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Net gain in jobs expected in 3 months; financial normalcy in 8 months. 

GTreasury is committed to helping its customers and the industry at large make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Recovery Monitor, an “immediate and ongoing survey of COVID-19 impact and response.” The survey collects ongoing impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry. The survey will be completed every other week.

“Financial professionals expect financial normalcy in the next 8 months, feel optimistic that job rates will improve in the next 3 months, and perspectives on organizational liquidity remain positive,” said Michele Marvin, vice president at GTreasury.

Positive outlook:

  • Net gain in jobs over the next 3 months: 26% of respondents say they will be hiring in the next 3 months (18% said they have additional plans for layoffs). This accounts for a 9% gain in jobs overall.
  • Impact of Covid-19: Respondents continued to report positive perceptions on how their company/organization, community, and country are responding to COVID-19.
  • Liquidity: This was the fourth week in a row of improving outlook for organizational liquidity, with 35% indicating a positive movement.

Cautionary and negative outlooks:

  • Continued concerns about accounts receivable: For eights week in a row,  organizations reported a negative outlook for accounts receivable, although these concerns have lessened each week.
  • Increased cyber-fraud: 36% of respondents reported an increase in the attempts of fraud or cyber-fraud.

Timing estimates:

  • Financial normalcy: Predictions of when businesses will return to the state prior to COVID-19 improved from almost 12 months last week to 8 months this week.
  • Economic recovery: This week, 62% had a negative outlook of a recovery happening in the next three months (down from 54% last week). The optimism of a recovery in the next 12 months was 53% this week, up from 43% last week.

Below are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition: Global Recovery Monitor.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the May 13 – May 26  dataset. You can also sign up to receive the full report every other week.

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This week’s survey results show optimism growing about 12-month recovery.

GTreasury is committed to helping its customers and the industry at large make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate and ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

Positive outlook:

  • Debt and liquidity: Changing perceptions of organizational liquidity repeated a week on week improvement. Perceptions of central bank liquidity, government fiscal activities, and fiscal policy all improved this week.
  • Impact of Covid-19 on company: Respondents continued to report improvements in perceptions of how their company/organization is reacting to COVID-19. Views of community/family and country responses also improved slightly.
  • End of health issue: Financial professionals saw slight improvement on when they expect the end of the health issue (now under 9 months, down from 10 months last week).

Cautionary and negative outlooks:

  • Continued concerns about accounts receivable: For the seventh week in a row, organizations reported a very negative outlook for accounts receivable.
  • Reconsidering liquidity forecasting: 81% of respondents have reconsidered plans due to COVID-19. More than half of these (56%) are reassessing plans for liquidity and forecasting.

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 increased slightly to a mean of almost 12 months.
  • Economic recovery: This week, 54% had a negative outlook of a recovery happening in the next three months (down from 66% last week). The optimism of a recovery in the next 12 months was 43% this week, down from 51% last week.

To participate in this ongoing survey click here.  You can also sign up to receive the full report each week.

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This week’s survey results show optimism growing about 12-month recovery

GTreasury is committed to helping its customers and the industry at large make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate and ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

“Financial professionals are now planning for the end of the health issue in 10 to 12 months and are planning on returning to financial normalcy soon after,” said Michele Marvin, vp of GTreasury, a supporter of the Treasury Coalition.

Positive outlook:

  • Optimism of 12-month recovery grows: There was a significant jump this week by respondents who expected a recovery in the next 12 months. Half of respondents (51 percent) are optimistic of a 12-month recovery, up from 39 percent last week.
  • Debt and liquidity: Changing perceptions on organizational liquidity repeated a week on week improvement. Perceptions of banks line of credit, central bank liquidity, issuance of commercial paper, government fiscal activities all improved this week.
  • Impact of Covid-19 on company: Respondents continued to report improvements in perceptions on how their company/organization is reacting to COVID-19.
  • Few projects are cancelled, and new projects are started: Less than 4 percent of respondents said projects have been cancelled due to COVID-19 and 9 percent reported starting new projects.

Cautionary and negative outlooks:

  • Continued concerns about accounts payable: Similar to last week, organizations reported a negative outlook for accounts payable, although there was a slight improvement this week over last.
  • Paused or altered scope of projects: 33 percent respondents said they have paused a project (25 percent of these said it was due to budget/cashflow; 14 percent due to staffing issues); and 31.5 percent said they altered scope/pace of an existing project.

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 increased to 11 months (from 9 months last week).
  • Economic recovery: This week, 66% had a negative outlook of a recovery happening in the next three months (steady from last week). As stated above, the optimism of a recovering in next 12 months leaped to 51 percent compared to 34 percent last week.

Here are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition: Global Crisis Monitor.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 29 – May 5  dataset. You can also sign up to receive the full report each week.

Medical factors should drive when lockdowns end

April 24, 2020 | Michele Marvin
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This week’s survey results show that medical factors are viewed as vastly more important than financial factors in determining when to ease lockdown restrictions

Treasury Coalition’s Global Crisis Monitor Survey Results: April 24, 2020

“This week, nine out of ten global finance professionals said that lockdowns should be gradually lifted when medical issues such as broader testing and broad availability of medication and treatment are available,” said Michele Marvin, vice president at GTreasury, a supporter of the Treasury Coalition. “To those in the finance industry, medical factors (90%) are vastly more important than financial factors (37%) in determining when to ease lockdown restrictions.”

Positive outlook:

  • Debt and liquidity: Respondents saw an improving liquidity situation across the board. Banks line of credit, central bank liquidity, and for the first time, the issuance of commercial paper were all seen as positive this week.
  • Impact of Covid-19 on company: A trend increases as respondents felt slight improvement of the impact of COVID-19 on their company over the previous week.
  • Level of concern for community and family: There was a slight improvement on levels of concern for community and family for the fourth week in a row.

Cautionary and negative outlooks:

  • Continued concerns about accounts payable: Similar to last week, organizations reported a negative outlook for accounts payable. However, the outlook was better this week (7x negative this week compared to 10x last week)

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 stayed the same this week nine months from now.
  • Economic recovery: This week, 65.5% had a negative outlook of a recovery happening in the next three months (down from 73 percent last week). 39 percent are hopeful of a recovery in the next 12 months (compared to 42.5 percent last week).

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 22 – 28  dataset. You can also sign up to receive the full report each week.

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This week’s survey results show accounts receivables remain the biggest liquidity issue by a large margin.

 

GTreasury is committed to helping its customers and the industry at large make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

 

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate and ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

 

“Treasury and finance professionals continue to express major and escalating concerns about Accounts Receivable. It remains — by a large margin — the biggest debt and liquidity issue the industry is facing right now,” said Michele Marvin, vice president of marketing for GTreasury, a supporter of the Treasury Coalition. “Earlier in the COVID-19 crisis, concern about Accounts Payable seemed to be more of a result of adjusting to a remote workforce. However, it now appears to be more directly related to financial conditions and uncertainty. Delays in payments continue to pile up, with more than 10% of companies reporting extending AP timelines and, for the first time in this week-by-week survey, treasurers indicated financial normalcy won’t happen until 2021.  Despite these trends, it is good to see concerns about impacts of COVID on companies, community, and family continue to improve each week.”

Positive outlook:

  • Central bank actions still viewed positively: Respondents felt more positive toward central bank actions this week over last. By a three-to-one ratio, more organizations indicated an improved position relative to the amount of liquidity provided by central banks.
  • Impact of COVID-19 on company: A trend increases as respondents felt slight improvement of the impact of COVID-19 on their company over the previous week.
  • Level of concern for community and family: There was a slight improvement on levels of concern for community and family for the fourth week in a row.
  • Accelerated accounts payable: 4 percent of firms sped up payments to support key suppliers.

Cautionary and negative outlooks:

  • Continued concerns about liquidity: Similar to last week, organizations reported an increasingly negative outlook for accounts receivable. 21.7 percent of organizations indicated their liquidity outlook improved over the past week while 32.1 percent indicated that their liquidity view deteriorated.

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 slipped to nine months from now (from eight months last week).
  • Economic recovery: This week, 73 percent had a negative outlook of a recovery happening in the next three months (down from 76 percent last week).  5 percent are hopeful of a recovery in the next 12 months (compared to 43 percent last week).

Here are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition: Global Crisis Monitor.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 15  – 21  dataset. You can also sign up to receive the full report each week.

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Concerns about future liquidity took a hit this week with an increasingly negative outlook among respondents for accounts receivable, commercial paper and accounts payable.

GTreasury is committed to helping its customers and the industry at large make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate and ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

This week’s Global Crisis Monitor survey was conducted April 1 – 8, 2020. We share here a few of this week’s highlights. This week’s Treasury Coalition Global Crisis Monitor slides are also pasted below.

“Concerns about future liquidity took a hit this week. Many more organizations indicated an increased level of concern with their loan covenants: more than a third of respondents expect business to extend payables; and expectations for the new normal have been pushed out to 8+ months,” said Michele Marvin, global vice president of marketing, GTreasury. “Still, respondents see a light at the end of the tunnel as central bank efforts are viewed positively and as health issues associated with COVID-19 are expected to begin to improve in the coming months.”

Positive outlook:

  • Central bank actions still viewed positively: Respondents continued to feel positive toward central bank actions, although respondents were slightly less positive this week over last.
  • Country responses: Respondents were more positive toward country responses this week over last.

Cautionary and negative outlooks:

  • Continued concerns about liquidity: Similar to last week, organizations reported an increasingly negative outlook for accounts receivable. In addition, commercial paper was negative this week. This week, 32% reported that they were extending their accounts payable.

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 slipped to 8 months from now (from 7 months last week).
  • Economic recovery: This week, 76% had a negative outlook of a recovery happening in the next 3 months (down from 79.9% last week) 43% are hopeful of a recovery in the next 12 months (compared to 48.4% last week).

Work from home issues

  • This week, managing staff activities and accessing all necessary IT applications from home were the two largest challenges to maintain normal treasury operations. These were identified by half of the respondents.

Here are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition: Global Crisis Monitor.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 8  – 14  dataset. You can also sign up to receive the full report each week.

Treasury Coalition Results-4-9-2020-Slide 1     Treasury Coalition Results-4-9-2020-Slide 2

Treasury Coalition Results-4-9-2020-Slide 3     Treasury Coalition Results-4-9-2020-Slide 4

Treasury Coalition Results-4-9-2020-Slide 5     Treasury Coalition Results-4-9-2020-Slide 6

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Not surprisingly, liquidity is still the primary concern of treasury professionals who participated in the second weekly Treasury Coalition Global Crisis Monitor Survey.

GTreasury is committed to helping its customers, and the industry at large, make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate & ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

This week’s Global Crisis Monitor survey, conducted March 25–31, 2020. We share here a few of this week’s highlights. This week’s Treasury Coalition Global Crisis Monitor slides below.

This week found that respondents are much more focused on securing, monitoring and forecasting liquidity.

Positive outlook:

  • Central bank actions viewed positively: Respondents continued to feel positive toward central bank actions. Moves by central banks to provide liquidity provided an even higher positive perception than in the week prior.  
  • Organization responses: Respondents continued to be positive toward organizational and country responses this week, although the numbers were slightly down week over week.
  • Improved view of commercial paper and bank lines of credit: Respondents are more positive around commercial paper and bank lines of credit this week (last week respondents were much more concerned about them).

 

Cautionary and negative outlooks:

  • Deepening concerns about liquidity: Similar to last week, organizations reported a negative outlook for accounts receivable.
  • Impacts to companies, communities, and families: Respondents had continuing concerns over the health of their organizations, their communities, and their families.

 

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 slipped from 4 to 6 months last week to 7 months this week.
  • Economic recovery: This week, 79.9% of companies said they have a negative outlook of a recovery in the next 3 months. 48.4% are hopeful of a recovery in 12 months.

 

Priorities:

  • Staff safety: Results from this week showed that staff safety protocols remain the number one concern.
  • Access to liquidity: Respondents were more concerned about the access to liquidity this week over last. Respondents cited a number of activities to address this, including expansion of short-term loans, drawing down credit lines (or converting other holdings to cash), reforecasting cash flows, and more monitoring of cash flows and the cash conversion cycle.

Here are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition: Global Crisis Monitor.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 1 – 7  dataset. You can also sign up to receive the full report each week.

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Results from the first Treasury Coalition Global Crisis Monitor Survey show concerns about future liquidity as the COVID-19 pandemic continues to disrupt global markets.

 GTreasury is committed to helping its customers, and the industry at large, make actionable decisions throughout the COVID-19 pandemic. With that in mind, we are active supporters of the Treasury Coalition, an industry-wide effort led by Strategic Treasurer.

The Treasury Coalition has launched the Global Crisis Monitor, an “immediate & ongoing survey of COVID-19 impact and response.” The survey collects weekly impact and reaction data from corporate treasury professionals around the world to provide flash insights into the current sentiment of the industry.

This week’s Global Crisis Monitor survey, conducted March 18–24, 2020, had results from 200+ global respondents, with operations in Africa (17.5%), Mid-East (20%), LATAM (30%), APAC (40%), EU (50%), and NAMER (75%). We share here a few of this week’s highlights. This week’s Treasury Coalition Global Crisis Monitor slides below.

Positive outlook:

  • Central bank actions viewed positively: Fed actions, ostensibly shoring up money market funds and pumping liquidity into the system, are major contributors to improving views on the liquidity outlook.
  • Organization responses: Respondents were positive toward organizational and country responses this week.
  • Virus inflection point sits just over one month: The majority of respondents believe the corner will turn in less than one month and a large minority predicts the inflection point will be within 2 to 3 months (with a mean of just over 1 month).

 

Cautionary and negative outlooks:

  • Deepening concerns about liquidity: By a factor of more than 5x, organizations reported a negative outlook for accounts receivables. Outlooks for commercial paper issuance and covenant requirements and material adverse conditions were also negative.
  • Impacts to companies, communities, and families: Respondents had growing concerns over the health of their organizations, their communities, and their families.

 

Timing estimates:

  • Financial normalcy: The mean of when businesses return to the state they were in before COVID-19 is 4 to 6 months.
  • End of health issue: The mean when the impact of the virus starts to diminish is 2 to 3 months.

Here are key graphics from this week’s report. If you cite or use any of the statistics or graphics in social media or reports, please attribute them to the Treasury Coalition.

To participate in this ongoing survey click here.  We are currently collecting perspectives for the April 1 – 7  dataset. You can also sign up to receive the full report each week.

Survey results from the Treasury Coalition Research. See treasurycoalition.com for more information.

 

 

 

 

 

 

 

 

 

 

5 Key Challenges to Accurate Forecasting

March 3, 2020 | Alexandra Loppnow
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Treasury professionals are today’s great prognosticators. They are charged with predicting the future to help organizations prepare of a variety of situations. Accurate forecasting is essential to be able to understand working capital needs, ensure adequate liquidity and maintain a state of active readiness to address emerging cash requirements. With accurate forecasting, treasurers help the organization protect liquid assets and ensure adequate liquidity at a reasonable rate over both the short and long term.

However, the key word is accurate. Treasury professionals face five key challenges when developing forecasts:

1. Understanding organization’s cash flows and how they change over time

The larger the organization, the more complicated the cash flows will be. Consider the company that has several “businesses” created via acquisition, or that has expanded globally into new markets. Payment terms will most likely vary across the different businesses, complicating the data. In another scenario, some departments, like tax, may make large, urgent payments without communicating them to treasury until right before they are due.

A high volume of transactions and larger value transactions made throughout the organization can also affect the accuracy of the forecast. There may also be situations where cash flows are quickly changing or approaching a material threshold. It’s safe to say, greater attention should be paid to cash flows that are evolving to ensure the forecasting results accurately reflect the expected cash flow. With all these complexities and variables in mind, it becomes clear a treasury management system (TMS) can be an invaluable tool to help treasurers understand and track the data.

2. Gathering the right data for the type of forecast

Once you understand the data, how do you pull the data into your forecasting model? Transactions that occur in high volume yet have low individual impact on the organization’s cash position can usually be obtained from well-established data systems already in place in the organization. Sources of this data include bank feeds and AR, ERP and other systems that automatically send information to the TMS or are extracted and manually managed within the treasury department.

Other less frequent, large value transactions such as tax payments, investment maturity dates and capital expenses could affect the accuracy of the forecast if not well managed. For example, large tax payments may simply be reported when they happen by the responsible individual. Treasury professionals must be aware of the timing of the payments and be on the lookout for data to be reported.

3. Managing the forecast data workflow process

Once you understand what data you need and where the data will come from, it will be necessary to set up processes to get the data when you need it. Depending on the complexity of the firm’s operations, getting consistent data in a timely manner may be challenging.

The first step is to secure a commitment from department heads outside of treasury to provide initial data for testing and modeling. You may also obtain additional insight about independent variables that will impact the forecast when talking to subject matter experts in the business who have a detailed, current understanding about the data you need.

Creating the best data workflow process will usually require:

  • Knowing when data is entered into systems or updated.
  • Modeling some of the data manually (e.g., spreadsheets) and gaining additional insight over various time periods.
  • Clarifying the cause of any significant anomalous numbers.
  • Setting up data feeds.

4. Selecting the right forecasting method(s)

Pinning down the right forecasting logic is key to providing the most accurate forecast. Start by looking at what category of cash flow you will be forecasting:

  • Operating flows – Cash flows from normal business operations, i.e., receipts and disbursements.
  • Investment activities – Investment flows are significantly more important than operating or financing flows for most companies.
  • Financing cash flows – Transactions related to a firm’s financing activity, such as capital contributions and long-term notes.

The most relevant characteristics of the flow must also be considered in order to fine-tune the forecasting logic. Consider whether the transactions are:

  • One-off or recurring?
  • Consistent or variable?
  • Seasonal or due to regular business cycles?
  • Rapidly changing or a secular trend?

Modeling and back-testing with enough data will help you see which model performs best over time through various cycles and economic environments, and will allow you to choose the most effective model for your forecasting needs.

5. Improving the forecasting model over time (variance analysis)

Analyzing the accuracy of the forecast by manipulating data manually on spreadsheets requires time most treasury departments can ill afford. That’s why the power of treasury management systems to perform variance analysis is a cash forecaster’s best friend. A TMS allows treasurers to compare a forecast to actual results over a chosen time frame and quickly identify any differences. The reason for any disparities can be evaluated and understood, creating a feedback loop for improvements in the forecast model.

With the new information, you’ll be able to

  • True-up the forecast in the near term when something was received early or late.
  • Update the forecast model based on better or additional information.

With a TMS, you can also manage multiple forecast models at the same time for real-time comparison. The system allows you to identify the strengths and shortcomings of each model, adapt to the results, retest the data (historically and real-time) and easily adopt the newly vetted program for even more accurate forecasting results.

To continue to explore the challenges and solutions for accurate cash forecasting, download our eBook, Accurate Cash Forecasting.

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Eric Reyhle, V.P. Business Development

As the corporate treasury environment becomes ever more complex, the need for simplified management of treasury processes using a treasury management system (TMS) is no longer a “someday” proposition. More and more treasury professionals are realizing the benefits of transitioning from spreadsheets to a more robust system. The discussion has moved from “why would we need a TMS?” to “how do we convince management that a treasury management system is an essential technology investment?”

It may be extremely clear that a TMS will save money overall, and that may seem like the most important factor. But a more compelling business case will address additional organizational concerns. Management will want the answers to questions such as:

  • Will an automated TMS system put the organization at greater risk for fraud?
  • What will need to be done to ensure the a TMS will interface seamlessly with other organizational systems like the ERP?
  • Will it complicate or simplify external banking and internal IT, reporting and audit processes?
  • How do we ensure the TMS functionality remains current as the technology continues to evolve?
  • How will a TMS affect workload, productivity and headcount in the treasury department?

Every organization will have different concerns that will need to be addressed. Yet, it’s safe to say there are five key areas of interest to management that you should consider to build a compelling case for a new TMS.

1. The current and future state of the treasury environment

What does management need to know about the treasury environment to be able to prioritize a transition to a TMS relative to other tech investments? As you develop your business case, look at the treasury environment from the company’s perspective as well as the industry at large to find the relevant intersecting objectives.

First and foremost, outline what is changing within your organization – what is the current state, where is the organization headed, the direction the business is growing and what tools and automation are needed to adjust effectively to meet the demands for the future. Secondly, examine the treasury industry technology space at large to identify trends and innovations that should not be ignored.  Finally, identify the changes within the industry that parallel the goals of the organization to demonstrate the need to adopt TMS technology to keep pace.

For example, your organization may have a strategy to move most technology resources to cloud providers for greater control of X, Y and Z. Perhaps you can point to how cloud-based systems provide greater control of risk and compliance management. Or maybe you’ve learned that many of the banks you deal with are moving to systems that control X, Y, Z better, but will not be compatible with your current process. It can be concluded that adopting a treasury management system will contribute to the company’s goals and keep the treasury department compatible with the systems required to stay competitive within the overall treasury industry.

2. Risk management and regulation compliance

Today’s financial environment has changed dramatically since the 2007-2009 financial crisis. Executive management and the board of directors have high expectations of what treasury can do and how quickly it can be done. Treasury must be able to think ahead, ask questions and examine scenarios, taking relevant risks and regulations into account to reach optimal outcomes.

However according to the 2019 Treasury Perspectives report published by Strategic Treasurer, 34 percent of treasury professionals feel they don’t have enough time to manage all treasury responsibilities, including the added responsibilities necessary to stay up-to-date with the relevant regulations. More to the point, the same report found that 50 percent of organizations expect further restrictions and increased regulatory oversight to be implemented over the next one to two years.

Outlining the specific ways a TMS can improve treasury readiness for future requirements, simplify risk management and stay on top of regulatory compliance issues is an essential element of a compelling business case.

3. The intersection of a TMS with the organization’s overall strategy

In every corporation, there is a wealth of projects competing for limited funding and resources. Correlating the benefits of a TMS solution to organizational imperatives will have greater impact when presenting your case.

For example, let’s imagine your organization’s growth strategy is through business acquisitions, but has also discouraged hiring more people to manage the combined businesses. Integrating the treasury processes of the acquired businesses into existing processes has added significant workload, but the headcount of the treasury department has not increased. As a result, the existing team has had to do twice the work to keep up and has put non-essential, strategic initiatives A, B and C on hold.

To build your case, you would detail how implementing a modern TMS technology system can allow the treasury team to reinstate specific vital tasks A, B and C to support strategic initiatives while keeping headcount at present levels.

4. Impacts on key stakeholders

Successful technology implementation projects are done by people, and people will highly influence the business case for a TMS. Projects that have wide support throughout the organization have a greater chance of garnering a share of the limited resources available.

It is critically important to present the project to key stakeholders early in the process to help them understand the benefits the TMS will bring to their areas. Discuss the challenges and learn the ways the TMS will streamline operations by involving everyone from your technology vendor to your banking resources. Consult with your IT department to learn the ways current processes will change, which will allow them to potentially offload some responsibilities. Be sure to include the accounting team that will most likely have to adapt accounting processes to integrate with the new TMS. A clear understanding of how the TMS will benefit them in their roles will motivate your peers to support the transition and help the implementation succeed.

5. The elements of a credible ROI

The savings expected to be realized by eliminating or reducing actual costs will be just one element of your ROI calculation. Items in this category include the obvious, such as reduction in bank fees, elimination of redundant systems, and reduction in audit fees because you will have one source of truth for your treasury transactions. Other, not-so-obvious, hard-dollar benefits might also come into play, such as having a much tighter grasp on the availability of short-term liquidity excesses. The real-time visibility into cash and liquidity might lead to greater investment income, or consolidation of banking relationships for additional savings.

Processes that can be eliminated or made more efficient by implementing a treasury management system may also be considered. The primary contribution to the ROI of a TMS in this category is most likely the ability to free up staff to focus on strategic initiatives rather than being mired in gathering data.

Some organizations also allow soft savings to be included in the ROI calculations for proposed projects. Items like the costs of dealing with errors caused by manual processes, or the potential setbacks that might be caused if your Excel guru were to leave the company. When soft savings are allowed, be sure to include items most relevant to management and keep your values conservative to maintain your credibility.

The Bottom Line

A transition to a treasury management system is an important step for an organization that will deliver far-reaching benefits. Be sure you focus on more than the monetary return on investment as you build your case for management.

To explore this topic in more depth, download a copy of our eBook, Building The Business Case, created in conjunction with Strategic Treasurer.

Eric Reyhle is Vice President of Business Development at GTreasury and has been welcoming new partners into the GTreasury family since 2012. He is based in Denver and manages the Western region of North America at GTreasury.

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Eric Reyhle, V.P. Business Development

When it becomes clear that your treasury department would benefit from implementing a treasury management system (TMS), you may not know where to start to build your business case for management. We’ve put together a list of the four things you can do right now to give you valuable information you will need when it comes time to present your case.


1. List the things the treasury department SHOULD be doing but can’t get to

It will probably be easy to make this list of things that you can’t get done because of time, resources or other hindrances. Maybe you don’t have enough time to effectively monitor the amount you are spending on bank fees to determine if you are being overcharged or if you could access a better rate. Perhaps you have been unable to analyze and update your short-term investing plan or provide the most accurate short-term forecasting because the data is in a lot of reports that no one has time to consolidate. Moreover, there is probably a lot you should be doing to streamline payment approvals.

Everything you believe management expects of your treasury department, you’re your team is currently unable to do, should be put on this list.


2. List the things you COULD be doing but are not

This can be an exciting exercise for dedicated treasury professionals. What else could you do, assuming you have a lot more time and greater visibility into your treasury data. Some items might be similar to the things you have in the “should do” list, yet you could take them a step further because technology will enhance the data available to you. Just think of the ways your team could provide additional value to the organization; be it deeper analysis, lowered fees, more accurate forecasting, etc.


3. Assign values to the ‘Should’ and ‘Could’ Lists

The value of the savings, investment earnings or strategic benefit of the missing and potential treasury activities will be unique to each organization. Do your best to provide accurate estimates or real examples of the hard-dollar, soft-dollar and strategic value of each one of the items on your lists.


4. Evaluate the time spent on tasks that could be automated or eliminated

There’s no question that a treasury management system will make your treasury department more efficient. The key is to quantify the time and cost savings that can be realized from the new efficiency.

Will a TMS keep you from increasing the headcount in the treasury department? Will it take the place of many disparate systems that require manual process to consolidate the data? Perhaps you can make the claim that technology will catch some common errors that have cost your organization time and money to rectify. Evaluate and itemize the ways a TMS will streamline your operations to allow your team to better support your company’s growth objectives.

 

The information you gather in these four steps will be the foundation of your business case. The next phase will be to correlate the benefits of a TMS to your organization’s strategic plan. Our eBook, Building The Business Case, created in conjunction with Strategic Treasurer, details the five key areas consider to build a compelling case for management. Download the eBook today.

 

Eric Reyhle is Vice President of Business Development at GTreasury and has been welcoming new partners into the GTreasury family since 2012. He is based in Denver and manages the Western region of North America at GTreasury.