Treasury Management Peripheral Application

Is Treasury Management lost?

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September 2, 2015

Is Treasury Management lost in the pile of Peripheral Applications? If this question was asked 10 years ago, the answer might have been a “Yes”. But in today’s scenario, an ideal answer to this question is “NO, it definitely can’t be”.

As per latest Survey & Report by Bloomberg, currently 58% of organizations have deployed a treasury management system globally and out of those, 79% organizations have revenue of atleast 10 Billion USD. Only 57% of them have upgraded their systems and are currently using latest versions of TMS. But a vast majority (86 percent) of organizations that are not using a TMS (i.e.42% of total) are still dependent on spreadsheets (usually Excel) for cash forecasting. These statistics confirm that there are a number of pending unresolved concerns in adapting to a TMS. One of them is challenges of technology adoption in peripheral applications such as Treasury. Let us evaluate this and lot more in detail.

Owing to current volatile business environment, treasury department’s role has completely transformed into a strategic one. Today’s treasurer demands real-time information into cash visibility, and global cash forecasting to perform efficient risk management. With this enhanced role, come added responsibilities and hence added challenges.

The most critical and daunting challenge is to convince the Management & IT department to implement a treasury management system.

Why is this task challenging?

The IT department is completely absorbed in multiple ERP systems which manage core processes; while treasury management still struggles as a peripheral application. Remember, 10 years ago, it was a challenging road for ERPs to establish their need but now these ERP systems are an integral part of today’s organizations. It is a similar scenario with treasury management systems today! Treasurers demand “it” while IT department continues to believe that treasury can be managed using archaic systems!

These ERP solutions can indeed manage treasury, but they cannot guarantee the efficacy an end-to-end TMS can!

Imagine a scenario like this:

An organization’s treasury is running on archaic systems such as a spreadsheet, which sources data from an ERP system, and deployed with some basic queries to automate the report generation. But do you think these reports or data generated out of this trivial management system is useful?

Alas without a seamless interface, the information is stale and thereby of no use for the Treasurer! It is critical to enhance efficacy of underlying processes to mitigate Market risks at enterprise level. An ERP system looks at an enterprise as a whole and does not give more focused or cost effective solutions to insulate them from market risks which a treasury management system can. Hence treasury management can no more be treated as a peripheral application and needs to be upgraded to a core functional process!
In addition to convincing the management for implementation of a treasury management system, there is another challenge faced by today’s new age corporate treasurer. This challenge is to identify a suitable Treasury Management System.
There are not many treasury management solutions available in the market, locally or globally, which holistically address all the requirements of a treasurer. Either the solutions are expensive or they do not address the requirements completely. This leaves a huge gap in the industry for an integrated and holistic treasury management system to fulfil requirements of the new age Corporate Treasurer.