Surprisingly it is estimated that just over half corporate treasury departments use a cash and treasury management system. The type and size of general cash and treasury management system employed by companies depends on the dynamics, size and complexity of the financial risks of their business, e.g. general cash and treasury management systems are used by quite small companies with as little as US$150m turnover/year but have a complex risk profile to manage, and by very large companies with US$100bn annual turnover who have a simple risk profile.
General corporate treasury management systems class covers a wide range of functionality from low level of functionality to systems with quite high functionality as the figure shows.
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The functionality typically covers all the world-wide currencies, complex internal group and counterparty structures; the main debt and investment instruments; all FX instruments; other instruments covered also include commodities, energy and most trade instruments. The general corporate treasury management systems also provide deal capture, confirmation and tracking; payments and collections, and often netting as well; cash management position keeping and liquidity management functionality. Today many systems also cover the basic hedge accounting for derivatives. Some of the more advanced systems even provide risk management of cross-asset classes.
Types of System and Differentiators
There are three types of suppliers of general cash and treasury management systems: ERP system suppliers and add-on cash and treasury management modules for ERP systems, cash and treasury management systems that were designed and built for corporate treasury departments, and systems that began life as a bank/financial system that are now available for corporate treasury departments. Many systems are available for license and as ASP or SaaS services, while an increasing proportion are only available as ASP or SaaS solutions.
The key differentiators between the general cash and treasury management systems include: elegance and ease of use of the functions, e.g. how many entries does it take to carryout a basic transaction; the type and number of instruments covered; the level and type of customer service; and what is the overall cost of ownership including implementation, annual maintenance, internal administration and support costs both centrally and in subsidiaries and operating units, and audit and compliance costs.
The charges for general general cash and treasury management systems are in the US$100k-750K+ range for licenses plus, typically, a similar amount for implementation and an annual maintenance fee of 15-20% of original license fee. The charging for medium SaaS/web-based ASP cash and treasury management services are either on the basis of range of functionality purchased and user numbers or just on the functionality purchased with no user charge or limit on the number of users.
Over the last 2-3 years the main developments in general corporate treasury management systems' functionality have included the expansion of the general cash and treasury management functionality, improved networking and connectivity both internally within the company/group and to bank and other FI suppliers, improved derivative hedge accounting and Sarbanes-Oxley compliance. Many suppliers claim that they provide enterprise cash and treasury management as their systems can now cover and consolidate the cash and treasury management risks for the whole company or group and provide services group-wide.
The other significant development over the last few years has been the takeover of several of the smaller suppliers, examples include in 2010 City Financials being taken over by Wall Street Systems and FXpress by Reval, and in 2011 ecofinance by Reval .