Tag Archive for: payments

Factsheet: The TIS Solution Suite

21-09-2022 | treasuryXL | TIS | LinkedIn |

Introducing CashOptix, PayOptix, and RiskOptix features from TIS (Treasury Intelligence Solutions), which offer enterprises of all sizes and industries improved capability to handle crucial cash management, payments, banking, security, and compliance demands. Find out more about the benefits of each suite right away in this unique factsheet.

Get to Know the TIS Solution Suite

TIS classifies the unique capabilities they offer clients into three distinct categories; CashOptix, PayOptix, and RiskOptix. When combined, this cloud-based suite provides organizations of all industries and sizes with superior functionality to address critical cash management, payments, banking, security, and compliance needs.

You can find the factsheet here

Get to Know TIS

05-09-2022 | treasuryXL | TIS | LinkedIn |

To give their clients the best treasury, payments, and liquidity management software and support possible, TIS is continually expanding and developing. Download the “Get to Know TIS” Factsheet to view the most recent details about their business and solution portfolio.

Source

Get to Know TIS

Read the factsheet to learn more about TIS. The purpose is to summarize each area of our business in order to educate readers on all the core capabilities, value-added services, and general operational expertise that TIS offers to clients.

This resource also highlights relevant stats, figures, and metrics that demonstrate TIS’ position as a global leader in enterprise payments and liquidity management. For more information about the capabilities that TIS offers or to better understand any aspect of our solution suite, request a private demo with one of our experts by emailing [email protected].

 

You can find the factsheet here

Payment Platforms & Collections in China

11-08-2022 | treasuryXL | ComplexCountries | LinkedIn |

Cryptocurrency, digital wallets, virtual everything – there is a huge amount of change. China has been at the forefront of a lot of digital trends, partly due to the fact it had an antiquated banking system which has been thoroughly modernised, and partly because the explosion of internet shopping in the country required a digital payments solution. This is a challenge when there are no credit cards.

Source

This report is based on a Treasury peer Call which explored how this is affecting members’ companies, and how they are adapting to this brave new, digital, world.
  • Most participants are accepting payment using WeChat Pay and Alipay. None is using these tools to make corporate payments.
  • The collections process using these tools is efficient and effective: you work with a third party (usually accessed via a banking provider), who will transfer the funds to your account the following day. One participant did an RFP, with two Chinese and two foreign banks, and found the service was identical – though pricing was different, and not transparent.
  • There was no mention of billbacks, the excessively high fees and acquirors which blight the use of credit cards in other countries
  • The one complaint all participants had was the difficulty linking this process to internal systems, for the reconciliation of receipts or for compliance purposes in terms of identifying the source of cash. The third party companies do provide detailed lists of payors, but it can be difficult to upload these into the ERP system.
  • There was a lot of discussion about travel expenses. The low acceptance of credit cards in China complicates the automated links which often exist between credit cards and T&E management and control systems. Allowing employees to use Alipay and WeChat Pay generally raised problems in terms of obtaining adequate receipts. One participant’s company was doing extensive auditing of travel expense claims, but this is expensive.
  • One company is using virtual credit cards to solve some of these issues, while one is routing payments made on AliPay and WeChat Pay via credit card providers to get the automated expense reporting.
  • Another issue was that, in some cases, sales teams had opened Alipay and WeChat Pay wallets for customers to pay into – but there was no way to stop them from taking this cash to pay themselves. The solution is to require all collections to go via the third party providers, who are under instructions to only remit the cash to the Company’s bank account.
  • Most B2B collections still go through bank transfers or BADs (Bankers’ Acceptance Drafts). One participant is introducing controls to ensure BADs are only accepted if drawn on banks with an acceptable credit profile. Some participants are making payments by endorsing customers’ BADs to their own suppliers. There are some collections by cheque.
  • On the payments side, most participants are making payments via the banks’ host to host systems, or using the payment tools in their TMS products. Participants are using a variety of local and foreign banks: ICBC and Bank of China got the most mentions amongst the Chinese banks, with a spread across Citi, HSBC, Standard Chartered and Deutsche Bank for the foreign ones. Kyriba was the TMS mentioned.
  • One participant is using Pcards for small value purchases – but this is not easy.
  • One participant was struggling with customers who have operations in both mainland China and Hong Kong, and who regularly make payments out of the wrong entity.
  • One participant has experience of linking their IT systems directly to the banking system, to get reporting from all their banks. While possible, this requires a lot of IT work.

There as also a discussion about cash pooling: this works in China.

Bottom line: China is at the forefront of innovation in dematerialised payments. As one participant put it, it has become very hard to use old fashioned cash.

But, as this is China, things are not straightforward!

This report was produced by Monie Lindsey based on a Treasury Peer Call chaired by Damian Glendinning

To access this report:

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Please contact ComplexCountries to find out about their subscription packages.

The State of Treasury in 2022: Research Summary

28-07-2022 | treasuryXL | TIS | LinkedIn |

This blog gives you insights into the state of the treasury function in 2022 and a short list of recommended action items for better management of modern-day treasury operations

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About TIS’ Global Research

The insights highlighted in this article are based on a comprehensive set of studies conducted by TIS and our affiliates between Q1 2017 – Q2 2022. During this period, TIS held one-on-one interviews with hundreds of treasury experts and also released a suite of digital surveys that gathered feedback from thousands of financial practitioners regarding technology, staffing, and general operations.

Over the course of our research, TIS partnered closely with a niche team of industry experts, thought leaders, and consultants to interpret the findings. Historical treasury data was also obtained from the Association of Financial Professionals (AFP) and the consulting firm Strategic Treasurer to provide context regarding the evolution of treasury technologies and practices over time. Together, the expertise of our consortium and the extensive feedback collected from industry practitioners has provided us with unparalleled insights into the state of the treasury function in 2022.

While this article serves to highlight the summary findings and recommended action items from our studies, readers that would like more data and information are encouraged to download our full whitepaper for extended coverage.

 

 

Research We Relied Upon

The below surveys, polls, and interviews represent the full suite of research that TIS relied upon to complete our study. Links to the associated research conducted by our affiliates are provided as applicable.

  1. 2017 Strategic Treasurer Technology Use Survey. View Full Results Here
  2. 2020 AFP Strategic Role of Treasury Survey. View Full Results Here
  3. 2020 TIS Rapid Research: Remote Work Capabilities Poll
  4. 2022 TIS Rapid Research: Treasury & Payment Systems Usage Poll
  5. 2022 TIS & Treasury Priorities & Opportunities Survey. View Full Results Here
  6. 100+ One-on-One Interviews with Active Treasury Practitioners Between 2017-2022

 

Key Findings & Highlights

This section provides a brief overview of the key points obtained through our research. For more information on any point of interest, please refer to the full whitepaper.

1. Treasury’s Responsibility List is Constantly Growing: The treasury function has never been more critical to the success of an organization, and this is being recognized internally by key stakeholders. However, treasury practitioners are now being handed additional responsibilities as executives and other departments realize the value they can provide, and nearly 80% of U.S. treasury teams saw their “net” list of responsibilities increase in 2022 vs 2021.

 

 

2. Stakeholders View Treasury as Equally Strategic & Operational: Over 50% of financial practitioners believe the treasury function holds key strategic value, which represents a significant shift from the traditional viewpoint of treasury being mostly an operational function. This shifting perspective is shared widely amongst internal stakeholders like accounting and AP. Today, treasury’s strategic influence is impacting areas like technology adoption, working capital management, bank connectivity, payment processing, and financial reporting.

3. A Saturated Technology Market is Confusing for Treasury: The growing importance of the treasury function and widespread digitalization of global financial operations has resulted in an abundance of Fintech and bank-led software products entering the market. While this has helped foster innovation, data also shows that many treasurers have become confused by the breadth of categories and service offerings in the market, which has led to greater indecision and headache during RFPs and implementations.

 

 

4. The Line Between “Treasury Expert” and “Tech Expert” is Blurring: As the treasury function continues shifting away from paper-based and manual workflows to digitally automated processes and software tools, treasury personnel are finding that their technological proficiency has a significant impact on their ability to perform their core financial responsibilities. This is leading many practitioners to seek out technology-based learning courses in tandem with their more traditional financial education.

5. Fraud & Security Concerns Remain a Critical Issue: In today’s remote and digitally-operated business landscape, tech-savvy criminals are presented with even more opportunities for infiltrating a company’s systems and processes. This is leading to a noted increase in fraudulent attempts across a variety of areas, and treasury teams are continuing to invest heavily in both technology and training to protect themselves.

6. Successful Treasury Teams Collaborate with Other Stakeholders: Research found that many of the most successful treasury teams are proactively working cross-collaboratively with other internal stakeholders and departments like accounting, AP, and IT to accomplish their objectives. These teams are also frequently partnering with external consultants, solution vendors, and bank personnel to ensure alignment and cohesion across all their various systems and operational workflows.

 

Recommended Action Items for Treasury

Based on the findings from our research and interviews, TIS experts have compiled a short list of recommended action items that treasury teams should consider as they seek to better manage their operations in 2022 and beyond. They are as follows:

1. Embrace the Opportunity to Provide Greater Strategic Input: As CFOs and other departments increasingly rely on treasury for reliable data and insights, practitioners should embrace the opportunity to expand their strategic influence internally. In the long run, this ability to provide value in new ways across the organization will benefit treasury when it comes to securing new budget and staffing approvals. However, in order to provide the most visibility and control over their operations without overloading their small teams, treasury must become highly adept at leveraging technology to eliminate manual workflows and repetitive tasks.

2. Becoming Proficient with Technology Should be Non-Negotiable: As technology continues to play a massive role in treasury, it’s crucial for practitioners to familiarize themselves with the core tenets of the modern technology landscape. This does not mean simply researching new buzzwords, but instead seeking to understand the unique differentiators that separate various bank and fintech product offerings in the market. Treasury should also not hesitate to seek out the help of specialized consultants or technology experts for help. Ultimately, treasury’s ability to effectively identify the solutions and capabilities that best fit their company’s needs will save significant time, money, and headache during implementations and migrations.

3. Managing Security for Remote Workforces Requires Extra Care: Given the continued prominence of fraud attacks within the treasury and finance environment, there is no room for error when it comes to protecting a company’s systems, workflows, and personnel. To secure their funds and assets, treasurers must implement multifaceted security controls and protocols that extend beyond the “frontlines” and include executives, administrators, and other “back-office” staff. Combining education and awareness with multiple layers of technology is the only way to gain the upper hand against a new era of tech-savvy criminal.

4. Building Strong Relationships with Other Stakeholders is Crucial: Today, most of the financial systems and workflows that exist within a business are closely intertwined. This means that treasury operations have a significant impact on other departments, and vice versa. Given the extent to which treasury workflows are integrated with those of other stakeholders, it’s vital for treasury to communicate and collaborate effectively with these groups. To ensure total alignment and cohesion, treasurers must be proactive in establishing solid relationships with internal IT, accounting, and AP departments as well as external banking and solution vendors.

5. Ongoing Education is Vital for Staying Ahead of the Curve: Treasury and finance teams have made it clear they are intent on furthering their education and professional skillsets. This professional development is not limited to any one area but encompasses a broad array of topics across both technology and finance. In a digital world, many practitioners are relying on remote seminars and webinars, but in-person events and training are still on the list for many teams as well. Moving forward, it’s highly recommended that practitioners who are serious about their careers undergo regular education and training so that they can stay abreast of new industry developments and innovations.

How Can TIS Help?

The TIS team hopes that the findings highlighted in our research are helpful for teams currently evaluating their own treasury structure, technologies, and workflows. For businesses that view these insights and find themselves in need for enhanced payments, cash management, and banking functionality, we would strongly urge you to consider the solution and services provided by TIS.

Today, TIS is streamlining treasury automation through a cloud-based platform that is uniquely designed to help global organizations optimize global payments and liquidity. In essence, the TIS solution is a multi-channel and multi-bank connectivity ecosystem that streamlines the processing of a company’s payments across all their global entities and systems.

Sitting above an enterprise’s technology stack and connecting with all its back-office, banking, and 3rd party solutions, TIS effectively breaks down department and geographic silos to allow 360-degree payments visibility and control. To date, the more than 200 organizations that have integrated TIS with their global ERPs, TMSs, and banking landscape have achieved near-real-time transparency into their payments and liquidity. This has benefited a broad variety of internal stakeholders and has also enabled them to access information through their platform of choice. Data is available either through dashboards or direct downloads but can also be delivered back to the originating systems.

As part of our client-centric service model, we fully commit our own resources to your implementation and manage the configuration of all required system functionalities, back-office integrations, and bank connections on your behalf. Beginning with project kick-off and lasting through testing and go-live, TIS’ all-inclusive approach to customer support means you never have to rely on internal resources to maintain our solution or integrate it with your existing technology stack.

This systematically controlled payments workflow is managed by TIS for both inbound balance information and outbound payments, and data can be delivered from any back-office system via APIs, direct plug-ins, or agents for transmission to banks and 3rd parties. No matter where you operate from, TIS provides global connectivity and provides the real-time data, control, and workflows needed for treasury to automate and control their end-to-end payments and liquidity processes.

For more information, visit our website or request a demo with one of our experts.

 

Approaches to FX Volatility

13-07-2022 | treasuryXL | ComplexCountries | LinkedIn |

The latest CompleXCountries report is based on two Treasury Peer Calls in which senior treasurers from Asia, the Americas and Europe discussed the latest bout of increased FX volatility, and the impact it is having on their hedging strategies. As to current volatility, some people are adjusting their strategies, but most prefer to stick with the approach which has already been defined.

Source

FX – one of the biggest and most important challenges we all face. It has a direct impact on the business, and everyone has a view.

The calls (European morning and afternoon to accommodate Asia and the Americas) were to discuss the latest bout of increased FX volatility, and the impact it is having on people’s hedging strategies – if any. Unsurprisingly, it turned into a long discussion of the way different companies approach hedging. The report below is long and very varied – we managed to reduce it to 20 pages, but they are dense. As to current volatility, some people are adjusting their strategies, but most prefer to stick with the approach which has already been defined.

What is that approach? The participants came from a variety of different industries, and covered a broad range of different ways of handling the issue.

  • Everyone has a defined hedging approach, though most contain some degree of flexibility. So, if the approach is to hedge the next 6 months, for example, there may be leeway to go down to 4 months or up to 8.
  • Most people add their hedges via a layering approach, where they build up the hedge over time. This provides an average hedge rate, and avoids the risk of choosing a single point in time.
  • Everyone tries to match their hedges to the needs of the business. This involves co-ordinating with the business units to get their input on the ability to change prices, how long it takes to do so, etc.
  • Most companies have a centralised approach to hedging, but there is variety as to whether central treasury acts as and advisor, or as a decision maker. In most cases, this is decided by the company’s internal measurements and incentive system.
  • Several companies try to insulate the operating units from the effects of currency. This is done by various means: several participants operate re-invoicing centres, which invoice the operating entities in their own currencies, and manage the resulting exposures in the centre. One participant achieves the same result by levying a currency specific working capital charge on the operating units. The income from this charge is then used to pay for hedges – which may, or may not, actually be taken out.
  • In these cases, the centre usually operates as a profit centre – but with strong risk management disciplines to contain the danger of positions getting out of control.
  • One other approach is to fix a budget exchange rate for the coming year, and try to lock that in via hedges. There was a discussion as to whether this suits all businesses.
  • Most participants use forwards for hedging, with the choice of deliverable or NDF varying from one country to another. Several use options, though cost and accounting complexity were obstacles.
  • One participant has an approach which is built entirely around options, including a sophisticated trading strategy to reduce the cost of what they view simply as an insurance policy, like any other. This company is also very opportunistic, and will be active or inactive in the market according to their view of current pricing. This company is also private, and family owned, so they have a higher tolerance for earnings volatility than most – and they are not concerned about quarterly earnings announcements. They also have a relatively high margin business.
  • In this company, as in all others, this strategy is only possible because it has the understanding and buy-in of the management and the operating units. Every participant mentioned this as being key for success.
  • Generally, the percentage of hedging is fixed by policy. However, most participants exercise some judgement, based on the cost of hedging. This is particularly relevant for some emerging market countries, such as Brazil, Argentina and many African countries. The judgement as to what constitutes a hedge which is too expensive was often empirical, but the currencies which were left unhedged usually did not represent a significant exposure for the company.
  • Most participants prioritise balance sheet hedging over cash flow hedging, but some take the opposite approach. In all cases, the accounting treatment is a significant factor in determining the approach.

Bottom line: hedging and managing currency is one of the key competences of the treasurer. For many years to come, it will continue to be one of the areas where there is the biggest variation in approaches – and endless debates. If you have an approach which is well defined and which has been fully discussed with the business, there should not be any need to change it during a period of volatility – though it can be an excellent stress test!

Contributors: 

This report was produced by Monie Lindsey, based on two treasury peer calls chaired by Damian Glendinning.

[The full report can be downloaded FREE by corporate treasury practitioners, please Log in to your account to download (if you receive emails from us – use your email address to retrieve your password), if setting up a new account, please ask for the FX report in the comments and ComplexCountries will send you a copy]

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TIS Coffee Talk

11-07-2022 | treasuryXL | TIS | LinkedIn |

Attend TIS’ coffee talk tomorrow with Joerg Wiemer and Nicolas Christiaen to learn more about how their innovative and cloud-based solution is addressing treasury’s contemporary concerns in the areas of forecasting and liquidity management.

Tuesday, July 12th, 4-5PM CEST

Cash Forecasting & Liquidity Management with TIS

 

Speakers: Jörg Wiemer, CSO & Co-Founder of TIS.  Nicolas Christiaen, Founder of Cashforce

Date: Tuesday, July 12th, 10-11am EDT / 4-5pm CEST

Session Outline: Today, cash reporting and forecasting functions are still being performed manually by a significant portion of treasury groups, which represents a major pain point for CFOs and business leaders when attempting to make strategic financial decisions. These manual workflows also limit treasury’s bandwidth to focus on other tasks and impact their ability to effectively manage liquidity and working capital. However, the new suite of capabilities developed by TIS and Cashforce (acquired by TIS in Q2 2022) eliminate many of these inefficiencies and ultimately enable companies to gain quick and accurate insights to their financial position based on reliable payments and liquidity data.

Key Discussion Points: In this session, Jörg and Nicolas will:

  1. Explore the treasury industry’s outstanding need for improved cash forecasting solutions and workflows.
  2. Examine the modern challenges of collecting and aggregating the right data together to conduct forecasts.
  3. Showcase how the accuracy and completeness of this data is paramount to the success of treasury’s overall forecasting strategies.
  4. Highlight how a “data-first” approach to forecasting generally results in more accurate and actionable insights.

To better understand how global liquidity management and cash forecasting workflows are being transformed through TIS’ revolutionary data aggregation, analytics, and advanced AI / ML capabilities, use the below link to register.

We can’t wait for you to join us! 

 

Nicolas Christiaen on TIS’ acquisition of Cashforce

06-07-2022 | treasuryXL | TIS | CashForce | LinkedIn |

Would you like more insights into TIS’s acquisition of CashForce? Hear from Nicolas Christiaen, CEO and founder of Cashforce, as he describes the inherent synergies between the two companies and what may subsequently be accomplished as a result of the acquisition.

Watch the video below to hear from Nicolas

 

 

“Our best-of-breed solutions are very complementary to each other: Being that natural synergy”

 

 

 

Nicolas Christiaen, CEO and founder of Cashforce

 

Treasury & Banking in India

20-06-2022 | treasuryXL | ComplexCountries | LinkedIn |

This call took place against the background of the war in Ukraine – but it was a useful chance to catch up on the ever-improving situation in India.

India has always been complex, with many regulations and poor clarity. This is clear from the comments below, where participants often have different experiences on the same topic. But, overall, the economy is working well, people are making profits (this was not always the case), and regulations are becoming more user-friendly, even if they remain challenging.

Source

Business structure: most participants have one legal entity which faces customers, and a different one which acts as an international shared service centre, invoicing other companies in the group on a cost plus basis. This can lead to inefficiencies in cash management: everyone struggles with domestic cash pooling and intercompany loans, while the shared service centre has guaranteed profits and cash generation. One participant has all activities in the same legal entity, which makes life easier.

Intercompany loans within India create transfer pricing and tax challenges: there is a required or recommended interest rate of 8%, compared to deposit rates of 4% to 4.5%.

Cross border cash pooling and intercompany loans are generally very difficult: many approvals are required. Dividends are subjected to withholding tax of 15%, which is sufficient to deter some, but not all, participants from paying dividends. However, this is an improvement on the previous 22% dividend tax, which was often not creditable against tax in the receiving country.

Netting of intercompany invoices is not allowed. However, one participant is using an Indian entity to centralise all invoices within the country using a POBO/ROBO process, and limiting the transactions to a single, large, gross in/gross out settlement. They are also looking at a non resident INR account.

Participants mostly use deposits for investing their excess cash. One is using the TIDE deposit: the bank automatically sweeps fixed amounts of cash above a defined threshold into deposits. These receive a higher rate if they remain for more than two weeks, but can be released if needed, with a lower interest rate being paid.

Most participants use international banks, mainly Citi and BNPP. Most complained that Citi are reluctant to use automated FX platforms, and are behind on the electronic transmission of import documentation – but one participant had a more positive experience. JPMorgan again received positive comments for their approach.

The participants who use local banks generally had positive comments about them, and found they were a big help with pricing, especially on loans and letters of credit.

Tax remains complex and challenging.

 

Bottom line: the – excellent – report below reflects the significant complexity of doing business and managing treasury in India. But it is an important market, and one which is improving. So it is definitely worth the effort!

To access this report:

Access to the full report is available to Premium Subscribers.
Please contact us to find out about our subscription packages.

Build vs Buy: How Should Treasury Teams Upgrade Their Bank Connectivity & Payments Stack?

15-06-2022 | treasuryXL | TIS | LinkedIn |

This blog highlights the primary considerations that treasury and IT teams must make when determining whether to build custom in-house bank connectivity and payments solutions or contract the services and software of a specialized 3rd party vendor. After evaluating the main benefits and drawbacks of each option, we provide a list of helpful questions for practitioners to consider as they decide whether building or purchasing a solution best suits their needs.

Source

How Does the “Build vs Buy” Debate Typically Surface Within Organizations?

In today’s remote and digitally operated business environment, it’s no secret that organizations have grown deeply reliant on technology to manage and automate their core treasury and finance functions.

Realistically, a “modern” company operating in 2022 will be doing business through a myriad of banks, accounts, currencies, and entities. They will also likely have hundreds or thousands of vendors, partners, and customers within their network. As a result, digital payments and cashflows are moving in and out of the business constantly, and every movement must be monitored and controlled by treasury teams that often consist of just a few employees.

Because of treasury’s limited personnel bandwidth, any issues with adopting the right bank connectivity and payments stack to automate their core operations almost always lead to excess complexity and manual strain. It can also result in significant security and compliance gaps, along with general inefficiency across crucial processes like transaction processing, liquidity management, balance reporting, and cash forecasting.

But while most treasury and IT groups today can agree that developing a robust connectivity and payments stack is critically important, each internal stakeholder will likely have their own idea regarding what the “best-fit” version of this technology stack actually looks like.

Why is this?

As companies grow over time, the systems they use to manage payments and connect with their banks must evolve accordingly. Because managing a few bank accounts and transactions in a single country and currency is a fundamentally different task compared to managing dozens of banks, hundreds of accounts, and thousands of payments across numerous countries and currencies, companies cannot rely on the same solutions and structure they’ve always used to sustain them as they scale.

Instead, in order to maintain compatibility with new payment formats and channels like ISO 20022 and SWIFT GPI, connect with regional payment networks like NACHA and EBICS, or accommodate custom bank connectivity protocols (Host-2-Host / SFTP, APIs, etc.), growing enterprises will inevitably reach a point where their existing payments and banking architecture must undergo a significant overhaul.

Complexity grows as you scale. Scaling from just a few bank accounts, back office systems, and funds transfers being executed in a single country to managing dozens of international banks and systems, hundreds of accounts, and thousands of payments globally requires a drastically different tech stack for treasury.

However, as this evolution occurs and internal stakeholders recognize the need to upgrade their connectivity architecture, disagreements often arise over which vendor or “type” of solution is the best fit. Given that there are hundreds of available 3rd party solutions that could potentially address treasury’s requirements, as well as a variety of internally developed applications that could be created and deployed by IT teams, it is common for different stakeholders to have contrasting views over which option is the smartest choice.

This is where the “Build vs Buy” technology argument most frequently comes into play.

 

Understanding Both Sides of the Build vs Buy Argument

As organizations recognize the need to upgrade their payments and connectivity capabilities, there are two main approaches they could leverage to address the issue. The first is to use internal IT resources and expertise to build a customized solution for treasury, and the second is to purchase a specialized solution from a 3rd party provider.

But which option is the best choice?

Let’s quickly review the key benefits and drawbacks of each option.

The Pros and Cons of Building vs Buying a Treasury Solution

Building an Internal Connectivity Solution

Organizations that prefer to create their own custom connectivity solutions internally using IT resources and expertise will likely have a greater ability to customize the offering in a manner that best addresses all their needs. To date, several prominent ERPs offer modules or plugins that give  IT staff the ability to build custom formats and configure their own connectivity protocols. However, this option requires a significant amount of bandwidth and maintenance from treasury and IT teams, as well as a high degree of expertise and technical prowess to support the solution over time. The below pros and cons list highlights this reality in more detail.

PROS

  • IT and Treasury teams know firsthand what the main requirements and preferences are.
  • Support and maintenance for the solution can be handled internally.
  • The solution can be customized to fit the exact needs of the enterprise.
  • Complexity and redundancy regarding unnecessary features are kept to a minimum.

CONS

  • IT and treasury teams may not have the bandwidth to build their own internal solution.
  • Fixing bugs and patches requires internal support, which is not always readily available.
  • Not all internal teams have the expertise required to build complex connectivity solutions.
  • Supporting the need for new formats and connectivity protocols requires more custom work.
  • Scaling over time requires constant upkeep and maintenance from internal resources.

Adopting a 3rd Party Connectivity Solution

Compared to building an internal solution, adopting a 3rd party connectivity and payments solution usually requires less of treasury and IT’s time, and there is less effort required to develop, implement, and maintain the solution. However, there is also the chance that this solution will require the purchase of redundant or unnecessary features. At the same time, improper or incomplete implementation of a 3rd party solution can cause severe integration, security, and compliance issues over time. More about these pros and cons are highlighted below.

PROS

  • IT and Treasury teams have a minimized role in the solution’s implementation and upkeep.
  • Dedicated customer support staff can help resolve issues and requests.
  • Updates and patches are normally handled externally by the vendor.
  • Specialist functionality is pre-packaged to address best practices in connectivity and payments.
  • Liability on the company to maintain, host, and secure the solution is largely outsourced.

CONS

  • Specific customization of the product for treasury teams cannot always be assured.
  • Reliance on 3rd party vendors for support and upkeep may result in delayed responses and feedback.
  • Tech complexity can quickly escalate if companies start adopting numerous 3rd party solutions to manage various functions, especially if they do not integrate well with one another.
  • Using external solutions for data and payments can create additional security risks and compliance issues.

 

As showcased by the above bullets, a company’s decision to build or buy its payments and connectivity solutions should always depend on its unique circumstances. For instance, a company with sufficient IT personnel and internal expertise might have the bandwidth to create and maintain a solution on its own. However, if treasury and IT teams are already exasperated with their current list of responsibilities and don’t have the time or expertise necessary to create and maintain their own solution, it probably makes more sense to begin evaluating the services of a 3rd party provider.

For treasury teams who are presently evaluating their options and need help deciding on the best course of action, the following considerations will help provide more clarity during the decision-making process.

Elements to consider when evaluating build vs buy

 

A Checklist to Walk Through When Deciding to Build or Buy Your Next Connectivity Solution

1. Validate the Need for New Technology

Many organizations have their eye on new technology before identifying any legitimate business need. Sometimes this “cart before the horse” approach is due to rigid business processes, lack of technical knowledge, or pure product hype. Decision-makers are very often awed by product suite success stories, dynamite product demonstrations, and industry analysts’ evaluation of technology—even when they haven’t formally identified a need for the technology.

To avoid these pitfalls, treasury and IT teams need to first validate the need for upgraded connectivity and payment protocols, prior to even beginning to evaluate which solution makes the most sense.

Last, but not least, tech leaders need to provide an estimated return on investment (ROI) for any new solution, along with a description of how ROI will be measured. It is surprising how many programs are initiated without considering ROI or added business value upfront. Many of these projects consume a lot of budget and time before leaders realize that either the solution will not add value or there is not a legitimate business need.

 

2. Identify Core Connectivity & Payment Requirements

In large organizations, pinpointing core connectivity requirements is often easier said than done. Still, it is a critically important step to take before deciding to implement a new solution. A core business requirement is one that must be supported by the solution to continue functioning as intended. For multinational organizations, core connectivity requirements may involve compatibility with numerous format types (EDI, BAI, SWIFT MT, ISO 20022, etc.) as well as numerous bank channels (SWIFT, H2H, EBICS, etc.) and back-office integrations (APIs and plugins for ERPs or TMSs).

Although determining treasury’s exact connectivity requirements may be difficult, it is extremely important to identify these core functional requirements first—not technology or design requirements. This is the only way to ensure unnecessary or redundant functionality is not purchased erroneously, and also ensures that critical requirements are never accidentally overlooked and unaddressed through whatever solution is ultimately chosen.

 

3. Consider Your Technology Architecture Requirements

Going a step further than the above point, it’s safe to assume that organizations are already using technology to enable other business processes. To reduce the cost and liability of this technology, your organization has also likely adopted standards related to how internal solutions are implemented and maintained.

As such, it is extremely important to identify any architectural requirements or standards that a solution must adhere to before determining if a 3rd party solution or an internal solution is the best choice. Some factors that may restrict the solution choice are as follows:

  • Information security strategy, compliance policies, and privacy standards (SOC 1 & 2, GDPR, etc.)
  • The state of current / planned systems with which the solution will be interfacing
  • What the preferred hosting structure is for the new solution (on-premise, SaaS, etc.)
  • Type and complexity of integrations that must be supported by the solution
  • Operating systems in use by the organization and their partners/banks/customers/entities

 

4. Examine & Evaluate Existing Solutions FIRST

At this point, a business need has been pinpointed, ROI has been estimated, and both core business and architectural restrictions have been identified. Leaders should now take a good look at existing systems.

It is not uncommon that different departments or entities of a large, global organization are not aware of what systems exist in other areas of the company. As a result, businesses will often implement multiple versions or forms of the same technology, only to discover that another system within the organization could have supported treasury’s new requirements with little to no modification. Thus, before deciding on the “best-fit” solutions approach, you should determine if any existing system(s) within the organization can be easily scaled or extended to meet your business need.

 

5. Compare In-House Expertise & Bandwidth Relative to Current AND Future Capabilities Required

One major factor that can significantly reduce the ROI of a custom-built solution (and in many cases, ultimately causes the project to fail) is the lack of available personnel with proper skill sets. In reality, the process of designing and deploying custom connectivity solutions that are both scalable and extensible is a massive undertaking for both treasury and IT. Unless one of your business areas is product development or you have an abundance of available IT support, there is an extremely high probability that your operations and maintenance technology resources will not be able to build, sustain, and support an internal solution, especially as new needs and requirements arise over time.

It is never profitable to let personnel gain these skills and experience by developing business-essential systems. Yet, more often than not, decision-makers see the short-term cost differences between an internally-built vs 3rd party solution and decide to try and build their own in order to save money. However, unless you’re supremely confident in the skillsets and bandwidth of both your treasury and IT teams, this option is not recommended.

 

Why TIS is the Ideal Provider for Global Payments, Liquidity Management, & Bank Connectivity

Ultimately, any organization evaluating whether to build or buy its next solution will have to closely analyze its own operations in order to make the best decision.

In cases where organizations require support for a complex array of payments and bank connectivity protocols and are open to considering a 3rd party vendor, they should closely evaluate the capabilities provided by TIS.

The cloud-based, fully-supported platform provided by TIS offers a global, multi-channel, and multi-bank connectivity ecosystem that streamlines and automates the processing of a company’s payments across all their global entities and systems. By sitting above an enterprise’s technology stack and connecting with all their back-office, banking, and 3rd party solutions, TIS effectively breaks down department and geographic silos to allow 360-degree visibility and control. To date, the ~200 organizations that have integrated TIS with their global ERPs, TMSs, and banking landscape have achieved near-100% real-time transparency into their payments and liquidity. This has benefitted a broad variety of internal stakeholders and has also enabled them to access information through their platform of choice since the data that passes through TIS is always delivered back to the originating systems.

 

TIS Simplifies Global Payments & Liquidity

Because of the deep connections that TIS maintains with internal systems such as ERPs or TMSs, external banks, and 3rd party vendors, the process of managing payments is simplified for every internal stakeholder. C-suite executives, treasury, accounting, AP, legal, HR, and other key personnel can access whatever financial data they need, exactly when they need it. And by automating this flow of information for both inbound and outbound payments, TIS provides the control and flexibility that enterprises need to function at their highest level.

Finally, with the global payments data we have amassed and the decades of experience our team has in orchestrating enterprise payments, we are uniquely equipped to help enterprises accurately benchmark their payments performance and provide tailored advice on how to optimize, grow, and mature. Ultimately, this rich data and deep experience are what enable us to continually provide industry-leading payment solutions and support to our enterprise customers.

In the digital world of enterprise payments, TIS is here to help you reimagine and simplify.

For more information about how TIS can help you, visit our website or browse our latest resources!

Winding Down Russia: Treasury Challenges

23-05-2022 | treasuryXL | ComplexCountries | LinkedIn |

 

This was our third call on the situation in Russia. It focused on the practical challenges people are facing: nearly all participants are either running down their businesses or continuing on humanitarian grounds for products which are exempted from sanctions, particularly in the healthcare sector. However, as one participant put it, winding down is easier said than done.

This report was compiled by Monie Lindsey. based on a Treasury Peer Call chaired by Damian Glendinning.

We are happy to share a copy of the full report FREE, please contact us and mention ‘Russia Report’ in your message.

Source

Chair’s Overview

This was our third call on the situation in Russia. It focused on the practical challenges people are facing: nearly all participants are either running down their businesses or continuing on humanitarian grounds for products that are exempted from sanctions, particularly in the healthcare sector. However, as one participant put it, winding down is easier said than done.

  • Many businesses operate through franchises in foreign countries. Terminating the franchise agreement may not be enough to stop them from continuing the business and using the brand name – some high-profile companies which have stopped operations still have franchisees who are continuing to trade, using the name.
  • In some cases, the name remains on the business. This makes it difficult for the brand owner to walk away, as the reputational risk remains.
  • People in the healthcare sector feel a need to carry on for humanitarian reasons. For them, there are significant logistical challenges getting new shipments into the country: no flights, very little sea freight, so heavy dependency on road transport, with limited willing suppliers. They are encountering an additional issue: sanctions apply based on customs codes, and some health care products have not been appropriately coded.
  • In other sectors, companies continue to sell down their existing inventory – but even this can be complicated, as fresh inputs can be required to make goods saleable.
  • Still, other participants have operations that are purely local, and do not require imports. These will typically continue to function, though moves are being made to make them fully independent.
  • Despite all the above, most participants continue to be able to pay down intercompany debt, pay dividends and settle outstanding intercompany invoices.
  • Cash operations are complicated by the need to segregate payments emanating from sanctioned banks. Again, this seems to work, and customers are usually willing to transfer their payments to non sanctioned banks.
  • Many Russian entities have taken steps to disguise their real ownership as a means of evading sanctions: some participants are using a database to identify the true beneficial owners to see whether sanctions apply.
  • Most international banks continue to function, but SocGen recently announced it is selling Rosbank. This raises the concern it may be sanctioned in the future.
  • Most international banks are refusing to open new accounts, and none is interested in taking deposits. This is a concern for participants who are building up cash balances as they sell down inventory. Raiffeisen seems to be the major exception to this.
  • It continues to be possible to convert RUB into hard currency – as long as you are not using a sanctioned bank. Hedging is also possible, but liquidity is limited and deliverable forwards are not available. NDFs seem to work.
  • Several participants have had to remove their Russian subsidiaries from their centralised treasury structures and in-house banks. This has resulted in the hiring of new local staff to manage the newly independent operations.
  • One participant raised the concern that Russia may be branded as a state sponsor of terrorism. This would complicate matters even further.

Bottom line: despite the length of this summary, there are still further details in the report below. Please read it. The overwhelming feedback from the call was that everyone is trying to comply with the sanctions, and business is either being scaled back, or completely localised. People have stopped looking for ways round sanctions – but compliance is complicated.

The full report on Winding Down Russia: Treasury Challenges is available to subscribers. Please get in touch for details. Enquire