Analyst Report Series Webinar

Treasury Management Systems & Enterprise Liquidity Management
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Advise - Major Projects
Assist - Outsourced Services
Research - Market Data
Inform - Industry Insights

Date

Thursday, January 12, 2023

Time

2:00 PM – 3:00 PM EST

Where

This is an online event

Speakers

Paul Galloway, Strategic Treasurer
Craig Jeffery, Strategic Treasurer

Hosted By

Strategic Treasurer

1.2 CTP and FP&A re-certification credits will be given for attendance to this live webinar.

Participants who attend this live session and respond to 3 polling questions will earn 1.2 CPE credits.

Description:

Treasury management systems (TMS) are a vital part of many treasury departments’ technology stacks, and adoption rates across companies of various sizes are expected to remain high for some time. Meanwhile, some TMSs seem to be outgrowing the category, creating the new enterprise liquidity management (ELM) solution type. This webinar will give a wide-ranging overview of the current TMS space, its importance in today’s era of volatility, leading practices for selection and implementation, and innovative technologies impacting the TMS landscape, as well as briefly discussing the emergence of ELM as a separate category.

Learning Objectives:

  1. Learn about the current TMS space and its importance in today’s era of volatility.
  2. Gain understanding regarding leading practices for selection and implementation of TMSs, as well as innovative technologies impacting the TMS landscape.
  3. Consider the emergence of ELM as a separate category.

Registration: To register for this session, please fill out the registration form on this page. In order to be awarded full credits, you must respond to all 3 polling questions during the program.

Field of Study: Information Technology – Technical

Prerequisites: None
Advanced Preparation: None
Program Level: Basic
Delivery Method: Group Internet Based
Cancellation and Refund Policy: Since there is no fee for registering or attending this session, there are no refunds. You may cancel your registration at any time before the session by contacting us at webinars@strategictreasurer.com. There is no fee for cancellation.

Complaint Resolution Policy: For more information regarding administrative policies such as complaint and cancellation, please contact our offices at 678-466-2220.

Strategic Treasurer is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

If you encounter any issues with this webinar replay, please contact our team.

Transcript

Announcer  00:27

Okay, well welcome everyone to today’s webinar titled, Treasury and Risk Management Systems. This is Brian from Strategic Treasurer, and we’re pleased you could join us as we analyze and discuss the latest Treasury Technology Analyst Report. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you would like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you would like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation and we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. It will also be a few polling questions throughout today’s webinar where you will be able to select your response from a list of multiple choices, you will need to click the submit button on the polling questions to have your response recorded. If you are here for CPE credits, you will need to answer at least three polls today. And last, please ensure that your zoom display name includes both your first and last name, so we’ll know to whom we should send the credits. Our speakers for today are Paul Galloway, Senior Advisor at Strategic Treasurer. And Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. Welcome Paul and Craig. And I’ll now turn the presentation over to you.

 

Paul Galloway  02:07

Well, thank you.  Appreciate that, Brian, the intro. This is the list of topics of discussion. For today, we’re going to cover our treasury technology, current tech environment, you know, it’s ever changing. There’s challenges that that are faced in the tech arena on treasury side, we’re talking about future new innovations, and who the tech players are in the market. We’re also going to cover some of the problems. Visibility, connectivity, security, volatility, these are all things that treasury departments are facing today. And then we’re going to cover leading practices in this area, you know what that selection implementation looks like? And then we’ll move over to an overview of the technology itself. And then we’ll move into ELM. So we think about, you know, the evolution and liquidity management and opportunities to be increasingly effective on the liquidity side. And then finally, we’ll wrap up with some additional resources be available out there for you to review and see. Craig, did I miss anything on that?

 

Craig Jeffery  03:31

No, that’s a great review of what we’re covering today. And good to, good to see on the webinar Paul and Brian. Thanks for the intro and welcome, everyone. I’ll add our welcome to you as well. This is our our first webinar of 2023. And we’re we’re glad to have that underway. Hope everyone is surviving the pleasantly warm weather. If you’re in that area of the country, if it’s really cold hope you are doing the same.  Dressing right matters. But let’s let’s look at treasury situation. Paul gives an overview about what we’re covering, and one of those is the situation landscape. So we’ll begin with what’s treasury’s situation and Paul and I will go back and forth a little bit on the side. If you look at the left side, what’s going on in treasury’s environment, you’re probably familiar with it. Most of the people on this call will be in treasury or they or you work at a bank or a technology firm working with people in treasury. What’s going on this slide can could have been replicated last year, the year before as well. There’s multiple years of what’s going on. That trend has continued. There’s increasing demands on treasury, increasing demands for analysis, or drivers of efficiency, improvements to working capital, but the expectation and the pressures have gone up. Now one thing we didn’t put on on here in too much detail was adding staff slowly As compared to most areas of finance, most areas of finance are shrinking, some dramatically and some slowly. Treasury tends on the average to grow. So anywhere from about 15 to 20% of firms on a net basis, add and treasury, most of the same little bit large number, add and a smaller percentage reduce staffs and treasury. So we’re looking at a more than a five year run of slow increase in staff. What else is happening? What are some of the challenges of this whole work from home?  Since everyone went home in COVID, and in March of 2020, there’s been this long era of work from home work remote, or hybrid back and forth. And that creates some security issues and challenges differently for different areas. And those have to be addressed, especially when we think about the payments security that everyone is under, not gonna say much about efficiency and scalability. But these are continual drivers, we have to be ready for our organizations to be able to grow without just, you know, adding staff at the same proportion of growth. So how do we do that? That requires a lot of technology that fits well, with an analyst report about tech, compliance burdens, get people mad, so I won’t want to lean on that too much. But know your customers particularly frustrating. Things like PCI DSS the payment card security standards are oftentimes in the treasury domain, or AP, sometimes in in AR, oftentimes, they are other security standards, whether it’s related to the clearing house, whether it’s related to the Swift customer security program, or f bar, there’s all kinds of compliance burdens that have to be met, you can think about quite a few more without us listing them. Finally, to move on to the right side. And I’ll give Paul a chance to talk again, in a moment, I’ll just say something about the big data side and let Paul cover the difficult topics of geopolitical tensions. But on the big data side, there’s more and more data, we know that it grows, it doubles every couple of years, there’s 40 to 50% growth a year. So we’re seeing it doubling every year. There’s complexity in organizations, because they’re adding more systems, there’s a need for visibility across all of these systems, both internal and external, we need to be able to access that data, be able to use it, and then be able to do things with that. And so we’re in this environment of more data, more systems. And we’ve got to be able to analyze that properly. Use that effectively for everything from forecasting to our models. And that ties in across the board with the three orange people are rapidly increasing demands, more complexity, more data, and a need to respond more quickly and more accurately. So those are some of the challenges that treasury faces today. Paul, I’ll let you jump in.

 

Paul Galloway  08:01

Thanks, Craig. So when you think about geopolitical tensions and economic stress, you know, they’re they’re over the last three years, 2020, come in year 2023, we faced a lot of these head on FX risk, you know, the US dollar has strengthened significantly. And for anybody that has a global footprint, or makes investments or have investments in local currencies, FX risks is becoming more and more important to them, especially as we see a run rising interest rates and reduction in inflation that continues to persist. We’ll see a shift in foreign currency. The other thing that we’ve seen is market volatility. I don’t expect less market volatility today, or through 2023, we’re probably going to see more as economic information comes out and as central banks make decisions. So market volatility is not going away. And obviously, interest rate volatility. When those decisions are made, you know, continue to raise rates, do they get to a point where they stop raising rates? And, you know, what’s it mean or what will happen when the yield curve starts shifting, anticipation of reduction in interest rates in the future? There are expectations rates probably be high for a while, but we have watched the the volatility of those interest rates, especially for organizations that hold you know, fixed income bonds that are tied closely to interest rates, but also the cost, the capital cost of funding, the return on your investments are all impacted. And so inflation we talked about that and we just had come out that we had a slight dip in the inflation relative to the prior reading. So we’re starting to see that come down, but the Fed is going to continue to do what they’re doing, rates will rise. And that has an impact on your business supply chain problems. I mean, this has been a huge thing, when you think about the bottom bullet point, the war in Ukraine, there was a huge disruption, in particular in food and, and energy. And so that’s created a lot of problems globally. So it’s not just an isolated event is something that’s impacting organizations and countries across the world. And of course, fraud, fraud is not going away, fraudsters are getting more and more sophisticated. They’re using different avenues, approaches to try to steal money from organizations, or prevent them from functioning until they make payments. And then when we think about lock downs, and China, China have recently reversed their course of locking everybody down. And now they’re having to deal with the effects of COVID. But those lock downs really have an economic impact, when they would lock down that further disrupt supply chains, it creates issues for organization. So all these things have impacts to treasury departments. And these are things that need to be considered. And so when you think about, you know, you, you know, are there currently any responsibilities that you don’t have time to perform? And you can see the results down below, nearly half of the people said, Yes, nearly half. So organizations out there have some gaps, they are in need of closing those gaps, so that they can deal with all the things we’re talking about on this slide. And with that, I’ll turn it back over to Craig, if you have any additional comments and move to the next slide.

 

Craig Jeffery  12:02

Thanks, Paul.  You know, this, this schematic is simplified in some ways. You know, when you hear the word landscape, when we say the word landscape, we oftentimes mean it in one of two ways. One is, who are the players? What are the types of systems that exist? You know, across the board, everything from FX trading platforms to accounting to treasury management systems to aggregators, anywhere FX trading, all of those can can be viewed as who are the players? And how do those relate. The other way we speak to the topic of a landscape tends to be the places where treasury payments are done, where does that activity sit. And this is a little bit of a hybrid, mostly, it’s about the places where this is done, where the data sets. So from this simplified chart, if we, if we start at the bottom, we think of cloud services, you know, what’s happened in the in the world of ERP as well, everyone’s either in the cloud, or moving to the cloud or making plans to move in the cloud, you’re either in a conversion process or going to do it if you’re not there. From you know, S/4HANA to Oracle Cloud to dozens, well, well over a dozen key providers of accounting systems or ERPs. They’re they’re often in the cloud, you see embedded TMS functionality, sometimes that’s embedded within cloud services, whether it’s just payments, whether it’s positioning or forecasting, or whether it’s a more full featured set that that’s what happens. Then you have treasury management systems, which are dedicated treasury systems that Paul is going to talk a little bit more about what they do, but think of those as the, the system for treasury like ERP is a system for accounting. The TMS is the system for managing your liquidity, forecasting, managing your debt, all those activities, it’s the single it’s the ERP for treasury, if you will. On the bottom, you have things like a data lake, and this is oftentimes, you know, private or public, may be stored purely in the cloud. As a service provider, this is a great place to dump a lot of data. And this has become very, very common. In many companies. Four years ago, five years ago, it was talking about it, for the most part, looking for a case study that they could play with some of the new tech, and now it’s theirs. They usually have multiple lakes, and they’re pumping information in there, from which to do things like reporting, analysis, and even support business processes with this place of the data. On the right hand side, I’m just gonna talk about it from it. There’s things like reconciliation systems you’re familiar with. You might be familiar with T-Rex or other systems Blackline and various admin systems, which is our general term for homegrown systems or systems that cover part of the business that are not Let’s say not part of the ERP, or not part of a treasury system. And then as you look across the board, we’ve got the web, we’ve got data providers, FX rates, calendar information, market data, market rates, all of that information that either comes into a TMS that comes into the company to be used and consumed by systems, or maybe it goes through treasury aggregator, the treasury aggregator here, there’s a separate webinar, we do this is what just think about that on the inbound side, it’s information aggregation, which is everything from bank data, balances, and transactions, could be rates and other information. And then on the outbound side, it would be the function of a payment hub, putting information to the formats, to execute payments, or to provide payment messaging that your bank or other provider executes. And we have banks in the right hand side, a lot of bankers on the call today. So this is the stylized list of a lot of banks that a company would oftentimes relate to. And so the information is coming over from banks, into the company through one of several ways. And the example in the middle, we’ve got networks. networks can be defined in different ways. You know, can be messaging could be just executing transactions could have other services. So we’re defining that broadly here. But this might be I make a connection to Swift, for example. And I can deliver payment instructions to Well, in this case, the six banks on the right hand side, or I get the information delivered through a single channel, the banks push it through, let’s say to my Swift code, and it comes to me that way. So there’s information that goes back and forth. And then where’s the other information that says, so we have the data center, you’ll see data lakes repeated from the bottom, but they’ll usually keep track of admin systems, maybe it’s the enterprise resource planning system, the current one might be sitting in the company, the company’s data center, it may be run through cloud services. So when we look at where those sit, they tend to be in a lot of different places. And then on the right hand side, and thanks for holding on, because it’s a long build up. Before I can explain what the purpose of all this is, you know, the desktop, you know, your laptop, whatever you’re using, you have Excel files to perform certain functions, you get a browser to access different portals, use the internet for sharing information, you could be uploading files, or accessing data or consolidating information that gets fed into these other system. The point of this is to build on what we just talked about in terms of the complexity, there’s a lot of data, there’s a lot of connections, and to excel and treasury. In AP and AR, there’s usually a requirement to understand what’s going on where it sits. So this conceptual chart, I think, provides some measure of that complexity. This can be over simplified for some, or it may look a lot more complex than for others, but but this one is really geared from where the places where data is stored, and where some of the processing may occur. And some companies have 10 ERPs, five ERPs. And so they may have some in their own data centers, some in the cloud. And you can just see the complexity.  Well, we don’t have five or six banks, we’ve got 20, or 30. We’re not in five countries, we’re in many more. So your particular landscape, even if it’s at this conceptual level can be quite a bit more complex. Maybe it’s a little bit less complex, but it just shows you some of those components. Paul, I’ll drop you to the poll question. Unless you had something to add there. I’m going to advance it.

 

Paul Galloway  18:53

That’s perfect timing there, Craig.  First poll question. It is, I am very familiar with these concepts, application programming interfaces, cloud data, microservices, open treasury, web services, real time data, business intelligence, artificial intelligence, machine learning, blockchain, distributed ledger, technology, you know, all these sit there and think about all these concepts here, Craig. You know, these are very applicable in today’s environment. And I think, you know, myself as a practitioner, I go back to as a practitioner, or several of these items that were even, you know, in play when I was a practicing tech, not a treasury professional. So this will be interesting to see where people are at in terms of the poll.

 

Craig Jeffery  19:57

Yeah, and you can see some people are typing the word poll in the box and for those who are first time webinar attendees with Strategic Treasurer. For those who are interested in getting the poll results we’re looking for, we’ll just look for we’re gonna go easy, 160 respondents to type attendees to type the word poll.  Not many, it’s a small percentage, but don’t just wait for other people to do it take, take a stand.  Type the word poll in, and if we get 160, we’re there. And the reason I said 160 is largely to give Brian, who has to count them up, a bit of a challenge. So that’s awesome. And yeah, so.

 

Paul Galloway  20:37

Got the results. Well, so it looks like we have leading near web services, real time data, for concepts that people are familiar with, followed by API’s and business intelligence, artificial intelligence, machine learning, browned out with the bottom three cloud native micro services, open treasury and blockchain. Not not surprised by the bottom three, Craig, I think these are still kind of relatively new concepts to folks. You know, and API’s continue to gain ground route between technology firms and banks, they’re building their libraries, it’s become more and more important to companies. So this seems to make sense to me. Any thoughts around this? Correct?

 

Craig Jeffery  21:29

Yeah, I think, you know, when we say things like cloud native and micro services, you know, you know, the platform as a service, or maybe some of the terms, there’s, there’s multiple terms that are have a lot of overlap to them. So everyone’s pretty familiar with software as a service, or SaaS, but platform as a service tends to be a lot less now, same thing with cloud native. But this is just the view of using some of the most current technology, the platform technology that runs these things, you may think of Microsoft Azure, Amazon’s AWS, or Amazon Web Services, where things are smaller. It’s fully hosted in those environments, they have unlimited, regular, natural language search, you have massive scalability, you have the components are smaller. So any development is, tends to be quicker, because you’re developing smaller pieces and putting them together. That’s kind of a big topic. But that’s one where, you know, I think we looked at this not too long ago, and we’re under 10%. On that topic. The other one, Paul, on the concept of open treasury, and people here, open banking, this is usually the idea of API’s between systems so that other technology can use and deploy services from other providers. So that’s kind of open treasury, open banking API’s, a lot of those tend to roll together. And the difference between open treasury and embedded Treasury or open banking and embedded banking are a little different. One is we can connect to the different systems, the other one tends to be, I can do those functions from within the app, I’m in my ERP, I can execute an FX trade, it’s embedded. Versus I passed to the other systems. So there’s a couple elements with a little bit of a gray area between them, but but some really, really good concepts. Yeah, Paul, we had a question come into really good question. I’m gonna try to answer I’m gonna read it and then we’ll try to answer part of it. There’s a lot of talk about embedded banking and finance, ci even just talked about so it says do corporate treasurers, see this approach of implementing embedding banking within their ERPs as a solution to their problems? Or vice versa solution looking for a problem? Now? That’s that’s a good question. Well, how do banks view it at a corporate treasurers view it? How do some of these different technology platforms view it? I think there’s a it can be either to the person who asked the question, you know, if you can have some of the functionality in the system that you’re working on, right next to it, that’s, that’s easy. So banks want to be embedded. Most of the time, I want to be able to execute a transaction or function from where I am, I don’t want to go this is great. Now I move over to another system, do it and I got to integrate between the two systems. I want to do in the most logical place. But you know, there’s also some aspects of what am I doing? What do I need to do? Do I want to just have a trade transaction function like, am I here up here? Do I want something that helps me see and fit that into my liquidity planning? So that’s the beginning of answering that question. That’s a really good question. But I already took a minute and a half and I got, you know, 10, 10 more minutes to go on that one. So I’ll, I’ll pause there. And thank you for that. Thank you for that question. Yeah, so we’re, we’re gonna, we’re gonna move on, I’ll take this one. This is, what is the future of treasury tech? I talked about microservices or cloud native or Paul, did you answer that question about, you know, one in five understood that. But Platform as a Service is not instead of software as a service, there’s still software as a service? How is it hosted? How is it run, you may hear terms like low code, no code, but think of it as smaller items that can be developed more rapidly and take advantage of the newer platforms. And some really good good items there to be thinking about. This is where people are heading to, you know, we were moving from SaaS, to SaaS, and PaaS or from SaaS to software as a service and platform as a service combined. That’s a key key direction. And we look at the application programming interface. This seems to be pretty well now, the ability of the connections between systems. If you want to be a pessimist, and say, Hey, there’s problems as we set things up, there’s issues of scale timing, we still have to make these adjustments. If you’re an optimistic optimist, everything’s perfect. We’re going through some of the learning pains, but it’s certainly growing and scaling. If we look at the third item on here faster to real time, not everyone needs instant, but nobody really wants things to move more slowly, whether that’s moving payments, having visibility as payments, accessing data, performing analysis, making recordings, things are moving in one direction faster, not necessarily instant. But they’re all heading in that direction, inexorably, the power and value of a networks. What’s the value of a network? Who’s on it? How big is the network? In terms of relevance to you? Does it help me with security doesn’t help me to scale does that protect, you know, payment information? There’s a lot of reasons why there’s power and value of networks. And those tend to be growing as well. across the across the franchise networks within TMS networks within payment and connectivity. On the big data and business intelligence, your data is double, at least doubling in your company. I think that’s, you know, probably well, well known or probably the case in every country and company, maybe maybe even faster than that. How do you handle rapidly growing data, you need tools that take advantage of managing that. So big data systems systems that help you capture that in memory, do analysis more rapidly, requires tools that support big data, business intelligence tools, rather than old reporting schemas matter greatly. On the AI and machine learning side where this is mostly growing, and where we expect it to grow most heavily this year, next year, and even into 2025 is within vendor provided systems where they use it for things like anomaly detection, this helps with quality control. This can help detect fraud or security issues, things that aren’t supposed to happen. There’s also some measure of success on forecasting, though you can see some different results in different areas. But that’s another area of growth, particularly in some of the areas like payment hubs and treasury management systems. I’m going to skip DLT for purposes of time. But if you look on the right hand side, which of the following technologies are you interested in using treasury? I’m going to only point out the top two areas when talking about API’s and AI or predictive analytics. Every time we ask people and we’ve done surveys for a dozen years, we ask people about new technology, new ideas, everything from the fancy, you know, fancy new idea and they’re always like, yeah, we’re going to use eBAM, or we’re going to use software as a service or whatever the tech is, are they uses, we’re, what actually happens is, is always discounted, sometimes it’s discounted only 10%. Oftentimes, it’s just counted about 30%. So 25% of the people say they’re gonna use it in in a year, we might get 18%, who actually adopted or perform a function. There’s lots of reasons for that. But the top two areas we take think about API use and uptake and AI and predictive analytics. What those plans are what we’ve seen for the plans as the actual adoption has been I’m at a premium as opposed to a discount. More companies are using it. I think largely it’s because system providers are adding that function into them across the finance space. But this is really an interesting activity where we see it exceed what, what the expectations are. So I’ll leave it there for now for the future of tech, and we’ll get back to foundational elements on the TMS, Paul.

 

Paul Galloway  30:29

Yeah, thanks, Craig. So defining the TMS you know, what, what is it? What what are the aspects that make a treasury management system effective for managing cash? Well, first area is visibility. Visibility is increasing importance for treasury departments. There’s demands internally, among senior leaders, and they want to have reports they want to see analytics, they want more strategic analysis done and thought process around how cash is managed. And TMS can provide these kinds of things to treasury departments. Also, forecasting and Craig hit on this earlier, we’re seeing advances with AI and machine learning. To help with forecasting, you’re starting to see that these types of technologies are being integrated into treasury management systems. And it’s it’s going to help treasury departments be more effective over time in managing their cash because they’ll have better forecasting tools in their hand on a global basis. And then think about the accounting side of things. Treasury management systems, connect to ERPs and admin systems, they’re able to take transactions for GL codes, GL accounts, and it can help with auto reconciliation. And then think about that cash management and cash positioning side of things. You get that global view across all your legal entities on all your accounts, which can have multiple banks that are feeding into those legal entities to perform your position in a given day. And so it so it helps you be more effective there. And you can see over on the right hand side of this slide, that there’s advances in technologies of features added to the TMS, you’re starting to see FX portals being integrated payments, they can act as a payment hub. Craig talked about treasurer aggregators and the payment hub functionality. Some of the treasury management tech providers have payment capabilities within their platforms, compliance, you know, this is always a huge thing. It allows you to stay on top of compliance, whether it’s bank account management, or providing data and information to your internal auditors or, or as requested internally by your business partners. And then debt and investments. So you’re able to have a visibility or view to all your debt or investment vehicles, I want to talk about investment vehicles, I’m talking shorter term investments that treasury departments have to manage money market mutual funds, commercial paper, those kinds of things. You can see that within the systems, your debt, you can senior senior debt, your revolvers, you can see preferred debt, you can see this information within the treasury systems. And they can help you with forecasting as well as making payments and posting to your accounting systems. And think about bank account management talked about that briefly earlier. You can have all of your relationships inside a TMS, you can have your people that are authorized signers, people that are functionally authorized to approve transactions. You can do FBAR reporting out of some of these platforms, allows you to manage the whole bank relationship trust corp. And then when we think about risk management, so there’s TMS and then there’s TRMS. So it’s just an added nomenclature, treasury risk management systems. And so these platforms can help you with your derivatives portfolios and managing risk based things tied to Treasury activities. And lastly, think about liquidity management and being able to bring everything together from between your forecasts, cash position, as well as the instruments that you have avail Of all the levers you have available from a liquidity standpoint. So when you think about TMS, it has lots of capabilities, and they continue to develop over time. So, with that, let’s move to the next slide. Problems a TMS solves. And so we’ve got several slides where we’re going to cover these, these areas of solutions that a TMS platform can provide. One is efficiency, efficiency gives you the ability to expand bandwidth across your staff also allows for analytics and strategic thinking. You also have a single source of truth with a treasury management system. So you think about, well, today, I don’t have a TMS I’ll have something in place that brings all together in one place, you know, I have access to various bank portals, I have spreadsheets, I get information from various sources, TMS can bring that all together, so you can have a global view. And that can be your single source of truth, and you can rely on it. When you think about straight through processing, this one is really good in the sense that it reduces your manual handoffs. So with treasury departments that haven’t made the switch to a technology platform or system to help them probably have a lot of manual processes along the way, paperwork, spreadsheets, emails, and whatnot to get the cash position done, and the movement of cash for daily activity that allows for smoother workflows and efficiencies are gained with all this. And when you think about external connectivity, it connects the banks it connects to networks such as swift, FX, portals, money market mutual fund portals, so it allows you to effectuate all these different activities at one place. And so it makes it very convenient and efficient. With that, I think we can move to slide 10. So some additional areas where we’re, TMS can help solve some issues or the things around security and control. And so it has built in controls, we’ve talked about compliance audit, and allows you to build this in automatically. So it’s not a manual process. It’s not something that you have to remember, and in many SSS, it’s automated. And so it makes it more effective. It also reduces the touch points we talked about. You’re not not having the manual handoffs, anytime, or reducing demand or handoffs, anytime you’re reducing manual handoffs or touch points, it reduces the risk of of error, there can be an error along the way. And so you get an efficiency gain there. The other areas around a single secure environment, less fraudsters, you know, if there’s less than, it’s less of a target for fraudsters to go after. And it’s also easier to defend. So you have a better you have a better wall, a better position to defend the kingdom, for lack of a better term, which is your treasure your cache. And then think about visibility, visibility, your your your ability to view and research data is faster, you have access to it quickly, and you got it all in one place. You can run queries and researchers quickly. And it also gives you a clearer view of accounts across legal entities and banks. So I talked about earlier, you know, a lot of companies will have multiple legal entities and each legal entity will have multiple banks. And they have the ability to view all this in different views, either across banks, or legal entities. So that makes it much more efficient in terms of visibility. It also prevents fraud from going unnoticed, which is pretty key. Fraud is something that is not going away. So it’s important to be able to have that visibility and being able to get into the data quicker and view it in totality. The last piece is around scalability a lot more efficient, which allows for staff to scale up or down. And so you can be more nimble as a treasury department and also helps you know, in the sense that you don’t have to hire more FTE is if you have a lot of growth at a fast pace, it can be more even-keeled cadence. For areas where need really is, you can scale up and not have to grow the staff necessarily at the same time.  With that, we’ll move to the last area for what are the solutions are things that TMS solves for. And that’s around managing the volatility that threatens liquidity. And this is a key piece. Liquidity is super important or organizations, when you think about the things that have had an impact over the last three years on liquidity, all these items listed below here or on this slide, lock downs, you know, that certainly had an impact supply chain issues, interest rates, international conflict, recession, inflation, all this, all this came down to impacting the ability to access liquidity, or making sure that you have enough liquidity in place. You know, what happened with a lot of companies when COVID hit and everything got locked down, people became really liquid, there was a sense that, hey, I need to make sure I have enough liquidity on the books because this is a crisis. And managing liquidity is, is ever more important today. In light of everything that’s going on around the world, I don’t see this going away. And just from a standpoint of being efficient, and being able to be prepared for changes and demands on liquidity. These platforms can help you manage that more efficiently. With greater visibility, you can run analysis, you can become real strategic about how you deploy your liquidity. And you can advise your senior leaders on how you should position. With that, we can move to slide 12. So the big question is probably going around in your head right now, for those of you who don’t have a system, do I need a treasury management system? Well, you know, we think about the stressors on company’s operations, areas like escalating inflation, rising interest rates, the food crisis supply chain issues, I think organizations writ large have had one, or perhaps more of these items that put stresses on their treasury teams, and the ability to effectively manage cash, especially in light of unexpected things that were going on, that were out of your control, or that you had lack of visibility to. And so when you think about the stressors that occur, I think a treasury management system can help aid and position organizations with greater visibility, better forecasting, greater efficiency, and the ability to be more strategic and analytic in what they do and position themselves not only for today, but what’s going to happen in the future, and be more nimble. For the times when you have things are out your control. And you can’t be proactive, but instead you have to have a reaction, but position yourself for something like that where you have to react. And you got that tool that system that platform that can help you engage in that area. On the next slide, is our second poll question.

 

Craig Jeffery  44:03

So this should show up on your screen about promising technologies. Here. We have two questions. The first one is about which technologies do you think are highly promising for treasury and finance within the next two years, and we have a list up top? We have a stacked question as well. The question on the bottom is are you interested in learning about ECR changes? So these credit changes on your analysis statements? This really does isn’t directly related to the analysts report, but it is related to what many of you are experiencing with your account analysis statements. If you’re interested in learning more about ECR changes, we have a program. This helps us know who’s interested in learning more seeing where That’s where those changes are happening as interest rates change. So that’s really the purpose for that second question. So that’s yes, yes, I guess I need to know more or No. If you’re if you’re interested in learning more about those, so if it’s yes or yes, I need to know more. We’ll share some information with those from that particular question. So thanks for your attention there. So go ahead and answer these two questions, if you would, and submit it. And I don’t know what the count is now. But we had only had 95 people type the word poll through the three different channels that that Brian can see. And that was a while ago. So we are going towards 160. So we’ll, we’ll see where that goes. So I’m happy to keep Brian, busy counting as those word polls come in. But let’s go ahead for sake of time. Paul, you and I are gonna have to pick it up a little bit. I spent a little too much time earlier on. So to finish on time, we’ll go a little faster. Paul, here, top one is API’s. People see that as most promising? I don’t know that. That’s too surprising, other than any thoughts on why machine learning or business intelligence isn’t more promising one is really about better connections, and the other are about ways of analyzing more quickly.

 

Paul Galloway  46:09

Yeah, correct. That’s, that’s a great question around AI, machine learning or business intelligence, I would have thought that it would have been a little higher. Some of that may be adoption rates, it could be perhaps some issues in the with the technology not being as robust as people expect. But, you know, I think that will pick up over time, those tools, I think, are going to become more and more important, as people begin to utilize them. So I expect that that might pick up no surprise around blockchain. I can tell you, you know, several years ago, Blockchain DT DLT. That was not my nomenclature. I had no idea what decentralized finance was. So I didn’t even think about blockchain. And you know, I think there’s a lot of growth to happen on the blockchain side. And obviously, cloud native microservices, the comments he had earlier on that, Craig. And that’s definitely an area that’s growing and probably just primed to explode.

 

Craig Jeffery  47:18

Yeah, so we’re going on polls, we had over 160 responses, if you type the word poll, I think some people are asking why we’re asking for that again. And the reason is, just to make sure there’s a decent number of people who are interested in that data. If we get it, which we almost always do, we put the poll results into this slide that’s blank right now, and send that out with the deck afterwards. So that’s part of the purpose for that. Thank you. And Brian will also stick a couple entities to follow in the chat box.  CTM file, which is our media outlet, we ask that you would follow that on LinkedIn. Also, if you want to follow it by going to CTMFile.com, that would be excellent. So there’s a way to sign up for the weekly newsletter there. So Paul.

 

Paul Galloway  48:09

Right, on emerging technologies, I’ll move through this quickly.  AI/ML, you know, anomaly detection and cash forecasting, I think is going to be really valuable for that it’s going to get more robust. It’s going to improve API’s we talked about earlier with, you know, I think that’s really going to facilitate the open treasury, more integration with tech stack, TMS, providers of banks continue to build out their API inventory, it’s going to get more and more robust BI tools and dashboarding. This is where I think business intelligence is going to grow over time. You know, the strong data management, that reporting, then there’s an increasing demand from senior leaders for reporting analytics and strategic thought, This is gonna help cloud native and miniaturization. We talked about that a few times. So I really won’t add anything to this other than, you know, you can adapt without interrupting the customers user experience, which is really nice. You know, if you have a platform, you’re not going to be disrupted. And once you’re doing that leads us to our next poll question and final one. Our position with regard to treasury management systems, we are evaluating or planning to evaluate a TMS we don’t have the TMS and aren’t planning to evaluate one. We have a homegrown treasury system. We have a hosted TMS, we have a SaaS TMS, we have installed TMS. So we got a wide range here. Be interesting to see how the poll comes out. You know, just filling in like, you know, we’ll have a number of folks that may say that they have a SaaS-based TMS, but I think might be interesting for my purse spective Craig is what the hosted is the old TMS looks like, homegrown systems.

 

Craig Jeffery  50:07

Yeah, this is good. One quick question. So you don’t have to answer a poll very question. It’s just if you answer a poll once, that’s fine, it would be all the poll questions. It’s an all or nothing. So nobody needs to type the word poll anymore in the chatbox, for today’s session, but yeah, let’s go ahead and see these. Paul, I think you have a good point about what’s what’s going on there.

 

Paul Galloway  50:31

All right. We are evaluated or planned evaluate and we don’t have a TMS are leading followed by well, SaaS, TMS is closer. So those are about 75% of all the responses. And then we’ve got the hosted TMS installed TMS. Craig, do you have any comments around installed or hosted? Do you do you see over time that, that that goes away, along with like, homegrown treasury systems?

 

Craig Jeffery  51:02

Yeah, if you go back to about 2000, that’s when people move to what they call the ASPs. So that’s 22 years ago. Everything was installed at that point. And so now it’s down to 11%. These are very residual by the time we hit about 2004, 2005, the majority of new sales were SaaS, now, it’s almost 100%. It’s been almost 100%, for a long time, at all levels of TMS hosted would be a source of like an application service provider. So this is just characteristics of this particular audience. Most people are buying in the full SaaS, sometimes they refer to him as hosted. But yeah, some good information there, we’ll send that out because we’re well over the numbers. Yeah, so one other thing in the chat box, Paul and I are happy to you can follow us or you can invite us to connect, we’ll connect with all of you, I think it’s a great way of staying connected on LinkedIn mindset, strategic treasure, but that goes to my name. So happy to connect with you, I hope to connect with you. But when we talk about enterprise liquidity management, this category, we we listed this in last year’s report to describe what goes on. And, you know, there’s some foundational elements here. There’s some advanced functionality really what an ELM enterprise liquidity management has, at its core, what Paul defined as a treasury management system, or treasury risk management system. But to be an enterprise liquidity management system, there may be some things like working capital functionality built in it might have supply chain financing, might have very extensive forecasting capabilities. more robust foreign exchange or interest rate exchange modeling capability. So as you look across the board, they go multiple layers deeper than than other systems that are just at a core, a treasury management system. So this is a key key area where enterprise liquidity management is an extension beyond a TMS, they can still have the same name, we go into this at length in the book in the analyst report. And they also report is free for you to download, we’ll have links at the end, where you can click download the digital version and read away. I want to say a few things here on this for purposes of time. So this chart here is like a giant, what looks like a trophy of sorts, if you can see my mouse, you see enterprise liquidity management on the front facing side. This is a top view, where in the center, you have the core treasury management system, which is here, and that continues up through the entire stacks, that’d be a TMS here. Enterprise liquidity management, this relief photo is shown on the front. If we move around the outside, these are the enterprise oriented systems. So most people are familiar with enterprise resource planning the large accounting, as well as ordering systems. If you look at ETS, these are enterprise trading systems if you find these oftentimes, in certain industries that do massive amounts of trading either in FX or otherwise. When you look at ECRM enterprise commodity risk management, energy is a big area, various commodity users that have shipping and tracking there’s all these really developed systems that focus on those areas. Not necessarily that those are the terms that are in common use, but that’s how we define the market. So enterprise resource planning, enterprise liquidity management are the two Treasury versus accounting models etc. OS, and ecrm are related to commodity spaces aren’t very heavy trading areas that are usually much more trading that would happen with a typical corporate. So that’s our view on the top. But all of these systems need a core TMS within them. So the example of what comes up in the TMS some of these systems add this functionality to a TMS, and it handles the front face. So what are the different levels of what goes on there, you have level one cache operating accounts, short term investments, lines of credit, very foundational, you go, you go another level deeper, you’ve got things like intercompany lending, that’s like that seems pretty basic, pretty standard. It’s certainly less common and used, most commonly use than then some, some people think it’s not universally used, and you have investment and custody counts or separate account management. As you continue to go down. Now you’ve got cash conversion cycle, are things related to working capital on the collection side, the disbursement side things like billing, collection, management, cash application, etc. Then you go down to the other level, you might have debt market intelligence, what does the debt market look like? How do I manage my pricing? When do I renew functionality built in other things like supply chain finance, or finding other sources of data. And then capital markets, you know, beyond the debt markets, information on the capital markets that can fuel your analysis and analysis and activity. This is a conceptual view of how ELM can work and some of the different areas. Now, as we continue on, you can see some of the areas on the side, what what makes this up. And we do encourage you to take a look at the analyst report to see more about this category, new category we’ve defined, and an illustrated in several ways. But for purposes of time and purposes of finishing the content call.

 

Paul Galloway  57:11

Yeah, I’m sure gonna spend too much time on this. But this is visibility survey results around accounts payable, accounts receivables, there’s a good chunk of people on both sides that are taking steps to gain that visibility or improve that visibility. What I would say about these results on both sides is that about a quarter of all respondents have no visibility to AP and AR. So I think that’s a gap that needs to be closed. So I think we can move to the next slide by and great leading practices. I’ll take the left side, if you’ll take the right side, I’ll just briefly talk about selection. So considering organizational changes over the next six years, or next several years, I think is important. So think about acquisition or disposition of companies or new products and services, or organizational restructuring. I think that’s something that you need to think about when you’re considering TMS. And is that right for me? And what do I need to do with enterprise liquidity management, and then on the innovation side, you know, consider the changing technology landscape because it is changing. And we’re, you know, talked about earlier SAS and paths. And so these micro services or cloud based native services, you know, these these are new technologies are evolving, I think you’re gonna continue to see the pace of change, pick up and and over the next several years, we’re gonna see shift and change. So there’s new tools that are being developed, and distributed and integrated across systems, platforms, and third party partners. So keep an eye on innovations and consider that. And then options, consider all options and narrowed down the list and get it to a list that meets your business requirements, because that it’s not one size fits all. So that’s why we have a variety of TMS providers and providers that provide a certain level of service with their platforms. Because not everybody needs all the bells and whistles and some people just need a limited amount, given their business profile and platform. With that, Craig, I’ll hand it over to you.

 

Craig Jeffery  59:38

Yeah, so implementation I know everybody can read so I’m only gonna say a couple things here.  Ensure adequate resources. There’s a huge lack of resources and companies for putting in new systems this this is a pinch point is most acutely felt within it, but also within treasury and so getting additional resources from the vendor off from within for it from your operation area. And I don’t want to be self serving from consulting firms. But those are, those are areas that help ensure success. The last point, make sure you leverage the processes built into the system as opposed to forcing your system and your existing process into the TMS. I think everyone hears those. It’s always a little bit more challenging, but we’ll leave those with you to think about. Now I’ll turn over to Brian. And you can see some of the some of the vendors that participate in this portion of the report. How to get the free report. You can see that in the download section and turn it back over to you, Brian. Thank you, everyone.

 

Announcer  1:00:42

Thank you, Craig. Thank you, Paul. And thank you, everyone for joining us today.  The CTP and FP&A credits, today’s webinar slides, and the recording of today’s webinar will be sent to you within five business days. And be sure to download the Treasury Tech Analyst Report by clicking the link in the chat box. Thank you and we hope you have a good rest of the day.

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