Treasury technology is continuously changing... This is why treasury professionals should stay informed about treasury technology changes and how they may affect their job functions. The Treasury Technology Forum (www.TreasuryTechForum.com) is a one-day forum specifically focused on learning, discussing, brainstorming and documenting treasury technology best practices.

Listed below are some questions that will be discussed during the Treasury Technology Forum:

1. How do you create a treasury management system cost benefit analysis?
2. How would you create a treasury technology RFP scorecard?
3. How do you assess the effectiveness of your current treasury technology?
4. How might treasury management systems change in the next 10 years?
5. How are blockchains and distributed ledgers related? How might this affect treasury management?
6. What are the treasury processes that could be automated by artificial intelligence?

If you're interested in the answers to these questions, you may want to consider attending the Treasury Technology Forum. The Treasury Technology Forums are held in Chicago and registration is limited. Register today by visiting:

www.TreasuryTechForum.com

The start of the new year is an ideal time for Treasurers to reflect upon overall treasury strategies and goals.  Since TreaSolution's purpose is to help organizations in developing world-class treasury functions, we've compiled a list of sixteen treasury optimization projects that every Treasurer should consider for 2016. 

The list of treasury optimization projects range from basic treasury policy and procedures documentation to advance treasury and risk management analysis.  TreaSolution hopes that this list will assist Treasurers in creating a world-class treasury department by implementing treasury best practices and simultaneously documenting treasury optimization results.

1. Document and Benchmark Treasury Policies
2. Document and Benchmark Treasury Procedures
3. Document and Benchmark Treasury Internal Controls
4. Create and Monitor Strategic Treasury Management KPIs
5. Document and Benchmark Treasury Personnel Workload Allocation
6. Update Treasury Position Descriptions with the Human Resources Department
7. Create and Regularly Test a Comprehensive Treasury Disaster Recovery Plan
8. Benchmark Current Treasury Technology Against Options Available in Marketplace
9. Review Treasury Technology Access Permissions (Treasury Workstations, Bank Websites, Etc.)
10. Benchmark Bank Analysis Statements Against Contracted Fee Schedules
11. Review Current Bank Account Architecture and Corresponding Account Purposes
12. Document and Review Bank Relationship Management and Implementation Services
13. Confirm the Accuracy of All Bank Signers on Both Bank and Organization Records
14. Document and Review Current Foreign Exchange (FX) Risk Management Functions
15. Document and Review Current Insurance Risk Management Functions
16. Create a Detailed Cash Forecast and Regularly Discuss Results with Organization Leadership

What are your thoughts about this list of treasury optimization projects? Should any projects be added to this list?  What treasury optimization projects will your treasury department pursue this year?  Please feel free to add your comments below.

As a treasury technology consultant, this is one of the most popular questions I get asked: "So, how long will it take to implement a treasury workstation from start to finish?"   The answer depends upon numerous factors such as the size of the organization, the number of people on the treasury workstation team, the scope of treasury operations, the number of financial institutions, etc...   Needless to say, TreaSolution wanted to discover some metrics around general treasury workstation implementation durations. 

This graph indicates the actual treasury workstation implementation duration (in months) for organization that purchased a treasury workstation.   Overall, the average treasury workstation implementation time was 7.51 months.   

For smaller organizations (<$250 Million in Revenue) the time to implement a treasury workstation was elevated (8.33 months) primarily because those companies typically do not yet have a treasury department.   There may be one or two people in the Controller's group who are responsible for implementing treasury technology leading to a longer implementation duration.   

For organizations between $250 Million - $5 Billion in revenue there is a reduced implementation duration (5.86 and 5.76, respectively).  Our options as to why this group is able to implement a treasury workstation more efficiently are:

1. Typically, these organization have a dedicated treasury department with knowledgeable personnel.
   
2. Generally, these organization have not yet had the need for extremely complex treasury management structures and services.
3. Many of these organizations are interested in SaaS / Hosted treasury workstations that can be setup and distributed rather quickly.

Finally, organizations that have greater than $5 Billion in revenue tend to have an extended treasury workstation implementation duration of 10.75 months.   Our opinion as to why this group has a longer treasury workstation implementation duration is:

1. Large organizations tend to have an exponential growth in treasury management complexity.
2. Large organizations generally have a larger scope of treasury management functions (FX, Insurance, Inter-Company Banking, Investor Relations, etc.).
3. Large organizations generally have more bank relationships, bank services and bank accounts.
   
   

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
Treasury Benchmarking Reports
Treasury Workstation Selection (RFP)
Treasury Workstation Implementation
Treasury Intelligence Reports (FI's)

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What is the tipping point?  When do large companies actually create a treasury department?  TreaSolution's research on this topic indicates that corporations typically create stand-alone treasury departments at approximately the $250 million / year revenue range ( + / - $100 Million).  There are some exceptions for smaller, truly multinational organizations.  For organizations < $250 Million / year in revenue, the treasury management function is typically conducted by someone in the Controller's department. 

Generally, there is one main reason why an organization needs to create a stand-alone treasury department = cash management complexity.   At a certain point during an organization's revenue growth, it's cash management functionality outgrows the Controller's group.  The catalyst for this increase in cash management complexity may be due to organic growth, merger(s) and/or acquisition(s).  It is at this point that it become more secure & efficient for organizations to develop a new, stand-alone treasury department.

List below are five topics that should be taken into considering when developing a new treasury department:

What is the new treasury department going to be responsible for?   Specifically, what will be the treasury department's scope of operations?  An organization may want to document their business requirements when answering these various questions.   One approach is to start at a very high level business requirements then work your way down to more specific business requirements.  Listed below is one example of a high level to detailed level business requirement logic:

Multinational Operations (US & UK) --> Cash Forecasting --> FX Risk Management --> USD / GBP Hedging

This is a simple example that should be replicated for every function that will be incorporated in the new treasury department.   Once the new treasury department's scope of operations are determined, then an organization can review the department personnel, hierarchy, technology, policies, procedures and internal controls.

Hiring qualified treasury personnel (or providing sufficient treasury management professional development) is one of the most important factors that will determine your organization's overall treasury management success.   Treasury department personnel should be familiar with current treasury best practices and internal controls.   When creating a new treasury department it is important to have someone on the treasury team who is an experienced treasury practitioner who can implement secure processes that are simultaneously efficient.  Continuous treasury department training can help ensure that your treasury department is educated on the most current treasury best practices.

Most new treasury departments will utilized a combination of bank website and spreadsheets to manage treasury operations.   The main reason for this is primarily because most organizations develop a treasury department while cash management complexity is still reasonable.   As organization grows in revenue, cash management complexity will also grow.  

In some instances, organizations postpone the development of a treasury department (respective to the organization's annual revenue and cash management complexity.)   If a relatively large organization is creating a new treasury department then bank websites and spreadsheet may not be secure and efficient enough to facility treasury operations.  In these situations, organizations may want to consider the selection and implementation of a treasury workstation (treasury management system).

Let's discuss the general definitions of treasury policies and procedures.  Treasury policies are the rules by which the treasury department will operate.   Treasury procedures are the step-by-step instructions as to how each treasury process will be conducted.  The treasury procedures will operate within the rules dictated by the treasury policies.

The development of treasury policies should be a team effort.   The CFO (via Board of Director directives) can lead in the development and approval the overall policies for the treasury department.   Specific treasury policy feedback should be requested from various subject matter experts such as Legal, Internal Audit, Accounting, IT, Treasury Consultants, etc...

The development of treasury procedures is a more specific task.   In order to create a secure and efficient treasury process one must have a detailed understanding of internal control, business requirements, treasury best practices and treasury department capacity.  Generally, treasury department procedures will be draft by the corporate treasurer and submitted to both the CFO and Internal Audit for review / approval.  Once approved, treasury procedures should be reviewed annually to ensure that they are 1.) meeting business requirements, and 2.) utilizing current treasury best practices.

Treasury internal controls are of paramount importance.   Therefore, throughout the treasury department development process an organization should always consider treasury department internal controls.  Are internal controls incorporated into the new treasury policies?  Treasury procedures?  Are there sufficient separation of duties amongst treasury personnel?  Are there sufficient separation of responsibilities amongst departments?   These questions (and more!) should be address when creating a new treasury department. 

Ultimately, the overwhelmingly vast majority of large organization will create a treasury department at some point during their revenue growth story.  The best treasury department development strategy is to be proactive and not reactive.   Treasury department formations are more complex and challenging if an organization has sufficient cash management complexity yet delays the  development of a treasury department.   

Do you agree or disagree with this article?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
Treasury Best Practices Review
Treasury Benchmarking Reports 
Treasury Department Development
Treasury Workstation Selection (RFP)
Treasury Workstation Implementation

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This treasury best practice metric indicates that most treasury workstations (treasury management systems) are not fully implemented.   One reason why TreaSolution asked this question on our Treasury Survey is because we've visited and spoke with many treasury practitioners who indicated that they have a treasury workstation but are not using all of the available functions.  Therefore, TreaSolution wanted to document the utilization of treasury workstation that have been purchased and implemented.   

There are two main reasons why a treasury workstation is not fully implemented.   1.)  The organization did not select the best treasury workstation for their current and future requirements, and/or 2.) The treasury workstation implementation project lacked sufficient budget, resources and/or qualified personnel. 

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
Treasury Workstation Selection & RFP Consulting 
Treasury Workstation Implementation
Treasury Intelligence Reports (FI's)

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It's always interesting to discover which treasury management banking products treasury practitioners are interested in purchasing.    This graphic indicated that there is a lot of demand for Electronic Bank Account Maintenance (eBAM), Mobile Banking Services,  Bank Treasury Workstation, SWIFT for Corporates, and Electronic Billing and Payments.    The services that are not in demand are probably already implemented by most treasury departments (i.e. Federal Wire Payments, Prior Day Reporting, Current Day Reporting, Positive Pay).

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
Treasury Benchmarking Reports
Treasury Best Practice Review
Treasury Intelligence Reports (FI's)

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Most treasury workstations (treasury management systems) provide a core cash management module which includes bank communications, cash reconciliation, cash positioning, etc.   In order to create a system that can be applicable to many organizations the treasury workstation vendors typically allow the client to implement other functional al-la-carte based upon their requirements.    In this treasury best practice graphic you can see that the most popular functions (beyond cash positioning) to be implemented are Cash Accounting, Cash Forecasting, Debt Management and EFT's.    The least popular treasury workstation modules are Bank Fee Analysis (mainly because most organization utilize spreadsheets for this function), Risk Management, Inter-Company Loans, Foreign Exchange, etc.

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
Treasury Benchmarking Reports 
Treasury Workstation Selection (RFP)
Treasury Workstation Implementation
Treasury Intelligence Reports (FI's)

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There are many reasons why an organization would buy a treasury workstation (treasury management system).   Although there seems to be one main reason: IMPROVED OPERATIONAL EFFICIENCY.    This is not surprising because the facilitation of corporate treasury management with spreadsheets is typically a manual and time intensive process.   Some of the other benefits of implementing a treasury workstation are Improved General Ledger Integration (15.38%), Improved Internal Controls (7.69%), and Improved Reporting (7.69%).   In many organizations, the implementation of treasury technology can improve all of the factors listed above in a material way. 

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
 Treasury Benchmarking Reports
Treasury Workstation Selection (RFP)
Treasury Workstation Implementation
Treasury Intelligence Reports(FI's)

If you found this information interesting, others will also.   Please feel free to share this page on social media by clicking the buttons below:

There are many factors that must be taken into consideration when deciding to select a treasury workstation (treasury management system).   One key component is treasury department complexity.   In other words, are your treasury operations complex enough to justify the selecting and implementing a treasury workstation?   This question is answered differently by each organization.   A company with domestic operations and two bank relationships is going to answer this question differently than an international organization with over fifty bank relationships.  

Generally, treasury management complexity grows as organizational revenue increases.   This is clearly demonstrated in the chart above.  Many organizations that are less than $250 Million in annual revenue lack the treasury management complexity (and an actual treasury department) to justify a treasury workstation.  Starting at about $250 - $500 million in annual revenue, organization generally start to develop actual treasury departments due of increased treasury management complexity.   The utilization of treasury workstations becomes a serious consideration as organization approach $1 billion in annual revenue.  Above $5 Billion in annual revenue, most organization require a treasury workstation due to the exponential growth of treasury management complexity and scope of operations.

Do you agree or disagree with this data?  Please feel free to use the comments to post your thoughts or questions.

Relevant TreaSolution Services:
 Treasury Benchmarking Reports
Treasury Workstation Selection (RFP)
Treasury Workstation Implementation
Treasury Intelligence Reports(FI's)

If you found this information interesting, others will also.   Please feel free to share this page on social media by clicking the buttons below: