B2B Payments

Is Technology Changing Treasury Management Systems?

According to one automotive supplier, the answer is yes. By creating a centralized treasury system, ZF Friedrichshafen AG (ZF) was able to create a smooth process that handled its cash management, including in-house banking; interest rate and FX risk management.

ZF’s Head of Cash Management, Christine Schöllhorn, wrote a contribution piece for Treasury Management International. In it, she explained the reasoning for ZF integrating a centralized treasury system, and what benefits have been created from the transition.

As Schöllhorn explained, ZF was experiencing difficulties with various systems, including its SAP ERP system and the market data system.

The company wanted to supplement its existing technical infrastructure with a new treasury solution that had embedded electronic banking capabilities with automatic interfaces to all systems, Schöllhorn wrote, adding that previously the integration had been done manually, which resulted in the risk of errors or missed files.

“Implementing a new TRM has resulted in an entirely new workflow at ZF, with greater transparency over data and processes, and convenient, robust and auditable communications both with subsidiaries and external counterparties,” Schöllhorn wrote. “We can manage access rights very precisely, for example by business entity as well as by business function, which supports our operational risk management requirements. The system is very easy to use and specific data can be accessed quickly through the use of data filters or reports.”

The idea of a treasury management system is not new, and is likely to only become more popular. A 2012 Deloitte survey found that between 62 percent and 71 percent of organizations with annual revenues under $5 billion have implemented treasury management systems. That implementation number increases to 74 percent with companies that have annual revenues between $5 billion and $20 billion.

Over 310 companies were interviewed for the survey, and also listed their top reasons for having an in-house bank (IHB) structure. According to the results, 48 percent of surveyed businesses said that having a centralized liquidity management structure for the entire organization was a top priority. Having lower transaction costs with banking and external counterparties was listed as a highlight for IHB by 45 percent of interviewed businesses.

The survey also showed that just over one-third of respondents said that visibility over cash and financial risk exposures were the biggest “pain point.”

In line with the 2012 survey results, Schöllhorn explained that ZF wanted an all-inclusive treasury management system that was secure. Essentially, the company wanted “better continuity, more consistent support and greater confidence in the future direction of the product,” she said.

Technology will continue to evolve, but it is up to businesses to take stock of their issues at-hand and do research to see what solution can meet all of their needs. ZF found its ideal treasury management system. Is that answer the same for all companies? Maybe, maybe not, but the key is to do research and find the necessary applicable options.




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