Five Elements of a Successful Business Case for a Treasury Management System

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.