Treasury Management Systems Guide 2015/2016 by bobsguide

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Treasury Management Systems Guide 2015/2016

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ABSOLUTE TREASURY MANAGEMENT.

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Welcome to the bobsguide Buyer’s Guide to Treasury Management Systems 2015/2016 In today’s fast-paced digital landscape, there are opportunities and threats everywhere and corporate treasurers require innovative Treasury Management Systems (TMS) that enable them to effectively tackle fraud, manage their cash visibility and meet regulatory requirements. For organisations looking at sourcing and purchasing a new TMS, the Guide includes a comprehensive functionality matrix of TMS offerings available in today’s market. The Guide also includes a variety of editorial features which address areas such as risk minimisation and how to beat the increasingly sophisticated fraudster. We look into the fact that, although technology is progressing at a fast pace, some corporate treasurers are still using Excel spreadsheets and explore whether Excel can survive in the current ‘big data’ environment. Are corporate treasurers making the right project management decisions? We look into the rules that treasurers should be following to again, minimise risk and the checklist corporates should go through when making the decision to keep their TMS in-house or move to the Cloud. Finally, we take an exclusive look into how top corporate treasurers select, implement and utilise their TMS.

Nicole Miskelly, Editor

TMS Tools to Combat Fraud

Today's TMS offer a variety of tools to help treasurers prevent internal fraud and tackle external threats. Ben Poole investigates how a TMS can help corporates beat the fraudster.

The immortality of spreadsheets

Despite the room for ‘fat finger’ data entry mistakes and cross departmental integration problems spreadsheet usage continues to be widespread. Neil Ainger investigates if spreadsheets will ever die or be co-opted into TMS’?

Treasurer insights Madhvi Mavadiya takes an exclusive look into how top corporate treasurers select, implement and use treasury management systems.

Functionality matrix

24 Treasury project management: Skills that deliver treasury functi on success

roject management is a key skill for treasury professionals but what is the P best approach for treasurers to take to ensure that their projects are a success? Peter Williams investigates how treasurers can ensure their department delivers on projects.

Installed vs. Hosted TMS

As technology evolves, the growth of hosted TMS offerings has given treasurers pause for thought when it comes to selecting a new solution. Ben Poole explores the pros and cons that should be considered when comparing hosted solutions with traditional installed TMS.

32 Embracing the digital: Automation and the future of treasury As banks increasingly test digital currency and reports suggest that corporates are being replaced by robots, Madhvi Mavadiya explores what the future holds for treasury management systems.

Interview with: David Kelin

David Kelin, director of specialist consultancy ViewPoint Nine offers his top tips for corporate treasurers selecting a TMS.

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CEO Anne-Marie Rice annemarie@bobsguide.com

Senior Account Manager Stefano Perciballi stefano@bobsguide.com

Contents 10

Editor Nicole Miskelly nicole@bobsguide.com

Sales Director Stephen McMaugh stephen@bobsguide.com

I hope you enjoy the Guide.

Treasury Management Systems Guide 2015/2016

Business Development Manager Edward Drew edward@bobsguide.com Client Relationship Manager Carolina Quintana carolina.quintana@gtnews.com Design & Artwork Donna Healy donna@missjonesdesign.com bobsguide is the trusted online global resource for buyers of financial IT technology. More than 55,000+ users visit bobsguide every month to research and purchase systems for banks, dealing rooms, corporate treasuries and other financial environments. Copyright© 2015 My Guides. Copying and redistributing prohibited without permission of the publisher. This information is provided with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. If legal or other expert assistance is required, the services of a competent professional person should be sought. bobsguide One Hammersmith Broadway Hammersmith W6 9DL UNITED KINGDOM Tel: +44 (0) 208 080 9167 Fax: +44 (0) 207 084 7783 sales@bobsguide.com news@bobsguide.com

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Treasury Management Systems Guide 2015/2016

TMS Tools to Combat Fraud oday's TMS offer a variety of tools to help treasurers prevent internal fraud T and tackle external threats. Ben Poole investigates how a TMS can help corporates beat the fraudster. The threat of fraud to treasury departments is not a new phenomenon but remains a key concern for corporates. For example, SunGard's 2015 Payments Survey found that the most popular reason for treasurers to embark on a payments and connectivity project was to gain improved controls that can tackle fraud. While the techniques that fraudsters employ are increasing in sophistication,

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the good news for treasurers is that tools offered by treasury management systems (TMS) are evolving to meet this challenge. "Controls are increasingly becoming system-based," says Carsten JĂ¤kel, partner, Finance & Treasury Management with KPMG. "The data analytics allow treasurers to review not just one transaction but all transactions over a certain time period, looking for certain anomalies.

Strengthened Audit Controls Organisations implement TMS solutions to enable them to gain visibility over all of their processes. These not only process payments going in and out of the organisation, but also provide a full track record of the payment historical activity and global audit - who initiated the payment and why, whether it is in reference to a salary payment or a tax payment, for example. "Corporates are particularly pushing for end to end visibility and audit capabilities - who

Treasury Management Systems Guide 2015/2016

created and approved a transaction, was it received and acknowledge by the bank" says Jerome Albus, SVP payments & messaging, SunGard. "This does not only apply at the end of the chain on the payment side, but also on the static data side. Corporates want to track and control the whole process from system configuration to payments processing." Strong audit controls can help detect and prevent a variety of different frauds. When hackers go into a system, they take their time to look at how processes work and what they need to do to remain undetected - they may start to change static data, for example. If you run a completely centralised treasury, this could be particularly costly. "There is an irony that you have internal and external auditors saying that decentralised and local banking and payments systems increase the risk of fraud," says KPMG's JĂ¤kel. "Obviously certain risks are reduced when you centralise treasury and payments systems, but this can also make you a much more attractive target to the fraudsters." 6

The increasing trend of the 'fake president's fraud' is another reason to ensure that a TMS has strong audit controls. Here, a fraudster will contact someone in treasury or in the accounts payable (AP) team and try to pass himself or herself off as someone very important within the organisation, such as the CFO or CEO. They can make themselves seem very credible as they collect detailed information on the company and can even have access to the email and calendar systems of the company they have in target. With this level of information, they are able to talk as if they are a senior manager at the company. They will then target someone in the organisation and inform, for example, that the company is making a highly confidential acquisition in China. They will pressurise the target, telling them that they have their complete trust and insisting that they don't tell anyone else about the transaction. This pressure, backed up with the comprehensive knowledge of the business that the fraudster has, can be compelling. Copyright ÂŠ 2015 MyGuides. All Rights Reserved

"In the case of a fake presidentâ&#x20AC;&#x2122;s fraud, an audit trail helps corporates to know who has done what, where any mistakes have occurred and where the fake payment occurred," says SunGard's Albus. "Adding extra workflow and controls, based on fraud prevention logic, to a TMS solution is very popular with corporates today. If anything unusual happens there can be a warning." Controlling Bank Relationships and Payments Corporates are also seeking more control over bank relationships, specifically over bank account management. "If a company only has visibility over half of its organisation's bank accounts, then there is large amount of risk coming from the other half," says SunGard's Albus. "You would not know if there were people trying to make payments on behalf of the organisation from these accounts. As a result, our clients are trying to identify and reduce these non-centralised bank accounts. www.bobsguide.com

Treasury Management Systems Guide 2015/2016

Partner, PwC. "The first is to have the correct controls in place and say that you will only pay to people whose master data is already captured in the system. If an invoice such as the one from the fraudster comes in with new bank account details, there should be a new process to have that approved." The additional process should use a new free format type of payment rather than standard settlement instructions. Treasurers can check the bank account with certain data services that can show whether the account is a valid for the supplier in the country that the payment request has originated from. This cannot be done for individuals due to privacy rules, but in certain countries this can be done for companies. "The other option is to try and get a bank confirmation that the bank account information supplied is legitimately associated with the supplier that has submitted the invoice," says PwC's McMahon. "However, not all banks will provide this information."

Implementing a treasury or dedicated payment solution clearly helps to get control over that." It is critical to have the right controls in place to stop fraud. There needs to be a clear policy for who controls the account, who can open and close accounts, and who can make payments using that account. Using a TMS can give the treasurer the controls they need over this. There is also a lot of interest around bank communication channels. The more points of entry that you have, the higher the risk is from a fraud perspective.

Consolidating bank communications into a single channel can also give treasury critical visibility into payment flows. "If you hold accounts and deal with many banks globally, communicating with each one of them through direct interface (host-to-host) or a proprietary e-banking protocol makes the whole connection vulnerable and difficult to manage," says SunGard's Albus. "Large corporates in particular are now looking to manage everything through a single channel, such as SWIFT or Ebics for example. This is definitely a trend that we are seeing in most European countries with a rapid growth in North America and Asia."

Recently a number of shared service centres (SSCs) have been targeted by fraudsters that use the postal service to intercept an invoice that is sent from a supplier, retain the formatting of the invoice but change the bank account details on it to divert payment to their own account. They will then put this back in the envelope and send it along to the corporate.

Digital Signatures and Authentification In the payments space, corporates increasingly want to use digital signatures to sign off payment instructions before they are leaving the organisation. "Digital signatures being sent along with the payment information to the bank, so that the bank also check who has signed against its internal mandate, providing an endto-end verification," says Luc Belpaire, product director, payments for SunGard AvantGard. "The technology exists to extend the digital signature in this way."

"There are two ways to counter this kind of SSC fraud," says Damien McMahon,

There is a move away from the USB tokens, which have been in use for

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some time, to more server-based solutions. USB tokens can be hard to manage - they require technology to be installed on the client side of things. "Signing in with a USB token on an iPad is not that straightforward," says SunGard's Belpaire. "One-time passwords are beginning to be used more in this space. An app on your smartphone or tablet can generate this. Combining the randomly generated one-time password with a second piece of information that you already know provides dual factor authentification." That is not to say that plug in technology is completely dead. Indeed, in some cases corporates are using it to their advantage in innovative ways. "We have a customer that uses SWIFT's 3SKey, but not actually for its bank identification functionality," says PwC's McMahon. "Instead they use it internally to approve payments, deals and similar items on their TMS. This allows them to track back and ensure the instigator is not a hacker that has been able to secure a password, as they would also need a token." Predicting the Future Many TMS solutions include software than can monitor the predictability of flows within its own system. "Today's TMS can learn and predict future cash movements, which provides even greater control," says PwC's McMahon. "Say that on the last day of the month the Italian business always pays out €10m in tax payments. This information is used for two purposes. If the following month the €10m payment does not go out the system can red flag this. That is useful from a cash flow forecasting perspective, allowing the treasurer to check that the forecast is correct. It also works the other way around as well, for example if the regular €10m jumped to €30m one month, the system will red flag that event. If it is three amounts of €10m going to the same vendor this could red flag for a second time - is this a simple error or is one payment going to the correct account while the two others are going to someone else?" A build up of data around historical cash flow allows the system to become a predictive tool for future cash flow. Anything outside of the norm will then be brought to the treasurer's attention. With new developments like this, the TMS will continue to play a vital role in aiding corporates stay one step ahead of the fraudsters. ■ 7

Treasury Management Systems Guide 2015/2016

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• Cash Visibility functionality Cash Positioning and Hedging Cash visibility Cash forecasting Financial planning Bank Reconciliation Automatic hedging In house banking Counterparty Risk Bank Account Management Account signatory Management Banking documents scanning upload and storage

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TX is supported by a global team of developers, treasurers and a 24/7 client services team that allows us to operate a global TMS. Products and services TX’s team of experts are continuously working to develop the system and bring the best customer experiences from our TMS. Understanding what the corporates want is at the forefront of our development. With this in mind our monthly functionality survey is run in order to innovate our solution in line with customer needs. With monthly webinars on functionality and treasury best practices along with workshops, client summits and customer visits TX is continuously evolving to better serve the changing needs of all our customers and treasury as a whole. Implementation: Whether you prefer a SaaS solution or a locally installed solution with web interface, TX is one and only provider capable to offer such capabilities. The cloud based implementation takes only a few hours before the TMS is fully up and running and is updated continuously for improved functionality at no additional cost. 8

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Treasury Management Systems Guide 2015/2016

The immortality of spreadsheets The connectivity and efficiency benefits of a treasury management system (TMS) are well known but treasurers still cleave to Excel spreadsheets for some cash management tasks due to its ease-of-use. Neil Ainger investigates if spreadsheets will ever die or be co-opted into TMS’? The persistent use of Excel by corporate treasurers has long been a concern because of the room for ‘fat finger’ data entry mistakes (see boxout), a perceived lack of functionality, continuity issues when employees leave and crossdepartmental integration problems. Despite these issues, and the rise of treasury management systems (TMS), treasurers continue to use spreadsheets because of their convenience, speed and relative cheapness, prompting some technology vendors to incorporate Excel into their solutions. After all, if you can’t beat them, join them. “I still use spreadsheets, especially pivot tables and graphics for flexible analysis purposes,” says Nicholas Franck, group treasury projects and products director at the cosmetics group Oriflame. “I also use it for integrating data from different sources. These requirements are too 10

small to put significant investment in a more robust data integration tool, in terms of money and staff time. Spreadsheets are therefore ideal.” “We have a TMS but we still use spreadsheets,” continues Oriflame’s Franck. “Admittedly, less than we did before, because we use the TMS for deal processing and as a general database for treasury-related instruments and information, such as guarantee lists for bond covenant reporting. Using Excel is still essential for many different applications, however,

particularly reporting, budgeting and forecasting.” In regard to vendor’s integration attempts Franck says his TMS can integrate with Excel, but only with an old version. “We therefore have to download an old version Excel file from the TMS; then open it in a newer version to access the analytics and graphics we want.” Even technology companies have admitted that their previous attempts to kill off Excel when treasuries move

“ Finance without Excel is unthinkable …it is flexible and a perfect calculator.” Martin Bellin, Managing Director of Bellin

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Treasury Management Systems Guide 2015/2016

to a TMS were futile. As Martin Bellin, managing director of Bellin says: “Finance without Excel is unthinkable …it is flexible and a perfect calculator.” He does add, however, that there is no process engine, database or means to share data cross-departmentally in an integrated way. “Excel never helps to improve processes, security, compliance and communication, so it should only be used in parallel.” “We could still use physical books for book-keeping but we have moved to SAP, Oracle and others,” continues Bellin, as he makes an analogy with 12

Excel as the equivalent of books in treasury. “The industry is moving to TMS’ to make work more efficient and for other reasons such as its ability to cope with regulatory demands emanating from the US Dodd Frank Act, IFRS and the European Market Infrastructure Regulation (EMIR).” It is a point upon which R.B. (Robert) Erickson, sales director at Kyriba agrees, pointing out: “There is no audit trial [for regulators] in Excel. Changes to data and programming logic cannot be tracked and it doesn’t offer user access control either, or conform to most companies’ Copyright © 2015 MyGuides. All Rights Reserved

business continuity procedures …It’s a good tool but shouldn’t be used as the primary treasury software.” According to Paul Bramwell, senior vice president of treasury solutions, SunGard AvantGard, Excel is an extremely sticky application. “It is very unlikely that Excel will ever fall out of usage,” he says. “Even when TMS’ are put in place rendering complex calculation spreadsheets unnecessary it still provides a flexible reporting and slice and dice analysis tool.” Nevertheless, Bramwell says SunGard has introduced flexible reporting tools to www.bobsguide.com

Treasury Management Systems Guide 2015/2016

augment industry standard tools that are available within its TMS solutions. The aim is, “to help treasury professionals rely more on their TMS rather than error prone spreadsheets”.

“ It’s a good tool but shouldn’t be used as the primary treasury software”

The game now is to incorporate Excel into a comprehensive, secure TMS system and ensure it’s only used in a controlled environment where spreadsheet risk is mitigated. Compatibility with newer versions of Excel has to be maintained, however, for users such as Oriflame, if this trend to incorporate Excel – rather than kill it off – is to be successful.

Robert Erickson, Kyriba

“It is still the case that Excel usage is prevalent among international treasurers, with the majority using it instead of TMS’ or enterprise resource planning (ERP) systems,” says Enrico Camerinelli, a senior analyst with the Aite Group consultancy. He cites a survey his firm ran a couple of years ago questioning 178 treasurers around the world which showed 107 of them still relied on spreadsheets; 51 on TMS’; and 31 on ERPs (see Figure 1). “If I ran this survey again now I don’t think the findings would be too different. When something is so popular, useful and widespread – as Excel is – then it’s for a reason. It’s unlikely to suddenly disappear.” “Technology firms across the sector have largely given up trying to get treasurers to scrap Excel and instead now incorporate it into their solutions as a calculating engine or such like,” confirms Aite Group’s Camerinelli. “It’s a useful tool, particularly for an older professional that may already have many complicated models on the platform, but it should only ever be an add-on tool in a controlled environment. The TMS should remain as the ‘single source of truth’ and over-riding corporate-wide system. That is the best practice approach.”

Figure 1: Q. What system(s) do you use to do cash forecasting?

107

Excel spreadsheets 51

TMSs 31

ERP 9

Bank product 4

Best-of-breed application(s)

Source: Aite Group and SunGard survey of 178 international corporate treasurers, July to August 2012.

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Best-of-breed “You don’t need to see the applications disappearance of Excel to prove Bank product innovation. It’s not an either/or situation,” adds Camerinelli, as he ERP emphasises that Excel, “will remain in use for a long while yet.” TMSs

100

120

Terry Beadle, global corporate treasury Excel spreadsheets business manager at Bloomberg TRM, argues that companies with less than $1bn in revenue have not found the TMS value proposition viable. “Smaller firms continue to use Excel exclusively because traditional vendors, with high 13

Treasury Management Systems Guide 2015/2016

implementation and run costs, have not yet made the case to switch,” he says. Software-as-a-Service (SaaS) offerings in the cloud may change this – and Bloomberg TRM obviously hopes so as it is this middle and smaller market it’s targeting, alongside other vendors – but even where TMS’ are adopted Excel usage will still remain. Oriflame’s treasurer Franck proves this with his continued spreadsheet usage.

“ Excel is an extremely sticky application. It is very unlikely that Excel will ever fall out of usage” Paul Bramwell, Senior Vice President of treasury solutions, SunGard AvantGard

Rumours of Excel’s imminent death have been greatly exaggerated it appears. It’s not going anywhere, anytime soon. A fact corroborated by Oriflame’s Franck, who says three things would need to happen to make him abandon Excel, all of which he finds “hard to imagine” happening: • Graphics and data integration capabilities in a TMS must be equivalent to the latest versions of Excel and be constantly updated. • A treasury function’s requirements for a data mining and presentation tool must be so materially beneficial that a company invests in an expensive professional system. • Excel becomes redundant for other treasury needs, as well as core TMS collaboration uses. “Unless a tool comes along that can handle all of the three items above – and can be used by other departments or third parties that treasury deals with – then I believe it’s unlikely treasurers will abandon Excel,” says Franck. “Technology is changing fast though – maybe this will be available in the future, but I’m not holding my breath.” “In addition, most TMS’ are specialised – as are accounting systems, ERPs and logistics systems. There is therefore always the probability that generalist applications like spreadsheets will be needed to link them,” continues Franck. “It seems likely that generalist applications like Excel will go down in price faster than more complex data integration and mining applications. In my opinion, therefore, they will remain better value for money for small needs, such as treasuries.” TMS’ deliver efficiency and value, especially for bigger corporations, but Excel can link it to other systems – whether inside the ecosystem or not – and this role looks set to remain. ■

Spreadsheet risk: Fat finger mistakes One of the most famous ‘fat finger’ errors involving Excel was revealed in April 2013 when Thomas Hendon, a graduate student at Amherst College in Massachusetts, US, said he couldn’t reproduce the results of a major economic research paper entitled 'Growth in a Time of Debt'. Written by the eminent Harvard academic economists Carmen Reinhart and Kenneth Rogoff, and published in the ‘American Economic Review’ in 2010, the academic report was widely cited as a justification for austerity measures. The error related to the figure given for the average growth of countries with high levels of debt: data from only 15 out of 20 countries had been included in a pivotal calculation, skewing the results. This famous example provides a timely reminder of the dangers of spreadsheet risk. Such Excel mistakes are common inside companies and out, but are rarely publicised. According to research by the European Spreadsheet Risks Interest Group, more than 90% of spreadsheets include errors. The ‘London Whale’ case at JP Morgan, involving trader Bruno Iksil, is another famous example of the risk. His errant CDS trades were reportedly entered wrongly into the Value at Risk (VaR) model calculated in Excel – one of many mistakes – and when the manual errors (whether deliberate or not) were corrected VaR increased 93%. When it comes to Excel; user beware.

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Treasury that Moves You.

Treasury Management Systems Guide 2015/2016

Treasurer Insights Madhvi Mavadiya takes an exclusive look into how top corporate treasurers select, implement and use treasury management systems.

hat encouraged you W to implement a treasury management system (TMS)?

ow did you source and H select the most appropriate system for your business?

Debdatta Banerjee, Senior Manager Treasury Operations & Controls at eBay

We are focused on FX, so we chose a TRM solution on Reval’s cloud platform, for its hedge effectiveness capabilities and how well it integrates with FXall and SAP. The whole upstream and downstream continuity was very important, and Reval covers the whole life cycle of the FX trade really well.

It was an RFP process, so the project specs were collected from each of the groups: the controllership, the operations group and the front office group. Each one of them had a detailed questionnaire, and the system that met the most of everyone’s requirements was what was chosen. It was a very detailed requirements process. Also SSAE 16 was very important as well.

Francois Masquelier, Senior Vice President, Head of Treasury and Enterprise Risk Management at RTL Group and Honorary Chairman of the European Association of Corporate Treasurers

Due to the size and complexity of our operations across the world, we decided to implement a TMS years ago. Choosing City Financial (Wall Street Systems) was based on the capability of the solution to respond to our needs and extending scope of activities and products. The hedge accounting complexity was a key element of our RFP. The reporting related to IAS 39 and all ad hoc reports or revaluation and tests were a discriminating factor when selecting the (best) tool or at least for the better fit to our IFRS needs.

Generally, we launch a full RFP to a limited list of suppliers. Our internal policies impose a fair and comprehensive selection process. I would say the more detailed the RFP, the better. For City Financial, our RFP included a description of needs that was 135 pages long. A buyer’s RFP is never too long, but is always too detailed from the seller. However, the quality and comprehensiveness of the document received will make a difference, as well as the beauty contest or parade afterwards with the shortlisted candidates.

Kristen Michaud, Managing Director, Treasury Operations at General Electric Corporate Treasury

We required the automation, central subledger capabilities and centralised access to data.

We followed an RFI and RFP process with extensive business requirements, use cases and then required the vendors to demonstrate test cases and results as part of the selection process. We also did a build vs. buy analysis.

Damian Glendinning, Treasurer at Lenovo

We went through an RFP, and evaluated different providers. We were only interested in specific functions, namely FX trade confirmations and recording, and mark to market valuations of outstanding trades. We had already decided we did not need a TMS for cash management – but we have a large volume of FX trades, and it was important to have a good system for controlling them.

There was a technical evaluation of the mark to market calculations and an essential requirement was that the provider had to be able to provide the system on a hosted basis. We were not going to install the system in house. Price was also a factor. We needed the TMS to be able to accept the data feeds from our market rates provider and do the MTM calculations automatically at a given time every day. Also, for valuing options, there are different calculation methodologies which give slightly different results. It was important to be comfortable with the methodology chosen – in the end we use two and compare the results. The decision to require the provider to host the application simply comes from a desire to avoid all the control and backup requirements which is the result if you host a significant application in house.

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Treasury Management Systems Guide 2015/2016

hat TMS do you use W and why?

id your TMS meet initial D expectations?

hat would be your Top Tip W for fellow treasurers looking to implement a new TMS?

We use Reval as it is excellent for hedge accounting, and its flexibility to create the different snapshots and get the different views of reports has been extremely helpful. The FXall GUI in Reval is also extremely beneficial to traders because they don’t have to log into two different systems to trade. Being able to move a lot of data into a system reduces chances for errors and FX for any sizable treasury is usually a huge portfolio, so being able to do that on a system that can customise reports differently is more flexible than having to do it on Excel.

Reval did meet our expectations and we asked the team to present a demo for us to show how the system would work from starting the trade, what journal entries would be generated, how customisable the reports were, the ability to create different views of the reports, being able to net across CNS trades and create more customised reports. I would say that the system is pretty agile and the fact that it allowed us to drill down into more data, unlike the more static system that we had in the past, was really appreciated. This was a huge plus for accounting as well as audit and reporting requirements.

Figure out the biggest priority for the treasurer – is it time savings, cost efficiency, the amount of configurability allowed by a system? Once they know what the priority is from an organisational perspective, they should use that to choose the system. Because Reval is more flexible than other systems, it is definitely a time saver. Also, I would suggest that they involve as many groups as possible when putting together a questionnaire for system. This is very important, because once it is implemented, you don’t want to have people questioning where different functions and features are.

We use City Financial from Wall Street Systems. We considered this system as the best suited to respond to our needs. The tools and functionalities, strong commitment from the IT vendor, involvement of the CEO himself, the promise of “yes, we will deliver all that is required” and an unlimited list of referenced customers were some of the major factors, among others, that justified our choice.

It did: although, as always, the IT project took longer than initially expected. It gave us satisfaction, apart from a few little details that we were forced to find ways to avoid, or shortcuts and workarounds to move forward. Whatever the solution, users are always a bit disappointed by reports and layouts. As humans, we all place too much expectation on the outcome. Our TMS was good but over time, it needs to evolve and scope changes. This means that we need to count on the TMS provider to develop and have the capacity to deliver upgrades.

Firstly, I would recommend discussing with others to list all potential suppliers. Secondly, I would recommend preparing a very comprehensive RFP based on existing systems to precisely describe what you expect from the IT supplier. The implementation will take longer than expected; therefore, you should dedicate at least one full time employee that has front-office experience to the project. The perfect TMS doesn’t exist, so your choice of TMS is the right one. Nevertheless, the best system which is suited to your needs does exist somewhere. Treasurers always seem to be unsatisfied with their TMS, whichever one is implemented as the best one will always be the next one.

We generally would select systems that allow some form of configuration to allow for the complexity of our business structure. GE has historically used many TMS systems. We used to have a best of breed strategy, so we have used WSS (3 instances), gTreasury’s payment tool, Reval, SunGard for Risk, XRT in LA and Misys Summit. We will be moving to a more streamlined footprint as we become an industrial focused company.

Yes and no. We find most TMS systems to all be comparable. They have specialty functionality in some areas but overall cover the baseline. The challenge with the TMS is the business specific process and how to implement that in the system without customisation. Many of the TMS systems are very configurable which adds to the complexity and organisational overhead of having these systems.

We would attempt to streamline our processes to adapt to the tool, so eliminate any customisation. We would love to find a TMS that has strong cash management/ IHB/payment factory functionality. We are currently leveraging a few vendors and many bank systems in this space.

We use Integrity by SunGard. It performed the mark to market valuations the best and is a hosted service. It provides us with a controlled environment for our FX middle and back offices. It generates the accounting entries, including hedging transactions. It also sends a series of management and control reports directly to a series of people within the company, to provide the maximum amount of transparency and daily control.

We bought the TMS to do a specific function, namely provide reporting and control on our FX trades. It is doing this effectively. We do not need a TMS for cash management, as we use a single bank – and their internet banking system provides us with all the information we would normally get out of a TMS.

A lot of TMS systems on the market have more functionality and complexity than most corporate treasuries need – at least that was the case when we were looking at them. Many IT systems, including TMS systems, simply automate existing systems and processes. The owners declare them a success, because they reduce processing time, or the number of headcount required to run them. What people often fail to do is to ask whether the complexity is needed in the first place. Not every treasurer would want to put all the accounts with a single bank as we do, but not many ask themselves whether all the complexity caused by multiple banking relationships is really worth incurring in order to obtain the supposed increased pricing efficiency and spread risk which comes with splitting the business up.

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Treasury Management Systems Guide 2015/2016

TMS Functionality Matrix Instrument Coverage Foreign Exchage (FX)

Forwards

Swaps

Equity

Fixed Coupon Bonds

Floating Rate tes

T-Bills

Zero Coupons

Serial Bonds

Commercial Papers

Private Equity

Money Market Funds

Cross-currency Swaps

Equity and Bond Options

e2gen

■

Axletree Solutions Inc.

Treasurytree

BELLIN

tm5

Bloomberg LP

TRM (Treasury and Risk Management)

■

Calypso Technology

Trading & Capital Markets System

Capita Asset Services

Capita TMS

■

CAPITAL CURRENCIES

Capital Currencies

CCK Financial Solutions Limited

Guava Treasury Management Solution

CGI

TWIN

Chatham Financial

ChathamDirect

Chella Software Private Limited

HORIZEN

Chesapeake Systems Solutions

SmartTreasury

CloudMargin LTD

CloudMargin

CNS Treasury

■

CRM Treasury Systems AB

CRM Finance Web

CS Lucas Associates Pte Ltd

CS Lucas

Die Software Peter Fitzon GmbH

Online Banking System

Eurobase

Siena

■

Financial Sciences Corporation

ATOM

GTreasury SS,LLC

GTREASURY

■

Hanse Orga AG

FinanceSuite

■

HazelTree

HazelTree Treasury

■

Hedgebook

HedgebookPro

Imagine Software

Imagine Trading System

■

Infosys Limited

Finacle Treasury

■

Kyriba Corp.

Kyriba Enterprize

■

Acumen

Lumina Americas

Lumina

■

Manex Treasury Systems

Parity

MIMICS Financial Software

MIMICS Portfolio Management

Misys

FusionCapital

MORS Software

MORS Treasury Manager

Murex

MX.3

OpenLink

Findur

Optimissa Capital Markets Consulting

2Cover Collateral Management

Orbit Treasury Solutions, Inc.

Orbit

■

Path Solutions

iMAL Enterprise Islamic Banking and Investment System

Premium Technology

FinShare

■

Interest Rate Swaps

Spot

Aqua Global Solutions

Interest Rate Options

Repos

TITAN Treasury

FX Options

System Name

3V FINANCE

Financial Futures

Company Name

Short Term Loans

DERIVATIVES

Call Deposits

INVESTMENTS

Fixed Deposits

MONEY MARKET

■

■ l

■

l l

■

www.bobsguide.com

Treasury Management Systems Guide 2015/2016

■ Some

■

l l

■

■ l

■ ■

■

l l

■

■ ■

■

l l

Separation of Duties

■

Financial Controls

Liquidity Management

Cash Visibility

Deal Limit Monitoring and Enforcement

Counterparty Exposure Testing

Sensitivity Analysis

Hedge Effectiveness Testing

Mark-to-Market Valuations

FX Exposure Management

■

Interface with Market Data Vendors

■

Interface with Enterprise GL

■

SWIFT interface and banks for Payments and Confirmations

■

Period End Accurals (2)

■

Multi Currency/Accounting

Overdraft Facilities

■

RISK MANAGEMENT

In-House Banking

Bills of Exchange

Settlements and Payments

Bank Guarantees

■

Confirmations

LC's

CFP,CFF&CFM (1)

Commercial Paper

Bond Issuance

Term Loans

Central Treasury Dealing

FUNCTIONAL COVERAGE

Pre and Post-Deal Compliance

E-DEALING

Payment Netting

TRADE FINANCE

FINANCING

Subsidary deal requests

l Yes

Links to main e-dealing systems

KEY

■

www.bobsguide.com

■

Treasury Management Systems Guide 2015/2016

TMS Functionality Matrix Instrument Coverage Foreign Exchage (FX)

Company Name

System Name

Short Term Loans

Repos

Spot

Forwards

Swaps

Equity

Fixed Coupon Bonds

Floating Rate tes

T-Bills

Zero Coupons

Serial Bonds

Commercial Papers

Private Equity

Money Market Funds

Cross-currency Swaps

Equity and Bond Options

Financial Futures

FX Options

Interest Rate Options

Interest Rate Swaps

DERIVATIVES

Call Deposits

INVESTMENTS

Fixed Deposits

MONEY MARKET

QED Financial Systems

The QED Platform

QTX Systems

The Hive

■

Reval

Reval Cloud Platform

■

Salmon Software Limited

Salmon Treasurer

Shashvat Systems

Integrated Treasury & Risk Systems

SoftWell

Navigator

SS&C Technologies, Inc.

Global Treasury Manager (GTM) Suite

■

Stahr GmbH

STS - Stahr Treasury Software

■

SunGard

Multiple TMS

Surya Software Systems

CorpTreasury

TAS GROUP

Aquarius

TIPCO Treasury & Technology

Treasury Information Platform

Trading Technologies

TT and X_TRADER

■

Treasury Software

ACH Universal

TreasuryXpress Inc.

TX - C2Box

■

TRINITY

The TRINITY TMS

Unisystems

Global Treasury

Visual Risk

■

Vitec

SUPERPORT, PORTMAN

Whistlebrook

Whistlebrook TMS

Whitewater Analytics LLC

FX Exposure Management

zeb

zeb.control.risk

■

l l

www.bobsguide.com

Treasury Management Systems Guide 2015/2016

■ Some

TRADE FINANCE

Deal Limit Monitoring and Enforcement

Cash Visibility

■

l l

■

l l

l ■

l l

■

l l

■

■ l

Separation of Duties

Counterparty Exposure Testing

Financial Controls

Sensitivity Analysis

Liquidity Management

Hedge Effectiveness Testing

Mark-to-Market Valuations

FX Exposure Management

Interface with Market Data Vendors

Interface with Enterprise GL

SWIFT interface and banks for Payments and Confirmations

Period End Accurals (2)

Confirmations

Multi Currency/Accounting

Central Treasury Dealing

In-House Banking

Pre and Post-Deal Compliance

Settlements and Payments

Subsidary deal requests

Payment Netting

CFP, CFF & CFM (1)

Bills of Exchange

Bank Guarantees

LC's

■

Commercial Paper

Bond Issuance

RISK MANAGEMENT

FUNCTIONAL COVERAGE

E-DEALING

Term Loans

FINANCING

Links to main e-dealing systems

l Yes

Overdraft Facilities

KEY

■

■ l

■

www.bobsguide.com

■

l l

■

Treasury Management Systems Guide 2015/2016

Treasury Project Management: Skills that deliver treasury function success Project management is a key skill for treasury professionals but what is the best approach for treasurers to take to ensure that their projects are a success? Peter Williams investigates how treasurers can ensure their department delivers on projects and continues with the day to day work.

Project management is a key skill for treasury professionals. While treasury management systems (TMS) or SWIFT connectivity are major technology projects, the need for good project skills extends to other areas of treasurers’ work. Project management skills and experience are not easy to obtain and resources are inevitably constrained. As a result treasurers need to think carefully about how to progress projects in order to achieve a good outcome for the corporation, the treasury department and their own career.

seen projects from different viewpoints. Project management is a specialist skill which corporates often fail to recognise. To illustrate her point she recalls Kevin McCloud, the presenter of the TV programme Grand Designs, who is regularly frustrated by those doing a build who say they are going to save money by doing the project management themselves, then make mistakes and lose money because they gave up the money from the day job.

Finding the resource Resources are always a key issue, as Chris Corner, Head of Funding and Financial Risk Management at Thomas Cook Group, notes: “The thing that I have witnessed most in treasury is that project objectives are added to already lean treasury teams.”

Griffin says: “Especially around TMS, you see treasury departments which don’t know how to anticipate a problem because they have never done it before. They probably spend more money and more time than if they had hired a professional. I have seen people get into dire straits because they did not know how to run a TMS project.” According to Griffin, Europe is particularly resistant to the idea of project managers while the US is more receptive to the concept.

Jo Griffin is a Freelance Project Lead and has significant project experience, including seeing treasury departments in different companies make the same mistakes. She works to help clients implement TMS and she has also worked for corporates and banks so has

Other errors that treasury departments can make include not listening to external advice and appointing the project manager on flawed reasoning. Every TMS installation should be based on a set questionnaire which the treasury department answers. Griffin

says at the end of the questionnaire process an experienced consultant can tell what system is needed. But the treasury department often doesn’t take the advice because it thinks the vendor could be selling something that is not needed. Griffin’s point about taking advice is echoed by Mike Richards, managing director of MR Recruitment, who has many years’ experience of recruiting treasury professionals into various project roles. Richards suggests that treasurers need to up their game in terms of clearly defining the requirement, the characteristics and the outcome of projects. He says he has sat with treasurers that have been unable to articulate what the end goal would look like and when it would be reached. Too often, says Richards, treasurers just say they want a new system or process implemented in X months which could be totally unrealistic. However, in contrast to Griffin, he does suggest that treasurers should be more aware that even bringing in extra resources – such as contractors – will not solve all the problems. Richards says: “There is only so much contractors can do. The rule of thumb seems to be however long you think a project will take, doubling

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Treasury Management Systems Guide 2015/2016

ADVERTORIAL

SWIFT FOR CORPORATES: CHANGING GLOBAL BANKING

Is the dream of centralisation finally a reality? We are at a tipping point for corporate to bank communication. SWIFT has already transformed intra-bank communication, and SWIFT for corporates promises to do the same for bank to corporate communication. However, the real big step comes with the combination of SWIFT and a treasury management system with a comprehensive payment factory – allowing truly centralised payment structures and global bank visibility.

When talking SWIFT everyone thinks about payments… …and for good reason: SWIFT is transforming payment infrastructure. Even after decades of conversation about treasury centralisation, most companies’ payments have remained a local affair: executed by an office in the same nation as the bank, through an individual bank’s website, with the individual bank’s token and the individual corporate PINs. As bank communication often requires more than one person, this leaves treasurers and other finance roles bumbling with multiple websites, tokens, PINs over and over – only to pass the process off to whoever has signing authority on those accounts, and have them go through the exact same process. SWIFT has been exciting for us because of how it changes this, especially when combined with a treasury management system. With global connectivity, you no longer have a need for local managers, which allows the creation of shared service centers and centralised payment operations that were previously a logistic impossibility. Bank activity only relies

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on extra-office staff if they are required by corporate policy for sign off, and – provided they use the right treasury management system – they can do it all from one interface. For example, a client using the BELLIN SWIFT Service told us the other day, how they were able to revolutionise their payment infrastructure: • Using tm5 and the BELLIN SWIFT Service, they were able to connect directly to SWIFT. • Thanks to tm5’s ERP integration, they were able to connect their treasury to their entire group. • Bank activity occurs by companies across corporate group in ERP, and invisibly syncs with tm5. • The payments team enters payments in tm5 and signing authorities confirm all payments within tm5, no tokens, PINs or banking websites. This means the team could operate from anywhere in the world. • Without the need for local payment staff, the team could be centralised into a single location, increasing efficiency and saving on costs. Given this, it’s no wonder payments are one of the primary reasons why people look into SWIFT. But there’s more to SWIFT than that.

What gets left out of the limelight is the role of SWIFT in bringing true global cash visibility to its users Arguably the most game changing part of SWIFT for corporates is how, when

integrated alongside other treasury data within a treasury management system, it provides unrivaled global cash visibility. Many treasuries have been driven to centralise organisation and processes for years, but while many treasuries have managed to centralise some tasks, information about their core business has remained decentralised. With treasury management systems integrating SWIFT for corporates, the last piece of that puzzle is here. If your banks support SWIFT, then you can get daily (sometimes more than daily, global bank statements delivered to your BIC. If the treasury management system integrates with SWIFT, this data is now available right next to your other financial data, giving you day to day global cash visibility. We are at a tipping point for corporate to bank communication, with the combination of SWIFT for corporates and treasury management systems. This opens up a world of possibilities for corporates, from payment infrastructure centralisation to global cash visibility, all integrated across your corporate group.

Contact Information BELLIN North America: (604) 677-2593 Europe: +49 7822 4460-0 UK: +44 20 3077 1144 welcome@bellin.com www.bellin.com

Treasury Management Systems Guide 2015/2016

Project Management: Key requirements

are the practical obstacles; what are the project-specific risks (not general ones) and who do I have to deal with?”

Stakeholder and team management

Risk and Time Management

Project Management Strategy

With resources set to remain tight and with corporates continually looking for productivity gains and competitive advantage then it seems clear that treasurers will need to be more confident about successfully deploying project management skills.

Issues and Resource Management

Project management: the key rules for treasurers • Think hard about how the project will be managed

Define requirements and outcome Source: Peter Williams

it gives a more realistic estimate.” (See diagram) The other common mistake that treasurers make on projects at the start is on the choice of internal project manager. Many treasury departments give a TMS project to someone within the team who has been performing well, as something special to do. They may be the right person, says Griffin, but on the other hand… Managing expectations Herve Delebarre, Group Treasurer at mid-cap company Volex, argues that there is always some sort of project going on in treasury; whether it is TMS or hedging yuan or refinancing. He warns that: “Whatever the project you have to bear in mind that there is administration. You have to think about the ideas from the start to the end. With major projects there has to be agreement from the board; you have to go and present and deal with any objections and make sure [whatever the project] that it meets the existing treasury policies.” Corner agrees that winning support from above is important, and so is gaining support from below. “The

challenge there is balancing the project deliverables and the business as usual. At the senior level, are you setting the expectations to the board as to what may have to go from business as usual, to free up time to deliver the project? And are you managing the team’s expectations such that colleagues remain motivated and focussed as more work comes their way? The danger is you undermine business as usual and the project itself. To the extent you can you should be moving people into dedicated project roles and where that is not possible you make it very clear what the expectation is on how to strike the right balance.” Gary Slawther, Treasurer at OCTAL, the largest PET resin manufacturer in the Middle East, was in the middle of a complicated, large corporate restructuring project when bobsguide spoke to him in Summer 2015, when he was driving forward an idea he’d had. He is confident that treasurers are ideally placed to successfully run projects. “As treasurers are professional risk managers we should be good at project work because project work is all about identifying all the risks. Even before you start you need to ask the questions: what can go wrong, what

• Be clear about what you want the project to achieve: with the board, the treasury team and the rest of the business • Be realistic about end dates: does it really have to be done by an arbitrary date? • Be realistic about timelines: projects will take longer than you think, especially if you can’t afford dedicated resources • Work hard to gain co-operation from the rest of the business • Listen to advice and be prepared to take it • Expect problems • Plan, plan, plan

It is not all about you While treasurers think primarily about their own projects they will often also ask to become involved in company-wide projects. For example, if the business is growing, moving overseas or going through some sort of restructuring – anything that is going to have a material impact on the cashflows or financial risk – then the treasurer has to be part of that project team. They could also be part of some Enterprise Resource Planning (ERP) implementation where the treasury module is just part of a much wider and complicated implementation and upgrade. Whatever the project, treasurers should be good corporate citizens and play their part.

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Treasury Management Systems Guide 2015/2016

Installed vs. Hosted TMS As technology evolves, the growth of hosted TMS offerings has given treasurers pause for thought when it comes to selecting a new solution. Ben Poole explores the pros and cons that should be considered when comparing hosted solutions with traditional installed TMS. The functionality of a treasury management system (TMS) can differ depending on whether it is installed or hosted. As a general rule, installed solutions can offer more customised options to the individual corporate users. Hosted TMS, particularly those that are pure software-as-a-service (SaaS), tend to offer a 'one size fits all' solution. When selecting a new TMS and deciding whether to opt for an installed or hosted solution, there are a number of variables that treasurers need to consider. With a SaaS solution, the functionality of the system will change incrementally over time and outside of the treasurer's control. This is clearly something to consider when selecting a new treasury management system (TMS). "There can be a mandatory upgrade at the weekend that means the functionality of the system has changed by the time you next log-in on Monday morning," says Roger Burkhardt, CTO at OpenLink. "For treasurers, if there are particular areas of functionality that relate to policies on certain accounting approaches, it is worth asking the question of whether you are going to get enough notification of change and whether the vendor might want to change something that is fundamentally important to their organisation. I think the chances of this are fairly low, but it is important to understand that typically you are signing up to a forced march that will change when the vendor wants it to change." The other side of the coin is that all treasury departments will be running the most up-to-date version of the system on SaaS, whereas with an installed solution it can be easy to end up several versions behind. Here the treasurer would need to prepare a business case to attain the budget to purchase each additional upgrade, which may or may not be available to them. They will then have to manage the upgrade project.

The subscription-based costing model for most SaaS solutions means that there is no spike in cost at the time of a new release. Treasurers will also receive a notification that something is going to change and they should have a look at it to see its implications. "The interesting part is that SaaS solutions are usually much more limited when it comes to configuration when they are compared with most installed or hosted solutions," says Carsten Jäkel, partner, Finance & Treasury Management at KPMG. "There is a certain degree that the system can be adjusted, but it is often limited, so everything that you would usually see - particularly in the high end market - of customer-specific developments is not usually available in pure SaaS TMS options. The restrictive nature of SaaS TMS does not necessarily have to be a bad thing, but it changes certain ways that treasurers view their own operations." Visibility Over Upgrades Hosted SaaS TMS solutions will also usually involve less direct work on the upgrade for the treasurer. However, it is important to have enough visibility into any significant upgrades. There may be reports that the treasurer generates from the TMS that will then go on to be used in other ways, so any changes to these must not affect the report's compatibility. "The worst case scenario is when a figure used to mean one thing, but now there is a slightly different assumption in the way that it is interpreted," says OpenLink's Burkhardt. "It may appear that nothing has changed, but in fact there has been a change of meaning. Treasurers should not be on autopilot with a SaaS-based treasury solution. Rather, they need to understand when upgrades to the solution will be happening, what the changes are and how they may affect their business." The person with responsibility over the TMS in the treasury also needs to

ensure that any benefits brought about by SaaS updates are recognised and taken advantage of by the business. If the system keeps getting better but nobody recognises that, the company ends up with cloud shelf life. Costs Cost could be a critical issue when a corporate is deciding whether to go with an installed or hosted TMS. A question to ask here is whether the organisation is willing to accept less flexibility if it comes at a much lower cost. On the plus side, the cheaper SaaS TMS solutions make automation of treasury available to smaller organisations. "There is no reason any more not to have a TMS," says KPMG's Jäkel. "Even the smallest entity with a treasury, with around €300-400m in sales for example, should have a TMS in place with the small SaaS-based offerings that are out there." While getting on the TMS ladder may not be overly expensive today, switching costs between different hosted TMS solutions can be high. "When setting expectations about a TMS project with the CEO, the treasurer should decide whether they are committing to the new system indefinitely, or whether to plan on a three-year life that includes a switching cost in the budget for if the best course of action is to change vendors further down the line," says OpenLink's Burkhardt. "Businesses change, vendors change direction, and vendors get bought. It is important to have flexibility built into a TMS project from the start. There are costs of entry and exit with a SaaS-based solution." It is also important that corporates understand the contractual terms they have with the vendor of their SaaS TMS. "One of our corporate clients decided that it wanted to leave its current SaaS vendor," says Damien McMahon, partner with PwC. "The vendor then pointed out a clause in the contract that said it could switch off the system

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Treasury Management Systems Guide 2015/2016

with 30 days notice. It is pretty much impossible to select a new TMS in 30 days, never mind to implement one. This was a shock to the corporate as they had not checked the small print in their contract." Data Considerations Another question to ask when deciding between an installed or a hosted TMS is how open the cloud vendor is to allowing corporates to connect from the TMS to other applications. With an onsite application, the corporate has a great deal of control when it wants to take data out of the TMS and feed it into another. In the cloud, vendors can choose to be more or less helpful. "Some hosted vendors could say that they don't support connection to a different vendor, but that they have a similar module within their suite which is the preferred connection," says OpenLink's Burkhardt. "The control over connectivity and data flow to

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other systems is certainly something that treasurers should question when looking for a new TMS."

technological dinosaur. However, it is not ready for its extinction event just yet.

With SaaS vendors, treasurers also have to ask who owns the data. The vendor supplies the software, but all of the data is captured by a database that is managed in the cloud. "While the corporate legally owns the data, they are still very much reliant on the vendor allowing them to access the data, download it and use it elsewhere," says PwC's McMahon. "Another consideration is, if the SaaS vendor goes bankrupt for whatever reason, the system could literally disappear off the treasurer's screen from one day to the next. How would you go in and get it back up and running again?"

"I don't think that the days of installed systems are numbered," says OpenLink's Burkhardt. "There are enough large corporates who don't reap the benefits of the economies of scale that SaaS offers to mid-cap corporates, but do value the control, to provide a big enough continuing market for installed TMS over the next five to 10 years."

Installed TMS on the Wane? With the growth of hosted and pure SaaS TMS solutions, the installed TMS is increasingly looking like an expensive

Despite this, when there are major release upgrades in the high end system space, large corporates may start thinking of taking this as an opportunity to change their whole system landscape. "When large corporates start looking at a completely new installation, they will at least think about making the shift to a hosted solution, although this is still in a very early stage," says KPMG's Jäkel. "It will probably be a couple of years until we can call this a trend, however." ■

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Treasury Management Systems Guide 2015/2016

ADVERTORIAL

Link your TMS to Thomson Reuters’ data & financial market connectivity

Why big data is a big deal As treasurers move towards rolling forecasting and budgetary approaches, which prioritise risk, the traditional annual budget process is being marginalised, says Stephen Malinak, Global Head of Content Analytics, Thomson Reuters. In this 24x7 treasury environment predictive analytics, connectivity and ‘big data’ computing power are vital. Are you equipped? It’s awful. Why did no-one see it coming? This was reportedly the response of the British Monarch to the credit crunch and it perfectly illustrates the need for effective predictive modelling. Treasurers who saw the crash coming could have been in a risk-averse hedging position that minimised counterparty and bank risk, with locked-in funding and rates. Equally, those advanced treasuries that can nowadays spot consumer, market or political/regulatory trends ahead of rivals can benefit their firms. Those who invest or hedge first tend to win, but spotting risk and opportunities before others requires ‘big data’ analytical tools and ‘big computing’ power. Luckily Moore’s Law states that computing power doubles every two years so cheap processing power is available on-the-shelf or via Software-asa-Service (SaaS) third-party contracts in the cloud. Many treasury management systems (TMS) are implemented in this way. Treasurers can therefore access the chip power they need, but good quality data and the connectivity to act upon it is another matter. Thomson Reuters can provide this by linking your TMS with its capital markets execution platforms, data reporting and analysis tools, in a vendor neutral manner, which can include Excel and other third-party tools. You can bring your risk, cash management and accounting all under one roof, delivering an integrated treasury workflow. More frequent reporting & data demand Chief financial officers (CFOs) and boardrooms increasingly expect treasurers and financial controllers to report monthly or even more frequently. This rolling budget approach requires big data number crunching and analysis tools, as much as a www.bobsguide.com

risk-aware treasury does. New regulations on the capital markets also require better reporting of hedges and trades. The drivers for a connected ‘big data’ enabled treasury are numerous. There is even a new job title for this 24x7 connected approach with heads of financial planning and analysis (FP&A) – what once would’ve been called controllers or directors of planning and forecasting in Europe – now cropping up all over the place. There is a head of FP&A at Alliance Boots, for instance; at the pharma firm Norgine; at easyJet; at the insurers Legal & General; and at many other firms. The FP&A title is no longer just an Americanism as the analytical imperative goes global. The function itself has always been there. But the A for analysis in the job title is becoming paramount in a big data environment where predictive planning and forecasting is prized and automated cash management and payment systems are taken for granted, freeing up time to focus on risk. Defining big data Unstructured data is how ‘big data’ was traditionally defined, referring to the explosion of social media content and internal untagged business data that was unleashed when the digitalisation of firms, people’s lives, trades and the associated e-commerce revolution gathered pace. The term has since come to also mean the ability to analyse data streams, from whatever source they are mined, structured or unstructured, using the cheap processing power that is now available to everyone. For instance, as well as analysing Thomson Reuters historical tick data from financial markets in order to feed predictive models, treasurers may also want to know how a marketing campaign might impact orders, the supply chain and profits? By assessing customer sentiment on Twitter, Facebook and online this is possible – equally our Eikon terminal users can assess market sentiment using the the social media monitor, which tracks Twitter sentiment and analyses data to track specific tweets, people and companies and has just been recognised by the FStech Awards. Predictive information can be fed into a TMS and an Excel spreadsheet reporting tool, Copyright © 2015 MyGuides. All Rights Reserved

Stephen Malinak, Global Head of Content Analytics, Financial & Risk, Thomson Reuters Dr. Stephen Malinak is Global Head of Content Analytics for Thomson Reuters. His team builds a wide variety of innovative analytics based on the vast range of Thomson Reuters content sets. Examples include innovative Smart Money alpha factors based on Insider Filings, Short Interest, and Institutional Fund Holdings. His team has also created credit risk scores for public companies based on structural models, forward-looking financial ratios, and text mining. Current research includes investigations of Big Data content including unstructured text and transactions data. Stephen was Director of Quantitative Research for StarMine prior to its acquisition by Thomson Reuters in 2008.

impacting the purchasing department, risk function and ultimately Boardroom updates in double-quick time. It can all be carried out in one technology stack, under Thomson Reuters integrated treasury workflow. Thomson Reuters can handle the coming ‘big data’ environment by providing you with: • The processing power to crunch numbers and access historical financial data for modelling purposes. You can also access our StarMine Quantitative Analytics package. This suite of proprietary alpha-generating equity analytics, stock selection models, credit risk analytics, and macroeconomic forecasts cannot be found anywhere else. • Social media mining tools on Eikon can reveal customer and market sentiment, alerting users to market moves. • Report figures to the Boardroom and crossdepartmentally to colleagues via our Excel integration tools. • Link to your preferred TMS provider via your Reuters terminal, enabling supply chain payments and accounting procedures to be integrated with risk processes. • Use Thomson Reuters data and market connectivity in order to track global financial markets and successfully hedge and report risk.

For more information on our full suite of solutions for corporate treasurers, please visit financial.thomsonreuters.com/ corporate-treasury. 31

Treasury Management Systems Guide 2015/2016

Embracing the digital: automation and the future of treasury Recent news suggests that digital is taking over, corporates are being replaced by robots and digital currency is being tested increasingly more by banks. Madhvi Mavadiya questions whether treasury will inevitably head in this direction and explores what the future holds for treasury management systems. Seven years on from the financial crisis, the treasury landscape for banks and corporates continues to evolve at a rapid rate and treasury management systems have arguably helped the financial industry springboard into the ever changing digital age. The attitude towards the TMS differs from individual to individual, as it impacts members of the treasury department in various ways, but there is an evident growing demand for this system. As the TMS and products alike can help financial professionals by, for example, simplifying cash management or placing transactions more securely, there have been recent discussions surrounding the possibility of financial jobs being taken over by automated systems, or robots. Alongside this, the long debated role of digital currency in the treasury sector is still a burgeoning topic and it questions whether cryptocurrencies would be a valuable resource to use beside a treasury management system. As the after effects of the foreign exchange scandal are still being managed in 2015, it is important for treasurers to realise that what they can offer to executives at larger firms will be valued as strategic insight, as Bob Stark, vice president of strategy at TMS provider Kyriba explains. “The road ahead will demand better predictions, faster analysis of “what if” scenarios, and more opportunity for treasury to become a true value both a strategic leader and also as an income generator for the business,” Stark says. Stark’s message is worthwhile advice and what is highlighted here is that if more treasurers were to follow this, it would defuse the possibility of another financial crisis. However, the real question that needs to be asked here is whether the implementation of a TMS would work as a good preventative

technique for future crises. Despite a TMS having many benefits, such as improving the overall treasury performance and reporting accuracy, Stark also comments on how companies should be wise about choosing a TMS or modernising their current systems, as ease of automation can be attractive when attempting to move a treasury department forward into the future. “Knowing the pros and cons of each will ensure you make the right decision for your needs. There are a lot of factors to consider that reputable firms like bobsguide are going the extra mile to sort out,” Stark alludes to the bobsguide TMS matrix, which can be found in this Buyer’s Guide. Peter Seward, vice president at TMS provider Reval refers to the implementation of the TMS system as a trend which highlights that perhaps the future will move in the direction of automation in order to simplify tasks. “This trend will continue as treasury are automating daily operational tasks to free up time for other, more analytical tasks,” Seward says. On the other hand in Deloitte’s “2015 Global Corporate Treasury Survey”, it was stated that the

“primary challenges facing treasury groups today have not yet been resolved with the increased investment in treasury technology, a trend over the past few years. Inadequate systems, FX management, and visibility to global operations continue to be difficult.” In the survey, principal global treasury leader Melissa Cameron and partner of M&A and treasury transformation leader Carina Ruiz reveal that as the digital age continues to influence different sectors, new technologies will also present problems and they cannot fully be an alternative to traditional ways of managing treasury. A similar view is also taken by global corporate treasury leader at PwC, Sebastian di Paola, in the network’s “Global Treasury Survey 2014: Treasury shown in a new light”, which also suggests that although the future may be heading towards more and more companies adopting treasury management systems, it is crucial to be rational. “Payment factories and in-house banking, are effective but will gain even more importance in the coming years as the regulations imposed by the OECD’s

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Treasury Management Systems Guide 2015/2016

Base Erosion and Profit Shifting 1 (BEPS) initiative come into force,” di Paola says. Looking to the future, regulations like the BEPS initiative must always be considered especially when new treasury products are launched, but some concerns have been raised about whether TMS systems are secure enough. In Deloitte’s report, eight TMS providers were surveyed against homegrown treasury systems and respondents were asked to disclose what functionality they used a particular system for. The results highlighted that many companies used homegrown solutions for cash, investment and debt management and interestingly, Deloitte highlighted that “homegrown solutions may pose greater cyber and operational risks.” The report also saw that “over 30 different vendor solutions were cited as being used by the respondents, often in conjunction with a primary treasury management system. These systems include FX trade execution and trade management platforms, smaller, niche treasury systems, Excel, Access, and banking portals.” Some bank or corporate treasurers, that have not adopted a treasury management system into their department, occasionally feel as if the TMS is where the financial digital age is heading. Miguel Sanchez, treasurer at Habib Bank AG Zurich, a bank that effectively uses an in-house system and spreadsheets, has an attitude that is reminiscent of that seen in the Deloitte and PwC reports. “As the regulatory landscape changes and evolves, I can only see it as a positive that more companies move toward using a TMS system. However, in doing so, I not only expect replication and improvement of the work process but expect it to add value in its risk management,” Sanchez explains. Although a TMS system may alleviate some risk management responsibilities from treasurers, some have been questioning if the industry is moving in this direction, and to what extent will treasurers be needed with recent reports of financial jobs being taken over by robots. Sanchez has an optimistic view about this subject. “I think that there are certain roles within the industry that computer systems have taken over with a high degree of success, however, this has led to other more niche and specialised roles appearing also,” Sanchez mentions. Reval’s Peter Seward also has a positive outlook regarding the future career of a treasurer and how the role will become more strategic. “The trend to do more for less is not replacing jobs; it is changing

“ it is changing the skill set of treasury professionals who are required to now be more strategic and analytical” Peter Seward, Reval the skill set of treasury professionals who are required to now be more strategic and analytical,” Seward says. According to research completed by consulting firm Hackett Group, the number of employees in finance departments has declined by 40%. Large companies now employ 44% fewer full-time IT workers and 20% fewer human resource workers than they did ten years ago. As well as this, robots are being used for financial tasks rather than outsourcing operations to other countries. CEO of robotic process automation technology provider Automation Anywhere Inc, Mihir Shukla, says that in the short term, automation does reduce the number of available jobs, but software can help businesses operate more effectively. “If you think like a human, there are only certain things you can do. When you think like a robot, many things are possible,” Shukla said. With a positive outlook, Kyriba’s Stark talks about the future of treasury and how a shake-up regarding the use of robots will be beneficial for the evolution of a treasury department. “Savvy financial professionals have the opportunity now more than ever to elevate the value of their contribution to the business with the help of technological innovations. So, the areas that computer systems are taking financial jobs are most likely not the jobs that financial professionals really want as they are laborious, mundane tasks,” Stark explains. Automation can be used in many ways by the treasury department and Reval’s Seward comments upon the benefits of automation as it “frees up treasury to do more complex tasks such as improving cash forecasting, reviewing hedge policies, and providing advice to areas outside treasury.” However, newer technology such as digital currency could be where cash management and transactions are heading as more and more banks have started to experiment with blockchain. “Blockchain technology platforms or digital currencies such as

Bitcoin are very new, and at the moment some firms are experimenting with the risk of accepting these types of payments, though to our knowledge, these experiments are performed in think tanks as opposed to real world integration,” Stark states. However, Stark also mentions that it is evident that risks are involved when working with untested technology, as corporations that accept bitcoins will experience price volatility on a daily basis and because of lack of support from market infrastructure, corporates would need to transact on a daily basis, which will incur costs due to transactions needing to be spread out over time. When discussing the topic of treasury and digital currency, Stark interestingly says that blockchain technology is becoming more efficient and has the potential to save money for banks. “If you asked me the same question two years ago, I might have been much less inclined to take a serious long view on digital currencies, but the right business drivers are starting to line up for digital currencies to be accepted. It’s not a question of if, but when,” Stark states. On a similar note, Reval’s Seward explains that if cryptocurrencies can be used to help the treasury department in any way, they should be used more. “Treasury is always looking for return on surplus cash and freeing up trapped cash, so to the extent that digital currencies could assist in achieving this, they could be used more,” Seward says. At present, however, a lack of knowledge about cryptocurrency and automation in general could evoke unnecessary risk. In conclusion, the reports conducted by PwC and Deloitte demonstrate that although TMS is becoming a trend amongst banking and corporate treasurers, the functionalities of each system should be reviewed with the help of matrixes, like the one found in this Guide, and that rationality is key to having a successful treasury department. ■

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Treasury Management Systems Guide 2015/2016

ADVERTORIAL

Bank Communication and Treasury Automation Specialists Company Information and Background At Axletree, we believe that Treasury Management should be simple and straight forward. You deserve the latest technology without breaking the bank; a system that is scaled to your needs; keeps you productive on the move; creates and returns value to your shareholders. Treasurytree is a system that works with you and not the other way around. Axletree Solutions Inc. is a Treasury Management specialist and SWIFT Connectivity expert, providing end-toend solutions to banks and Fortune 500 companies worldwide. Our team has dedicated specialists and fully managed data centers which deliver a wide range of cutting-edge financial solutions for banks and corporates. These services include SaaS Treasury Management and SWIFT Connectivity solutions along with Format Translation & Integration and Regulatory Compliance. Axletree helps corporates and banks automate processes and efficiently manage, optimise and improve their global messaging and treasury operations.

Products and Services TREASURY AUTOMATION SOLUTIONS Cash Management: The Cash Management module provides clear visibility into the global cash and liquidity of all your treasury operations. You can make better funding and investment decisions with up-to-date information and a thorough analysis of your cash availability. Cash Forecasting: The Cash Forecasting module allows you to forecast more efficiently and with greater accuracy through its advanced modeling techniques. Create forecasts for daily to yearly cash positions and any time interval in between. Now you can reduce excess liquidity, predict future shortages and optimise interest income. Detailed cash flow projections and variance reports on demand will support your analysis.

company's ERP system to automate the process of balance reconciliation. Eliminate operational risk by doing away with the manual end-of-day and intra-day balance reconciliation.

environment with the expertise of our SWIFT certified professionals. Axletree can design, implement, upgrade and provide on-going pro-active maintenance of the SWIFT infrastructure.

FBAR Regulatory Compliance: The FBAR Module delivers automated Foreign Bank Account Reporting in compliance with the requirements of the United States Treasury.

Vendor Test Bed: Axletree’s Service Bureau offers a dedicated VTB connection that customers and application developers can use to test their product’s compatibility and compliance to SWIFT standards prior to launch.

Electronic bank account management (e-BAM): e-BAM lets you keep track of signatories authorised to open, manage and close bank accounts. Manage your bank relationships with unparalleled control, being able to view all accounts across all geographical locations. Debt & Investments: The Debts & Investments module allows you to monitor, analyse and manage the full spectrum of your investment and debt portfolios with greater transparency and control. Reduce borrowing costs and increase investment returns with timely, accurate information. Funds Processing: The Funds Processing module simplifies all aspects of wire transfers. Speed up funds transfers with user-defined custom templates for repeated transactions. In addition, the GUI shows the work flow, providing at-a-glance task transparency and unparalleled ease of use. Banking Solutions Regulatory Compliance: We provide OFAC solutions to customers who wish to manage their compliance risks associated with SWIFT transactions. We offer integrated OFAC, FINCen, Anti-Money Laundering (AML) and Know Your Customer (KYC) standalone products or hosted solutions.

Bank Fee Analysis: The Bank Fee Analysis module allows you to analyse electronic bank fee statements (EDI 822, BSB) in an easy to read format. Use comparative bank fee analysis to negotiate better prices with your banks and automatically verify fees charged against contractual agreements to identify discrepancies.

SWIFT SOLUTIONS SWIFT Service Bureau: As one of the top 5 SWIFT service bureaus in the world, Axletree offers customers a powerful bank connectivity solution that guarantees superior service and value. SWIFT has granted Axletree the “SWIFT Premier Operating Practice label” - the highest form of accreditation awarded to only the best in class SWIFT service providers. Customers worldwide rely on the hosting and support services of the Axletree SWIFT Service Bureau to exchange their financial messages reliably and securely. Our customer service engineers offer “live” 24x7x365 continuous global expertise and support guaranteeing complete peace of mind.

Cash Reconciliation: The Cash Reconciliation module integrates with your

SWIFT Consulting Services: Axletree supports our customer’s in-house SWIFT

SYMMETREE SMART INTEGRATION Symmetree tackles the challenge of message communication between SWIFT and an organisation’s internal systems. The solution can integrate proprietary back office applications with the SWIFT network by bridging the gap between different messaging formats and SWIFT messaging formats. Symmetree Integration provides customers with SWIFT compliant any-to-any format integration and validation. It supports CSV, XML, ISO 15022, ISO 20022 and any other proprietary format. Symmetree Transport seamlessly and securely transports files, messages and transactions across all processing nodes, protecting the integrity and confidentiality of customer data. Symmetree Reporting provides enhanced reports of the financial transactions, enabling intelligent and strategic decision making.

CONTACT INFORMATION Axletree Solutions, Inc. 2 King Arthur Court, Lakeside West, Suite A-1 North Brunswick, NJ 08902 United States Tel: +1 (732) 296 0001 Email: info@axletrees.com Website: www.axletrees.com

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Gain the TWIN advantage KEY TWIN HIGHLIGHTS • A leading and proven Treasury & Asset Management solution • Support for all major instruments available in the financial market • Instant views of financial information flow and currency positions • Process support for Frontto-Back with built-in Cash Management, STP and integrated General Ledger • An interactive and integrated solution • A scalable solution with the technology you need

Treasury and Asset Management

Find out how we can help you Jörgen Tisell jorgen.tisell@cgi.com www.cgi.se

Treasury Management Systems Guide 2015/2016

Treasury Management: a Consultant's View David Kelin is a director of specialist consultancy ViewPoint Nine, which helps corporate treasurers in their choice of TMS. In this interview with Graham Buck, he offers tips for selecting the best system to meet their needs. [Graham Buck], While requirements will vary from one company to another, what essential features should corporate treasurers be looking for in a treasury management system (TMS)? [David Kelin] Treasurers should think carefully about what is really important for them, what they need and what they would like to have in a system. Focus on the “must haves” first and ensure whatever system they choose can satisfy those needs. Work these out before starting conversations with system vendors otherwise you may end up with a system that is not fit for purpose. Start by looking at the high level requirements – Cash Management, Investment etc. For example, if your company really needs a system to manage Risk then focus on your needs in this area. Work out what is important for you to achieve with the system and break it down into multiple components. We always work with our clients to make sure that the questions are clear and concise to ensure you get the best response from the vendor. We segment the system vendors by their expertise in areas such as Cash Management, Liquidity Management, Investment, Debt, Commodities, Risk, Netting etc. We know that some vendors are stronger in some areas than others. This helps us to reduce the number of vendors to be placed on the shortlist making the selection process easier and quicker.

TMS vendors are bought by the larger companies the concern is what the long term plans for each product. Where, in the past these smaller vendors were in competition with each other they are now owned by the same company and their strategy needs to be questioned. Will both products be supported? What happens if the new owner decides to abandon development? What improvements distinguish today’s TMSs against those of five or 10 years ago? One of the main changes has been the move to Cloud or Software as a Service type solution. This is definitely where things are heading and will provide treasury with some major improvements around the support and upgrade of their systems, reducing the dependence on internal IT support. Alongside, this

technology offers the ability to really use the system from any location which will really improve the efficiency of Treasuries which have fewer staff and want to run their operations from different locations. Technology has become cheaper and we are seeing that Treasury systems are becoming much more affordable for smaller companies offering the same functionality that would have been out of reach only 10 years ago. TMS have become “more intelligent” and the vendors have come up with really innovative ways of making life easier for Treasuries. For example, dashboards which reflect an individual’s working environment and presenting screens unique to that way of working. There has been a great leap forward in the automation of tasks such as reconciliation, payments etc.

There has been some consolidation in the market in recent years. Do treasurers have much choice when selecting a TMS provider? There are still many systems and vendors around with more emerging each year. We have already seen at least two new entrants into the European market this year. Consolidation is however a worry and when smaller

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Treasury Management Systems Guide 2015/2016

And do you have any predictions as to what further refinements might be introduced in the years ahead? More of the same really. We predict that Cloud systems will become the norm and the advantages it delivers will really help treasuries to focus on the more “interesting” parts of the business and expand into new areas. We think there will be a move to improve the way data is presented to Treasurers focussing on reporting and business intelligence. We believe going forward treasury systems will be used to present information around wallet sharing, banking relationships and so on, providing a real-time intuitive reporting system. This is really exciting. An alternative that some corporate treasurers have explored to installing a TMS is integrating treasury as a module within an enterprising resource planning (ERP) system instead? What are the main advantages and disadvantages? SAP and Oracle in particular have been developing their Treasury systems capabilities over the past few years. The main advantages for companies who already use ERPs in different parts of the organisation is that they can simply add the treasury element. Having separate systems and then having to integrate them is often not a strategy organisations want to follow. The downside is that it often takes longer to implement and works out more expensive in the long run.Not all features that TMS’ provide is available in ERP systems and often users complain that upgrades take longer and product development is not as responsive when compared to a TMS vendor. Lastly, are there any mistakes that corporate treasurers commonly make when selecting a TMS? If so, how can they be avoided? Plan, plan and plan again. Before you embark on the TMS selection be sure you know what you want, have a budget in place and ensure that you engage with the right people in your organisation, such as IT, Legal, subsidiaries. Talk with your peers and learn from their experience. Go to conferences and hear what others have to say. Take up references. Focus on what you want in a system and not what the vendor wants to sell you, in other words as I said above work out your “must haves” and stick with them. ■

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Automated Hedge Accounting Supported by Experts risk@chathamfinancial.com 610.925.3120