EXPERT OPINION - gtnews 2012 buyer’s guide to Treasury Management Systems

15 June 2012


Alexandre Clar, Director Global Treasury (EMEA), PPG

1. What were the catalysts that convinced your company to implement a/renew its treasury management system (TMS)?
The main catalyst for the implementation was the business decision to develop better global visibility of treasury risk and liquidity. Consequently, we made the move to transfer all three treasury centres - US, Asia-Pacific and Europe, Middle East and Africa (EMEA) - onto a single platform.

2. What key steps should be undertaken when selecting a suitable TMS?
Key steps begin with designing a robust, objective selection process that is flexible, iterative and enables you to make agile decisions. Identify TMS experience or expertise within your business and ensure that is effectively deployed. Get to know your vendor: ensure that the implementing team is known and fully trusted. Make a firm choice as to the external hosting, or not, of the TMS software. Think about treasury function continuity and knowledge sharing, i.e. how easy and intuitive it is to train internally and to communicate with stakeholders.

3. What TMS do you use and why was it chosen?
We use IT2. We saw it as the best means to design a global solution and implement more integrated business processes. We wanted to cut manual work and journal creation, reduce probability for errors or out of balances, build our own treasury reports and dashboards from the TMS, so that we free up professional resources to focus on strategic activity and performance and better service to our affiliates. That was principally in the areas of cash, liquidity, foreign exchange (FX), and risk management where we now have powerful, automated analytical tools and real- time capability. We were also particularly excited about IT2’s capability to define and lock in treasury policy, controls and best practice on a global basis: their fully configurable process maps are highly flexible and constitute an audit friendly solution that enable us to support treasury policy easily.

4. How does your TMS help provide greater visibility in your cash flows?
IT2 provides a single environment for managing the entire treasury operation, from front office dealing, resulting maturities, cash flows and market exposures through to netting, cross-currency pooling, Oracle and SAP ledger entries. We can therefore have instant visibility into the entire treasury position on the basis of real-time analyses and marked-to-market accounting values. In the near future, centralised bank account administration in IT2 will enhance our visibility of cash and authority on accounts. In addition, IT2 NET, our TMS’s web-based front end, will also extend visibility, accessibility and reporting to a 150 users internationally. We will therefore have an up-to-date picture of exposures, forecasts and requested deals from a broader number of affiliates.

5. How can a TMS help to reduce operational risk?
A TMS can automate and eliminate manual processes and workarounds that give rise to operational risk. By superseding spreadsheets and manual, possibly multiple, deal re-entry, (e.g. to track deals, cash flows, for risk management and accounting) the risk of human error is reduced. A TMS can also enforce processes and approvals within mandated workflows. Automating key controls, such as approval of trades by two treasury functions, is part of PPG’s treasury’s policy, which specifies automated, traceable, centrally visible and documented processes within such workflows. In addition, bank account management (BAM) via a central TMS and repository can ensure in the future that mandates and signatories are up to date, preventing delays or unauthorised activity.


Tony Osentoski, Director, Europe and Asia-Pacific Treasury, Cytec Industries

1. What were the catalysts that convinced your company to implement a/renew its treasury management system (TMS)?
The catalyst was, simply put, the growth of Cytec’s business both in volume and geography. The European and Asia-Pacific operations have been expanding rapidly over the past several years and the resulting workload equated to a mandate to invest in streamlining treasury operations within a TMS or to substantially increase staffing levels.

2. What key steps should be undertaken when selecting a suitable TMS?
Key steps start with implementing a robust selection process. Evaluate vendors’ ‘strength in depth, and ensure that full support and training is available. Find out if the vendor committed to the product and whether the product represents state- of-the-art technology. You will need to secure buy-in from the whole team: legal, technical accounting, senior management and internal control. Last, stay resolutely focused on your stated objectives at every stage of the selection process. It is very easy to be distracted by some of the ‘nice to have’ items offered by many TMS vendors, so it is important to stay focused on the core items that you want centralised and/or automated within a single TMS.

3. What TMS do you use and why was it chosen?
We selected IT2. It is state-of-the-art technology that comprehensively addresses our objectives for cash, risk and operational efficiency. The solution is highly intuitive and easy to roll out to a lean, global treasury operation. It interfaces seamlessly with our three enterprise resource planning (ERP) systems - BAAN, Infinium and SAP. Simply, IT2 offered the processes and tools we needed to fulfil our project objectives, including cutting bank costs, reducing the time taken across the range of activities, from reconciliation to managing hedging, and improving our visibility of cash and global FX and interest rate (IR) position.

4. How does your TMS help provide greater visibility in your cash flows?
Our TMS affords comprehensive, easy visibility of the entire treasury business to any authorised user. By building daily reporting and cash forecasting into treasury activities worldwide, putting treasury payments, notional pooling and netting activity onto one system, and introducing daily maturity analysis and in-house mark-to-market valuation of our outstanding FX contracts, we have an improved understanding of our developing cash flows, liquidity and FX results. In addition, bank costs are transparent and can be reduced through central management and consolidation of our facilities usage. In the first year alone, we cut our Asia-Pacific and European banking costs by 18%, a substantial six figure sum. We’re now going a step further. By introducing web-based cash management for subsidiaries and applying key performance indicators (KPIs) to the accuracy of the subsidiary cash forecasts, we hope to achieve a better understanding of actual and forecast cash. This will allow us to act more aggressively in hedging our FX exposures, after we have a proven legal entity forecasting track record established.

5. How can a TMS help to reduce operational risk?
A TMS helps to reduce operational risk by bringing complex processes together, on a single platform, in the simplest and most visible way. For example, we have insourced the monthly processing of tens of millions of dollars in intercompany payments with our multilateral netting programme, cutting the complexity and operational risks of the programme, as well as its cost. By locking down processes within defined pathways, or workflows, on a single platform, we enforce key controls and treasury policy. At a simple level, that’s making sure that the ‘four eyes’ rules apply, or that account signatories are up-to-date. At a more complex level, it’s making sure that settlements are executed, counterparty risk is managed according to policy, and sweeping, hedging and treasury processes are performed in compliance with policy.


Peter Schädelbauer, General Manager, Lindner Group

1. What were the catalysts that convinced your company to implement a/renew its treasury management system (TMS)?
The steady growth of our group of companies and the expansion abroad required a rapid and efficient reorganisation of the existing banking department into a modern group treasury. There were several issues that required the implementation of a TMS in order to be solved. The group had a heterogeneous system landscape with diverse ERP systems, various online banking solutions and no standardised reporting. A tremendous amount of time was required for the daily financial planning, as well as for intercompany interest and loan invoicing. In order to meet the requirements of a modern treasury and to keep up with the increasing internationalisation of the group, the introduction of a TMS was a logical and necessary step.

2. What key steps should be undertaken when selecting a suitable TMS?
Since a wide range of TMS are available, it is important to find the system that best suits the company. The desired features and requirements need to be defined and reviewed beforehand to see whether the demands put forward can really be fulfilled in the end. What constitutes a basic prerequisite, and what is merely a bonus feature? Beyond that, the implementation process has three stages: Stage 1 - the preparation - is arguably the most important phase, and includes the creation of the catalogue of requirements. The pre-selection of possible system providers takes place in this stage as well. Stage 2 - the advanced and final selection phase - is followed by stage 3, where the solution is implemented and the system goes live.

3. What TMS do you use and why was it chosen?
We use the BELLIN TMS in the current version tm5. We were convinced by the modular structure, the licensing model and the cost-performance ratio of the system. However, its easy accessibility was another deciding factor, since tm5 features a very workflow-oriented design. The internet-based TMS allows new group companies and users to be added quickly. All this leads to a high acceptance in the entire group, not only in the finance and treasury departments. New users learn to use the TMS quickly and easily and thus do not see it as an additional burden. In the Lindner Group, 206 users currently work with tm5. This number is evidence of its high acceptance.

4. How does your TMS help provide greater visibility in your cash flows?
Owing to the fact that all relevant accounts worldwide are electronically connected to the TMS (via SWIFT) and all deals and transactions are entered in the system, creating a daily financial status of the Lindner Group causes no more problems. It is available ‘at the push of a button’, so to speak. The current status can be reported at any time. Moreover, all planned cash flows are entered. The liquidity planning enables both a rolling forecast and an actuals plan for the daily comparison of plan and reality. Planning is no longer static, it has become dynamic. All in all, the visibility of cash flows and the corresponding liquidity management was improved a great deal due to the TMS.

5. How can a TMS help to reduce operational risk?
All relevant financial information of the Lindner Group is available centrally in a single system. All transactions are recorded in the TMS, both internally (with companies in the group) and externally (with banks), from forward exchange transactions to guarantees. All operational risks in the area of finance can be made visible and thereby reduced considerably by means of the system. A simple example: counterparty risk is reduced by setting and monitoring limits in the TMS. Furthermore, the operational project risk can be reduced by co-ordinating the treasury and sales departments. For example, hedging transactions can be assigned to the project. A comparison of the project cash flows to the plan makes it possible to quickly display differences and to adapt the hedging strategy accordingly.

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