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The True Value of TMS in the Evolving Role of Treasury

Historically the value of treasury systems primarily focused on time savings, improved efficiency, and enhanced productivity. While these remain important factors, time savings are actually the least interesting benefits a TMS offers corporate treasurers and CFOs.
In this webinar, Actualize Consulting and Kyriba discussed opportunities to realize the true value from a TMS, including:
- Cash Visibility and Forecasting
- Business continuity
- Financial controls
- Shared service centers
- Working capital optimization
- Risk management
If your organization is considering replacing an existing TMS or evaluating treasury technology for the first time, this webinar slides will help you make your business case.

You can contact treasury@kyriba.com for more information.

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The True Value of TMS in the Evolving Role of Treasury

  1. 1. Chad Wekelo Bob Stark May 10th, 2016
  2. 2. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2 Today’s Presenters Bob Stark Vice President, Strategy Chad Wekelo CPA, CFA, Founder & Principal
  3. 3. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3 Topics of Discussion  Why value is important  Downplaying productivity benefits  Value creation hierarchy  Realized value creation  Questions! Today’s Agenda
  4. 4. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4 Building a business case for technology is a reality  Executive approval almost always needed  Budget isn’t just “handed out” – Even if informal, justification often has to be presented  Justification often involves a mix of quantitative and qualitative benefits  Productivity (measured by time savings) isn’t enough Importance of uncovering value of a TMS
  5. 5. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 Productivity is a ‘soft’ benefit  Treasury doesn’t get downsized for improving productivity  You will still have a job; in fact, you will have a better job  Productivity improvements are generated across all treasury roles – Would take realignment of treasury team’s responsibilities to free up an entire FTE Only realistic opportunity to count time savings in ROI is when additional headcount doesn’t need to be hired Importance of uncovering value of a TMS
  6. 6. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6 Productivity Financial controls Global visibility Effective financial decisions Value Creation Hierarchy Single point of data entry • Eliminate re-keying errors • Improve accuracy and confidence in analysis Automate repetitive tasks • Shift time from processing to analyzing • Achieve results more quickly Streamline reporting • Automate and schedule preparation and distribution Treasury as a strategic partner
  7. 7. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7 Productivity Financial controls Global visibility Effective financial decisions Value Creation Hierarchy Examples Streamlining of payments process - 50 hours / month (25% ) Consolidating Cash Forecast - 80 hours / month (50% ) Automating GL Entries - 4 hours / day (50% ) Multi-bank reporting - 2 hours / day (25% ) Treasury as a strategic partner Productivity = X Annual FTE CostHours saved 8 Hours per day
  8. 8. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8 Improve data integrity • Eliminate reliance on ‘super’ spreadsheets • Standardize processes and procedures Controlled workflow • Separation of duties • Reduce SOX audit costs Centralized audit trails • Improve visibility and transparency • Better control of workflow Reduce propensity of fraud • Standardize payment workflows • Central management of bank accounts • Cloud hosting -> reduce internal fraud Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy
  9. 9. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9 Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy Examples Not as easy to quantify!! Reduce SOX Audit Costs - 50% reduction in time taken Reduced likelihood of fraud - Total Cost of fraudulent payment or bank account - % of event occurring Reduced likelihood of errors - Cost of error (e.g. broken formulae, ‘extra’ zero, duplicate payment) - % of event occurring
  10. 10. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10 Productivity Financial controls Global visibility Effective financial decisions Cash • Bank reporting • Cash positioning • Forecasting • Liquidity Financial positions • Investment • Debt • Intercompany • Foreign exchange Exposures • Foreign exchange • Interest rate • Counterparty • Supply chain Treasury as a strategic partner Value Creation Hierarchy
  11. 11. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11 Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy Examples Value of visibility is in the decisions it enables Bank Account Optimization - Visibility into bank accounts - Visibility into bank fees - Visibility into bank reporting = cost/benefit of bank accounts Identifying idle pockets of cash - Visibility into bank reporting - Can find balances didn’t know you had (or balances higher than realized) - More likely for decentralized
  12. 12. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 12 Productivity Financial controls Global visibility Effective financial decisions Excess cash and liquidity • Investing longer • Debt repayment • Supplier discounts Cash mobility • Multi-Lateral Netting • Cash Pooling • Cash Repatriation Risk Management • FX hedging • Trading diversification Analysis • Bank Fee Analysis • Bank Account Rationalization Treasury as a strategic partner Value Creation Hierarchy
  13. 13. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13 Visibility Cash Forecasting • By improving forecast accuracy, CFOs are able to reduce idle or underinvested cash balances and increase returns on cash • For every $10M of idle cash freed for strategic investment, bottom line impact is > $100,000/yearProductivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy
  14. 14. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14 Visibility Hedge Effectiveness • A better forecast means a better hedge program • For a $1B distributor with 50% global revenues, a 1%↑ in USD means $500M of global revenue becomes $495M • Increasing hedge coverage from 50% to 75% protects $1.25M for every 1% ↑ in USD Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy
  15. 15. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15 Optimization Reduced Bank Fees • Kyriba enables rationalization of bank accounts, elimination of data storage costs and redundant users, implementation of transaction netting • Will reduce bank fees by at least 10-20% • At least $50,000 to $100,000/year Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy
  16. 16. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16 Controls Fraud Prevention • Kyriba strengthens controls for cash management, payments and bank accounts. • Direct financial loss alone is typically $100,000+ (many examples of $1M+) • Reputational risk and stock price degradation are millions → billionsProductivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Value Creation Hierarchy
  17. 17. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17 Productivity Financial controls Global visibility Effective financial decisions Treasury as a strategic partner Build value through collaborative business partnerships  Intelligence  Insight  Analysis Benefit to the organization Financial Performance Risk Management Operational Improvement Business Continuity Regulatory Compliance Value Creation Hierarchy
  18. 18. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 18 Realized Value Creation - Aspirations
  19. 19. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 19  Central database containing all Treasury activity utilized across multiple functional groups  Creation of entire operational, management and external reporting generated from TMS  Tight integration with other financial systems – Banks (either host to host or via SWIFT) – ERP (forecasting, payments & accounting) – Trading portals (funding, investment, hedging, etc.) – Market data providers – Other  Utilization of TMS subledger capabilities with automated interface to GL Realized Value Creation Examples - Productivity
  20. 20. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20  Calculation of all accruals, valuations and cash activity on financial instruments  Reconciliation between expected and actual cash activity  Systematic bank account management  Embedded SOX controls into TMS  Creation of operational and management dashboard to activitely monitor key controls and risks  Robust compliance checking on payments (SWIFT message format, SEPA, OFAC) Realized Value Creation Examples – Financial Controls
  21. 21. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21  Integrated bank reporting via SWIFT or bank consolidator  Importing short and long term forecasts into TMS to create seamless interaction between actual and forecasted activity  Consolidation of Treasury data into one source enabling one source of the truth across the entire organization  Segregation of data by region, entity or function Realized Value Creation Examples – Global Visibility
  22. 22. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22  Management and monitoring of all financial and operational compliance via reporting  Improved confidence in current and forecasted cash position allowing more informed decision making and improved return on investment and minimization of bank and other transaction fees  Management of internal and external funding strategies  Enable more complex netting and pooling structures due to automation of transactional movements and tracking of activity and balances  More active monitoring and forecasting of exposures and true enterprise risk  Ability to monitor and report on vendor performance thereby allocating business accordingly  Reduction of earnings volatility due to improvement management of risk Realized Value Creation Examples – Financial Decisions
  23. 23. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 23  Key provider of financial analysis throughout the organization  Scenario analysis utilized for key business and M&A activity  Leverage vendor relationships to aid in expansion to new geographies/regions  Identification and communication of key trends or risks to other business groups throughout the organization Realized Value Creation Examples – Strategic Partner
  24. 24. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 24  Complex payments structures • Payment smart routing • Payment on behalf of others  Mobile Reporting • Seamless integration across all functionality and navigation  Reporting • Fully seamless and flexible reporting infrastructure including management dashboards and alerts Realized Value Creation – Opportunities for Improvement
  25. 25. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 25  A good business case will rely upon more than productivity to justify the value of a TMS  Value of technology = the improved treasury decisions that can be made  A more proactive treasury leads to greater strategic input and organizational collaboration Summary
  26. 26. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 26 Further Reading eBook: Building the Business Case for a Treasury Management Solution Download at: http://kyri.ba/TMSBizCase White paper: SaaS and Cloud: Beware of the Wolf in Sheep's Clothing Download at: http://kyri.ba/WhySaaS
  27. 27. Questions? Bob Stark bob.stark@kyriba.com @treasurybob Chad Wekelo cwekelo@actualizeconsulting.com
  28. 28. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 28 Thanks for attending facebook.com/kyribacorp twitter.com/kyribacorp linkedin.com/company/kyriba-corporation youtube.com/kyribacorp slideshare.com/kyriba kyriba.com/blog

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