Identifying the ROI in a Treasury Transformation Project

By Kyriba Value Engineering Lisa Husken

How do you truly identify the total value of implementing a treasury management system (TMS)? While some aspects of a treasury transformation project may seem black and white, other value components are difficult to quantify, and many are often overlooked completely. When evaluating the ROI of a treasury initiative, it is important to ensure that all components of the value proposition are accounted for.

This blog, which is part of our Value Engineering series, highlights some of the key attributes that are often forgotten when determining the value of a treasury project.

Establishing Treasury as a Strategic Partner

As a former treasury practitioner, it sometimes posed a challenge to change the view of treasury held by many in the C-suite. Historically, treasury has been viewed as more of a tactical department, serving as a firefighter when things go wrong. However, the view has since expanded to see the value treasury can provide to an organization. With the correct tools at their disposal, treasury can be elevated to a seat at the CFO’s table by providing valuable information to an organization’s global liquidity profile. Investing in an enterprise liquidity platform enables treasury to provide essential insights to ensure an organization’s sustainability and financial longevity.

What would elevating treasury to the role of strategic business partner to the CFO do for your team? With a treasury solution in place, what type of analysis and support would you be able to provide your internal customers? Clearly articulating this value is critical to ensure an accurate and comprehensive ROI assessment.

Business Continuity Risk

Many organizations have processes in place that inherently live within team members that helped to establish existing workflows. Although written workflows provide some controls and guidance, they do not always capture the whole picture of the process, are not regularly updated to include recent changes, and often lack the ability to list out all inevitable exceptions to the rules.

Standardizing processes and managing repetitive tasks through treasury software helps protect the organization from employee turnover or reduction in overhead expenditure by eliminating reliance on subject matter expertise. Furthermore, overreliance on team members tends to perpetuate the monotonous following of established procedures, rather than encouraging employees to gain a true understanding of the logic and reasoning behind processes and think outside of the box. The systematic enforcement of processes and procedures allows more time for the evaluation of current processes and offers opportunities to establish best practices rather than staying with the status quo.

Think about the current structure of your team and the various responsibilities each member has. What would happen if a key employee left the company? Would you be able to continue operations smoothly? Could remaining members absorb and redistribute the workload, or would there be a steep learning curve? Being able to seamlessly provide continued support at the same level of service, as well as the ability to improve the status quo, is a vital component of the ROI calculation.

Human Capital Optimization

Companies work hard to ensure that their treasury team is composed of intelligent, highly educated individuals, often with years of experience. However, without a TMS in place, team members frequently spend their time on manual tasks like data collection and consolidation. The cost of not optimizing the organization’s greatest asset, its human capital, not only leaves missed opportunities for growth—it can decrease employee morale and increase turnover. Additionally, the labor market in today’s economy is increasingly competitive. The ability to include the usage of a TMS or enterprise liquidity management (ELM) platform in a job description provides a strong competitive advantage, allowing the organization to attract top talent.

The ROI of a treasury project must include the value associated with repurposing time spent on tactical activities and optimizing human capital by leveraging them for more value-add and strategic initiatives. Think about how team members will be able to better use their time and what the impact of new strategic initiatives will have on the organization. For example, your team could now have time to work with experts to evaluate, create and implement an FX risk management program to mitigate the impact of currency volatility. There may be the opportunity to launch a dynamic discounting or supply chain finance initiative to optimize working capital management. All potential projects that a treasury transformation project would enable need to be evaluated and included as a part of the ROI calculation.

Increased Controls

The final value component that is often neglected is the importance associated with the harmonization and centralization of controls. In a 2022 KPMG study of over 642 organizations, 83% surveyed indicated that they have experienced at least one cyberattack over the past 12 months. In addition, 71% of respondents indicated they have experienced some sort of internal or external fraud and 55% suffered losses due to regulatory fines or compliance breaches. Payments fraud attacks impact not only the bottom line, but also pose a risk to the organization’s reputation. Leveraging a TMS or ELM platform would provide the ability to standardize controls and reporting globally, ensuring auditable enforcement of internal policies and minimizing the opportunity for successful fraud attempts.

Without a treasury solution in place, how effectively can you protect your organization, its assets, and its reputation from fraudsters? How would you quantify the reputational impact of reduced sales, lost customers, potential lawsuits, or loss of future business? The value of mitigating this risk is an essential piece of the ROI calculation.

Next Steps

Evaluating the return on investment for a treasury transformation project is a complex undertaking that goes far beyond evaluating productivity savings versus the cost of the solution. Companies need to ensure that they consider all potential value components of a treasury project and its impact across the entire organization to ensure that a full value assessment is included in the decision-making process. With such intricacies and value components that are often neglected, many treasury teams look for outside guidance in calculating the potential ROI of such projects in order to ensure that they are comprehensive in their evaluations.