Rock your treasury management system implementation project in 3 steps.

Rock your treasury management system implementation project in 3 steps.

BELLIN has successfully launched over 350 corporate groups on our tm5 Treasury Management system, leading the industry in project success rates.
This has given us a certain perspective on some of the less thought about aspects of TMS implementation, especially when it comes to cash management. Listed here are three factors we don’t think people pay enough attention to when implementing their TMS, and how these factors can improve your cash positioning, forecasting and risk management.

Don’t automate, do streamline.

This holds true for many things, but it holds especially true for cash positioning. Cash positioning is something where we do a lot of consultation because there are several different sources of information that make up the position. Most TMSs can “automate” this, but it’s not as easy as clicking a button and having it spit out reports. There is a lot of thought that has to go into it, and that’s what makes the quality of your implementation team so crucial.

The first step is to identify the sources of data. Cash positioning data can come from ERP systems, business intelligence systems, long-term forecasting, current day reports from banks, payment runs or even as a note in an e-mail about an upcoming payment.

The next step is to prioritize those sources of data based on when they are available and their historic accuracy. This is important as a fully automated system may overwrite more accurate data with less accurate but more recent information. A process needs to be put in place to ensure that the most accurate data is always used and there is no duplication of data.

For example, if you’ve got a payment factory, payments through it may automatically update your cash position. But, what happens when you get your current day report and those payments show up there as well? You have to figure out a way to reconcile the different sources so that you don’t have any duplication.

In some cases, that’s really easy to do because the different sources are easily identified, but in some cases, it’s really hard. Maybe you’ve only got one five-million-dollar payment that day so it’s easy to say “I see this one here on my current day report is the one that I just ran through the payment factory”. But maybe you’re making the same payment to multiple vendors, then how do you reconcile all those payments with what’s coming in on the current day report. So what we do is build a process for a customer based on how much work they want to do and at what level of detail they want it to be. There’s always going to be a trade-off there – if they wanted to be really detailed then they might have to do a few more steps in the workflow to make sure that everything lines up.

So you’re not automated, but you are streamlined, and let’s face it, that is really what you want. Somebody needs to look at this, there needs to be a human at some level to verify that what the system is doing is correct and that you owe the money that you’re transferring, that the amount is correct and that there are no errors.

Somebody’s got to have a look at what’s being suggested by the system and at BELLIN our philosophy is that you should check before the system does something on your behalf.

Get your subsidiaries involved in cash forecasting early, so you can use their data.

People always ask how to assure the reliability of the cash forecast reports submitted by their subsidiaries. We think this entire train of thought is faulty. If you have cash forecasts that are being “submitted” by the legal entities, then those legal entities have no reason to ensure you get the best numbers. What you really want is for the subsidiaries to start doing real, actual forecasting for themselves.

There are so many benefits to a real forecasting system (i.e. comparing against your actual values without all the copy/paste effort) that they should want to use your system. Then, you want access to those numbers.

Accurate forecasting requires really good historical data – and unfortunately trying to organize that across a group can become a nightmare for certain organizations. Nearly every tool on the market can spit out this theoretical sequence that models a future cash flow. However, if you’re relying on incomplete or faulty data to base this model on, you’re wasting your time.

One of our clients recently told us how hard it is to get his subsidiaries to do forecasting. His problem was that they were asking “how do I even know where to start? On what forecasting?”. For him, one of the biggest and best things he could do would have been to get them their historical numbers.

Now that he has BELLIN tm5, he has global cash visibility through the BELLIN SWIFT Service and he’s getting every entity’s account statements on a daily basis. He can go to them and say “Okay, you don’t know where to start with your forecasting? Well here’s what happened last quarter, you can use these figures as the basis for next quarter’s forecast.” In our system, you give those entities access to do their own forecasts (You can do this free. We don’t charge you for users). They’ll do forecasting because they were just given a great tool to do forecasting with. It’s good for their companies. They’re using the system to do their own forecasts, and in so doing you’re getting these forecasts at a very detailed level. Now it’s a tool for them – it’s not a reporting requirement from head office – so they are going to do the best job possible because it helps them.

Then it’s up to the head office for the central treasury to decide “do we incorporate this as part of our forecast”.

The answer is often “Yes.” When it comes to risk management, start with real data, and use specific analysis to establish where you have weaknesses.

When it comes to risk management, start with real data, and use specific analysis to establish where you have weaknesses.

A lot of customers ask for risk management and there are lots of questions around risk management, especially in the AFP RFP. However, the questions are always focused on a few specific risk management calculations, and not thinking about risk management from a broader perspective. They are looking for broad metrics and aggregate comparative numbers that really tell them very little about how to more effectively manage that risk. Ironically, this lack of broad perspective often comes from a lack of specific data.

For example, let’s say you do a VaR calculation and find you have four million dollars at risk what does that tell you? What should you do now with that four million dollars? This kind of data is hard to work with because it’s so aggregate. Aggregate data is bad. At this point, it’s really just kind of a measure but there’s nothing actionable. You can look at it and that’s about it. On its own, it doesn’t tell you much.

What’s really risky is that your company doesn’t have enough money in the bank to make a payment on a particular day – that’s a major operational risk. People don’t think of it as risk management but that’s probably the most important risk management that you’re going to do in the day.

Now, when you have this treasury system that organically provides you with more (and more accurate) data, suddenly you are in a much better position to make sure that you have accurate funding now and in the future for all of your operations.

Providing a useful tool to your entire corporate group is the best approach you can take when implementing a TMS. This ensures that you will have high-quality data from which to make both short- and long-term strategic decisions.

Implementing the TMS is easy, that gets you out of neutral and into first gear. Once you are moving, you face a whole new set of challenges. Don’t settle for a TMS that only considers the features you need to get to first gear. This is where you can leverage the experience of BELLIN to provide you with a truly transformative treasury experience. BELLIN brings you three decades of treasury expertise, assuring that when you buy tm5, it’s setup to provide you with a transformative treasury experience.

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