Here is a scenario we see too often: You finally abandon spreadsheets and implement a treasury management system. You complete the hard work of system selection and implementation. Perhaps you endure the agonizing parallel phase where you use old and new systems together for a while. Finally, you are live and ready to enjoy the steady state. So why aren’t you happy?
The post-implementation blues
If yours is like many treasury teams, you may experience disappointment after a system implementation because you have gone to all this trouble, but you must still perform several manual workarounds. This occurs because the system could not handle all the twists and turns of your specific business process. This is a perfectly normal situation; no system can mirror everyone’s processes. But this journey and its outcome have left you disappointed. A system is supposed to provide all kinds of efficiencies and safeguards, and they do. However, they can’t cover everything, and you may be left wondering, “Was it all worth it?”
Take a step back and get some perspective. You didn’t really believe the system you implemented would take care of every aspect of your workflow. But your process is still taking a long time (or longer than you anticipated post go-live). Maybe the problem isn’t gaps. Maybe the problem is automation. Are you getting enough? And in the right places within your workflow? That possibility is worth investigating because it can uncover opportunities to greatly improve efficiency and outcomes.
Automating the “key 3”
If you’re not using automation to streamline these three areas, you are probably not automating your risk management program as much as you should be.
1. Manual Linking of Hedges to Exposures
Systems are not built in a vacuum. Technically mature products tend to define the scope of functionality for current products. One example lies in Hedge Accounting where some products pre-date the compliance standards that prompted treasury teams to implement a system in the first place. Those legacy systems met the functional requirements the way they had to – quickly and without a lot of thought to design. That’s why you must spend a lot of time post-trade linking exposures to hedges, hedges to hypothetical derivatives, and all those records to hedge strategies.
Wouldn’t it be great if system developers took the time to fully understand how corporate treasury teams manage risk, instead of dictating the process and proscribing aspects of your workflow? Lean treasury teams have many different areas to manage. Spending time linking data post-hedge can defeat the purpose of using a system. That’s why advanced treasury risk management (TRM) systems include functionality that enables users to tell the system what they want to do before they execute a hedge. That way, users can execute and capture trades knowing that their hedge accounting treatment is already taken care of automatically.
2. Month-End Financial Processing
That works for individual hedging strategies, but what about all of the data you have to manage at month-end? Many treasury systems require a “stand-in-line” approach to serving their clients simultaneously at month-end. They create process queues for MTM, Effectiveness Testing and Journal Entry creation. You typically have to kick these processes off yourself and then babysit them until they are complete and you can run the next process.
Wouldn’t it be great if your provider managed these processes for you? That way you could leave work at a reasonable hour and not have to check back in from home to keep month-end processing moving forward through manual intervention. You could simply show up the next morning and view your reports to spot check the data. and it can save a lot of time. But that also depends on having a good reporting solution.
3. Financial and Management Reporting
Most providers offer a report building engine and some pre-defined templates that enable you to extract data out of the system. However, unlike your business needs, these templates and the engine that builds them can be very static and hard to change.
Wouldn’t it be great if your provider had an off-the-shelf Application Programming Interface (API) that could easily connect with established Business Intelligence tools? That way, you could maintain dashboards for important stakeholders, drill into and display all aspects of the data that helps you analyze positions and make decisions, all while giving you the ability to adjust and enhance the reports you’ve built on the fly. This would save you an enormous amount of time and focus as you shift from managing templates to understanding the direction of your business.
These examples show the value of building as much automation into your workflow as possible. You may still have some manual workarounds, but the heart of what you are working on could be (and should be) automated enough that you can save many hours per month getting your work done. Identifying key automation gaps and then working with your TMS provider to address them is an important first step. Depending on your objectives and workflow, you may also want to consider adding a Treasury Risk Management (TRM) platform to your technology stack. A TRM adds functionality designed to automate and streamline your financial risk management process.
ChathamDirect is a groundbreaking Treasury Risk Management and hedge accounting platform that supports foreign exchange, interest rate and commodity hedging programs. ChathamDirect provides a clear view of your entire hedging program, including cash flow forecasts, balance sheet exposures and hedge requests—all securely available on a leading SaaS platform. ChathamDirect is backed by Chatham Financial, an employee-owned, independent market leader with a global team of capital markets experts, risk management advisors, CPAs, lawyers, quantitative analysts and technology developers who serve more than 2,500 clients annually.