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Why Treasury Teams Miss Out on Key TMS Functionality

  • By Andrew Deichler
  • Published: 7/15/2019

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The following article is an excerpt from AFP's latest
Treasury in Practice Guide, underwritten by Kyriba.

Many treasury professionals miss out on a lot of the functionality that their treasury systems offer because they tend to have a narrow focus during implementation. Typically, a treasury department will invest in a TMS to improve a particular set of functions. The implementation process for any system is lengthy and costly. Once it’s finished and treasury has the functionality that it was targeting, the department often doesn’t look to see what else it can get out of its system.

“A lot of implementation is focused on where the most productivity can be gained, rather than value generation,” said Bob Stark, vice president of strategy for Kyriba. “Let’s just say you spend most your time in cash management. So the implementation is going to focus on cash management. And you think, ‘We’ll get to that stuff later.’ And then they never get around to it.”

PROJECT FATIGUE  

Additionally, because the implementation process takes such a long time, treasury professionals tend to get “project fatigue,” noted John Dourdis, CTP, vice president and treasurer for Conair and a member of AFP’s Treasury Advisory Group (TAG). There may be more functionality than the systems offer, but if it wasn’t something treasury already set out to address, they might just leave it alone.

“You’re not going to go back and seek it out after your implementation is done for say, daily cash stuff,” Dourdis said. “They fail to have an integrated view of what their systems can do.”

Jennifer Dale, CTP, assistant treasurer and director of treasury services for Sprint Nextel and a fellow TAG member, noted that many treasury systems are installed in multiple phases because the process takes so long. And towards the end, there’s a push to just be done with it. “By the time you get to phase three, you’ve been at it for 12 to 18 months, and you decide to just keep doing some things the way you were doing them previously,” she said.

Dourdis believes that faster implementations could solve the problem of project fatigue, but that typically falls on the shoulders of the manager leading the implementation on the vendor side. If they aren’t doing their job, then there’s a good chance that treasury may not think about additional functionality. “That’s what’s going to break down the individual components of a system so that you can understand what it needs to populate it,” he said. “So if you have someone who understands that and can break it down really well for you, then you know what you need and it helps you organize it and make it a faster, less painful implementation. You really have to know what your structure is so that you know what to do for each of those treasury functional areas.”

TECHNOLOGY CHANGES  

Having a singular focus on process improvement can also blind treasury departments to the potential that their systems offer. With technology evolving at a rapid pace, practitioners need to be aware of the latest capabilities.  

“If a TMS was implemented even two years ago, there may have been 500 new features added since the TMS was first setup,” Stark said. “New functionality may have been added to solve problems that weren’t priorities at the time—such as payment fraud detection.”  

Bobbie Eiseman, CTP, president of Comcast Capital Corporation and formerly vice chairman of AFP, agreed that technology is often a key reason why many treasury departments fail to embrace the functionality of their systems. “First, the technology options available to treasury have grown,” she said. “Do you want to customize the TMS for additional functionality or build a bot? Do you want to leverage [application programming interfaces (APIs)] or build traditional secure connectivity? Does the new functionality change the type of data used and if so, do you want MT940, BAI, ISO 20022, CAMT, or XML format?”

Some of this technology is still very new and treasury and other teams need to educate themselves on the various options in order to choose the right one for their needs. And once the organization settles on the direction it wants to go, it still needs to determine whether the TMS can even handle it. “If your TMS cannot accommodate what you need, do you work with your vendor to prioritize the item on their roadmap—and wait—or look for an alternative such as a fintech already specializing in the functionality you seek? This can seem like a daunting task,” Eiseman said.

In recent years, treasurers have been moving away from installed treasury systems to cloud-based ones. Overall, Stark has observed treasury departments that are still on installed systems using less functionality, simply because the technology in those systems is old and can’t do some of the more dynamic things that new, software-as-as-service (SaaS) systems can. And it is because of this that some TMS providers have decided to sunset their installed options.

But even if your system can do all that you need it to, you also have to consider that additional functionality could come with additional costs. These costs can come in many forms—licensing a new TMS module, TMS consulting, ERP integration, internal resources, higher TMS maintenance fees, or adding an entirely new vendor. Still, these costs are only barriers if there is no value attached to the outcomes they achieve.

Dale noted that if treasury is still using an installed system and it tries to go back and add more functionality long after the implementation is complete, it can become incredibly expensive. “A lot of times, if you try to do a business justification case to get the IT resources to go back in and build it, you just can’t make that case work for you,” she said. “‘You can do it in Excel and that’s not going to cost us anything, but to go back and build this here to save you maybe an hour a week or five hours a month—it’s not worth the cost.’”

Download Getting the Most Out of Your Treasury Management System here.

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