influence on the Treasury
SaaS (Software as a Service) models offer treasury departments more flexibility than traditional on-premise setups. These solutions provide quicker updates, more standardized processes, and fewer customizations. With SaaS, treasury teams no longer need to wait for IT departments to roll out updates, allowing for more timely improvements.
However, organizations must actively engage with new features rolled out in SaaS updates. Often, release notes from vendors may go unnoticed, causing companies to miss out on valuable improvements. Treasury departments should regularly assess how new features align with their internal processes to leverage SaaS fully.
Steps for Conducting a Comprehensive Treasury Review
Once you identify that your treasury systems are outdated and you’ve secured a budget for an upgrade, the next step is a thorough review. Let’s discuss how to conduct a Treasury review effectively:
1. Initial Analysis and Workshop
Begin with an internal analysis to identify pain points and areas needing improvement. If you’re not confident in your findings, consult an external expert to review your analysis. The review process often starts with a workshop involving the treasury team.
The team discusses current practices, processes, and system usage during this workshop. This discussion often reveals hidden issues and areas where the system may not align with the organization’s needs.
2. Documentation and Benchmarking
Gather and analyze all relevant documentation, including treasury policies, process descriptions, and guidelines. Create a list of current pain points and requirements for a Treasury Management System (TMS).
Benchmark your practices against industry standards using a fit-gap analysis to identify gaps and areas for improvement. This benchmarking helps you understand where you excel and where you can develop further.
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3. Identifying Strengths and Weaknesses
Assess your current processes to determine where your organization performs well and where it needs improvement. Knowing your strengths is crucial, as it prevents unnecessary changes in areas that already work well.
Companies often underestimate their strengths by comparing themselves to peers with varying requirements.
Benchmarking Treasury Practices Before Consulting Experts
Before consulting experts, you can benchmark your treasury practices effectively. Attend treasury events, conferences, and association meetings to learn from peers and engage with presenters. Conversations with other professionals often reveal common challenges and solutions.
Start by identifying processes that are time-consuming, costly, or manual. This helps you focus on areas where automation or system improvements can benefit most. Additionally, take advantage of events hosted by system vendors and treasury associations.
These gatherings offer chances to connect with peers and experts who can provide valuable insights and share their experiences. By using these methods, you can clearly understand your current practices and identify areas for improvement.
Benchmarking Processes and Levels
Experts examine documentation and speak with process owners and executors to benchmark processes. They detail the processes, looking for inefficiencies, manual tasks, and gaps.
This involves understanding different process levels:
- Level 1: Broad categories like treasury risk management or asset liability management.
- Level 2: More specific processes, such as cash or financial risk management. These can vary by organization.
- Level 3-5: Detailed steps, including who performs specific tasks and how systems interface.
Examining these levels allows you to identify where improvements are needed and how to implement changes effectively.
Key Outcomes of a Comprehensive Treasury Review
A thorough treasury review does more than identify strengths and weaknesses. The goal is to create a roadmap for improvements that can guide your treasury department over the long term. Here are the typical outcomes:
Identifying Development Areas
The review highlights areas that need attention. These development areas could be operational inefficiencies, outdated systems, or security gaps. Once identified, these issues can be addressed through targeted initiatives.
The review also benchmarks your current performance against industry standards, helping you understand where you excel and where improvement is necessary.
Establishing a Treasury Roadmap
A key outcome of the review is the creation of a treasury roadmap. This strategic plan organizes the identified initiatives chronologically, preventing duplication of efforts.
The roadmap ensures that changes happen efficiently by prioritizing tasks and outlining a clear sequence. It also helps treasury teams shift their focus from day-to-day operations to more strategic objectives.
Managing Change and Resources
Change management plays a critical role in the process. The treasury roadmap considers team members’ availability and capacity, ensuring they are not overwhelmed by multiple projects. Balancing operational tasks with strategic initiatives helps prevent burnout and maintains team efficiency.
Moreover, change management explains why certain initiatives take precedence, giving the team a clear sense of direction and purpose.
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Quick Wins in Treasury Transformation
Quick wins can offer immediate improvements and boost team morale.
Here are a few examples:
- Automation:
Automating routine tasks is often a quick win. Many systems already have built-in automation features that were never activated during initial setup. Implementing these features can significantly reduce manual effort and improve accuracy. - Consolidating Data:
Another quick win is centralizing data that currently exists outside the system, such as in spreadsheets. Bringing these processes into the main system enhances transparency and reduces risks associated with manual data management. - Improving Security:
If your team has grown but user roles haven’t been updated, a quick fix is reassessing and improving security protocols. Ensuring proper segregation of duties can minimize risks and strengthen internal controls.
Assessing Readiness for Major Changes
Before implementing larger initiatives, such as adopting a new Treasury Management System (TMS), assess your team’s readiness. The treasury team should have a solid understanding of their current pain points and requirements. Clear communication with key stakeholders, including the CFO and CEO, is also essential to secure the necessary budget and approval for the project.
Ultimately, readiness for change depends on how well the team can balance operational responsibilities with the time and effort required for the transformation. Properly managed, these changes can bring significant long-term benefits to the organization.
Conclusion
To summarize, a well-executed treasury review ensures your organization stays responsive to internal and external changes. Regularly assessing your treasury systems can identify gaps, improve efficiency, and reduce costs.
Ignoring this review process may lead to outdated systems, inefficiencies, and unnecessary expenses. Regular treasury reviews provide opportunities for quick wins, such as automation and enhanced security.
Most importantly, conducting a thorough treasury review helps your team create a roadmap for ongoing improvements. This roadmap ensures your treasury department can evolve alongside your organization’s goals and industry standards.
FAQs
What is a treasury review?
A treasury review examines your treasury operations, technology, and processes to ensure they align with your organization’s current needs and goals.
How often should a treasury review be conducted?
Conducting a treasury review annually or whenever a significant organizational change, such as a merger or major policy shift, is recommended.
What are the benefits of conducting a treasury review?
A treasury review helps identify inefficiencies, reduces risks, and ensures that treasury operations are aligned with the latest technological and regulatory developments.
How can a treasury review improve cash management?
A review can streamline cash flow forecasting, optimize liquidity, and ensure accurate real-time reporting, leading to better decision-making.
