As mid-sized corporations expand, enhancing their Treasury function becomes essential. International growth, exposure to multiple currencies, evolving regulatory requirements, and increased working capital demands are key indicators of the need for a well-structured Treasury function. These factors heighten the risk of challenges such as limited cash visibility, foreign exchange fluctuations, and a greater need for centralization and diverse financing sources—making a solid policy framework essential. A Treasury function built around a clear Target Operating Model (TOM) is critical for managing this complexity and enabling sustainable growth. 

Zanders has deep experience in helping companies of all sizes define and optimize their Treasury TOM—from small businesses to global multinationals. Across industries from pharmaceuticals to manufacturing, we support organizations at every stage of treasury maturity. A well-designed TOM gives you a roadmap to transform Treasury into a strategic, scalable capability. 

Benchmarking your Treasury Performance: Know Where You Stand 

A treasury benchmark study provides a clear and objective view of how your treasury function compares to peers and industry best practices. It helps to identify strengths, spot inefficiencies, and uncover opportunities to enhance performance and resilience. 

This kind of assessment is especially valuable during periods of rapid growth, when your treasury must adapt to increasing complexity. It also proves to be critical during major events such as mergers, acquisitions, or shifts in the market, where quick adaptation is key. 

Benchmarking is more than a comparison exercise. It delivers clarity on your current state and defines what’s needed to evolve. That insight becomes the foundation for targeted improvements, stronger risk management, and the development of a TOM that aligns with your organization’s goals. 

In the sections below, we outline two key areas to consider and how benchmarking provides the insights needed to build your optimal treasury roadmap. 

Strategic Alignment in Action: Optimizing Organizational Structures for Sustainable Growth 

As organizations grow, it becomes increasingly important to clearly define treasury responsibilities separately from those of the broader finance function. At the same time, integrating Treasury into the interconnected structure of the Office of the CFO helps build a stronger and more resilient finance organization. A common challenge in change management arises when legacy definitions of roles and responsibilities remain unaddressed. For example, certain processes—such as reconciliation—may continue to be performed within the ERP system simply because “that’s how it’s always been done,” even if it’s no longer the most efficient approach. In some cases, the accounting team may lack the capacity to take ownership of such tasks, resulting in inefficiencies and blurred accountability. 

A TOM review creates the opportunity to redefine treasury roles, policies, and processes. This should be revisited regularly to keep it aligned with the organization's structure and goals. 

Key Opportunities for Policy and Procedure Optimization: 

• Consolidation and Standardization: Implementing unified policies and procedures can enhance efficiency and consistency across the organization. This involves consolidating knowledge, standardizing processes, and ensuring that all departments operate in alignment with organizational goals. 

• Enhancing Segregation of Duties: Reviewing and refining the organizational structure can better support the segregation of duties, reducing risks and improving operational integrity. This involves defining clear roles and responsibilities to ensure effective internal controls. 

• Streamlining Operations: Centralizing certain activities currently performed locally can lead to streamlined operations, improved efficiency, and reduced costs. Centralization allows for standardized procedures, clearer decision-making processes, and improved resource utilization. 

• Strategic Resource Realignment: Redirecting treasury resources from routine operational tasks to strategic initiatives can significantly enhance the treasury's value proposition. By automating non-core activities, the treasury can focus on high-impact projects and internal consulting roles, driving business growth and strategic alignment 

Alongside a review and assessment of the organizational structure, a deep dive into the treasury technology landscape of an organization is another key aspect to consider when transforming a treasury. 

Technology as a tool 

While large organizations typically have an ERP or TMS in place, many small to mid-sized companies have not yet reached that level of maturity. In these organizations, treasury functions often rely heavily on spreadsheets, which can be cumbersome and prone to error. Additionally, treasurers must log into multiple bank portals to gather essential data for reconciliation and forecasting. As the company grows, the time spent on these manual processes increases, along with the risk of mistakes and inefficiencies. 

Recognizing the need for modernization, treasurers are increasingly focusing on upgrading treasury technology. As mid-sized corporations scale and face greater financial complexity, the reliance on outdated, custom-developed solutions and manual processes becomes more problematic. This makes the need for an enhanced treasury management system even more critical to efficiently manage financial operations and reduce operational risks. 

Key opportunities for a Treasury Technology Upgrade: 

• Enhanced Flexibility and Scalability: Upgrading to cloud-based treasury management systems (TMS) can provide greater flexibility, scalability, and cost efficiency compared to traditional onsite systems. This allows for easier access and management of treasury operations across different locations and teams. 

• Advanced Reporting Capabilities: Real-Time Financial Insights: Implementing a more advanced TMS can address reporting challenges by providing accurate, real-time financial insights. This capability enables treasurers to make timely and informed decisions, enhancing overall financial management and strategic planning. 

• Streamlined Operations: Upgrading to a system with seamless integration capabilities can automate processes, reduce operational delays, and minimize errors. This integration ensures that all systems communicate effectively, fostering a more efficient and cohesive treasury environment. 

• Efficient Cost Management and Regulatory Compliance: A modern TMS can help achieve significant cost savings and improve compliance by supporting segregation of duties and multi-level approval processes. This ensures adherence to regulatory requirements while optimizing operational expenses. 

• Improved Cash Management: Access to real-time data, such as global cash positions, is crucial for effective decision-making and cash management. Upgrading to a system that provides these insights can enhance treasury operations by allowing for proactive management of liquidity and financial risks. 

Organizations should carefully evaluate when and how to upgrade their TMS, recognizing signs of inadequacy, understanding the benefits, and identifying essential features. A suitable TMS will not only optimize treasury operations but also provide the necessary tools for effective financial management, maintaining a competitive edge in an evolving landscape.  

Build a Strategic Roadmap 

With the insights gained from benchmarking, organizations can define their long-term target state and build a tailored solution design. This becomes the foundation for a strategic roadmap that outlines the initiatives needed to elevate your treasury function. Whether the focus is on technology upgrades, process improvements, or resource realignment, each initiative should shape a treasury function that is agile, efficient, and growth ready. A fit-for-purpose treasury is not just a support function; it is a strategic asset that underpins long-term performance and resilience. 

If you wish to learn more about how we can support the growth of your organization through the treasury function, please contact Ernest Huizing or Vincent Casterman.

In a world of persistent market and economic volatility, the Corporate Treasury function is increasingly taking on a more strategic role in navigating the uncertainties and driving corporate success.

Even in the most mature organizations, the involvement of the Treasury center in FX risk management often begins with collecting forecasted exposures from subsidiaries. However, to fundamentally enhance the performance of the FX risk management process, it is crucial to understand the nature of these FX exposures and their impacts on the upstream business processes where they originate.

Enabling this requires the optimization of the end-to-end FX hedging lifecycle, from subsidiary financial planning and analysis (FP&A) that identifies the exposure to Treasury hedging. Improvements in the exposure identification process and FX impact analytics necessitate the use of intelligent systems and closer cooperation between Treasury and business functions.

Traditional models

While the primary goal of local business units is to enhance the performance of their respective operations, fluctuating FX rates will always directly impact the overall financial results and, in many cases, obscure the true business performance of the entity. A common strategy to separate business performance from FX impacts is to use constant budgeting and planning rates for management reporting, where the FX impact is nullified. These budgeting and planning rates typically reflect the most likely hedged rates achieved by Treasury, considering the hedging policies and forecasted hedging horizons. However, this strategy can lead to unexpected shocks in financial reporting and obscure the impacts of FX exposure forecasting and hedging performance.

When these shocks occur, conclusions about their causes, such as over or under-hedging or unrealistic planning rates, can only be drawn through retrospective analysis of the results. Unfortunately, this analysis often comes too late to address the underlying issues.

The most common Treasury tools used to measure the accuracy of business forecasting are Forecast vs. Forecast and Actual vs. Forecast accuracy reporting. These tools help identify recurring trouble areas that may need improvement. However, while these metrics indicate where forecasting accuracy can be improved, they do not easily translate into a quantification of the predicted or actual financial impact required for business planning purposes.

End-to-End FX risk management in a Treasury 4.x environment

Finance transformation projects, paired with system centralization and standardization, may offer an opportunity to create better integration between Treasury and its business partners, bridging the information gap and providing better insight and early analysis of future FX results. Treasury systems data related to hedging performance, together with improved up-to-date exposure forecasting, can paint a clearer picture of the up-to-date performance against the plan.

While some principles may remain the same, such as using planning and budgeting rates to isolate the business performance for analysis, the expected FX impacts at a business level can equally be analyzed and accounted for as part of the regular FP&A processes, answering questions such as:

• What is the expected impact of over- or under-hedging on the P&L?
• What is the expected impact from late hedging of exposures?
• What is the expected impact from misaligned budgeting and planning rates compared to the achieved hedging rates?

The Zanders Whitepaper, "Treasury 4.x – The Age of Productivity, Performance, and Steering," outlines the enablers for Treasury to fulfill its strategic potential, identifying Productivity, Performance, and Steering as key areas of focus.

In the area of Performance, the benefits of enhanced insights and up-to-date metrics for forecasting the P&L impacts of FX are clear. Early identification of expected FX impacts in the FP&A processes provides both time and opportunity to respond to risks sooner. Improved insights into the causes of FX impacts offer direction on where issues should be addressed. The outcome should be enhanced predictability of the overall financial results.

In addition to increased Performance, there are additional benefits in clearer accountability for the results. In the three questions above, the first two address timely forecasting accuracy, while the third pertains to the Treasury team's ability to achieve the rates set by the organization. With transparent accountability for the FX impact, Treasury gains an additional tool to steer the organization toward improved budgeting processes and create KPIs to ensure effective strategy implementation. This provides a valuable addition to the commonly used forecast vs. forecast exposure analysis, as the FX impacts resulting from that performance can be easily identified.

Conclusion

Although FP&A processes are crucial for clear strategic decision-making around business operations and financial planning, the FX impact—potentially a significant driver of financial results—is not commonly monitored with the same extent and detail as business operations metrics.

Improving the FX analytics of these processes can largely bridge the information gap between business performance and financial performance. This also allows Treasury to be utilized as a more engaged business partner to the rest of the operations in the prediction and explanation of FX impact, while providing strategic direction on how these impacts can be minimized, both globally and at local operations levels.

Implementing such an end-to-end process may be intimidating, but data and technology improvements embraced in the context of finance transformation projects may open the door to exploring these ideas. With cooperation between Treasury and the business, a true end-to-end FX risk management process may be within reach.

Security in payments is a priority that no corporation can afford to overlook. But how can bank connectivity be designed to be secure, seamless, and cost-effective? What role do local connectivity methods play today, and how sustainable are they? This article provides an overview of various bank connectivity methods, focusing specifically on the Electronic Banking Internet Communication Standard (EBICS). We'll examine how EBICS can be integrated into global bank connectivity strategies, while comparing it to alternative methods. The following section offers a comparison of EBICS with other connectivity solutions.

For a comprehensive overview of bank connectivity methods, including insights from an SAP perspective, we recommend the article Bank connectivity – Making the right choices.

Compared to alternatives, EBICS contracts are cost-effective, and EBICS connectors, along with supporting online banking software, are equally affordable. Whether through standalone solutions provided directly by banks or SAP ERP-integrated systems, EBICS consistently proves to be the most cost-effective option when compared to SWIFT or individual host-to-host connections.

The downside of EBICS? Outside the GSA region (Germany, Switzerland, Austria) and France, there are significant variations and a more diverse range of offerings due to EBICS' regional focus. In this article, we explore potential use cases and opportunities for EBICS, offering insights on how you can optimize your payment connectivity and security.

EBICS at a Glance 

EBICS, as a communication standard, comes with three layers of encryption based on Hypertext Transfer Protocol Secure (HTTPS). In addition to a public and a private key, so-called EBICS users are initialized, which can present a significant advantage over alternative connection forms. Unlike Host-to-Host (H2H) and SWIFT, which are pure communication forms, EBICS has an intelligent signature process integrated into its logic, following the signing process logic in the GSA region. EBICS, developed by the German banking industry in 2006, is gaining increasing popularity as a standardized communication protocol between banks and corporates. The reason for this is simple—the unbeatable price-performance ratio achieved through high standardization.

Furthermore, EBICS offers a user-specific signature logic. Primary and secondary signatures can be designated and stored in the EBICS contract as so-called EBICS users. Additionally, deliveries can be carried out with so-called transport users (T-transport signature users).

In practice, the (T) transport signature user is used for tasks such as retrieving account statements, protocols, or sending payments as a file without authorization.

It is worth noting that for the intelligent connectivity of third-party systems or even service providers that create payments on behalf of clients, the T user can be utilized. For example, an HR service provider can send an encrypted payment file using the provided T user to the bank server. The payment file can be viewed and signed separately on the bank server via the relevant treasury or EBICS-compatible banking software.

Furthermore, through EBICS, individual records and thus personal data in the case of HR payments can be technically hidden. Only header data, such as the amount and the number of items, will be visible for approver.

Is the signature logic too maintenance-intensive? Fortunately, there is an alternative available to the maintenance of individual users. A so-called Corporate Seal User can be agreed upon with the bank. In this case, the bank issues an EBICS user based on company-related data in the (E) Single signature version. The (E) signature is transmitted directly to the bank for every internally approved payment, which is comparable to connectivity via SWIFT or Host-to-Host.

Strategic Adjustments with EBICS

Regional standards like EBICS can be used to connect regional banks and send or receive messages over the bank's internal SWIFT network through a so-called request for forwarding, also known as European Gateway or SWIFT Forwarding. Using this service, it is not necessary to connect every bank directly via Host-to-Host or SWIFT in order to become cost-efficient in your corporate banking.

A SWIFT Forwarding agreement is drafted and signed with your individual bank. Payment files are sent to the bank via a defined order type intended solely for forwarding. The bank acts here as a mere transmitter of the message. Incidentally, the same principle can also be adapted for account statements. Several banks in the GSA-region and France proactively market the service as an additional cash management service to their corporate customers. Account statements are centrally collected via the bank's SWIFT network and sent to the corporate via the existing EBICS channel. This procedure saves implementation efforts and simplifies the maintenance.

We like to summarize the advantages and disadvantages of integrating SWIFT forwarding via the EBICS channel:

Advantages

• High maintenance Host-to-Host connections are avoided.
• A dedicated SWIFT connection can be avoided without neglecting the benefits.

Disadvantages

• A bank with a well-developed interbank network is required.
• Transport fees per message may apply.

In general, corporates can take advantage of this specific EBICS setup when dealing with banks that manage a small portion of their transaction volume or when the technical connections with certain banks are more challenging. This approach is especially beneficial for banks that are difficult to access through local connectivity methods and have medium-to-low transaction volumes. However, for banks with high transaction volumes, connectivity via Host-to-Host or even a dedicated SWIFT connection may be more appropriate. Each situation is unique, and we recommend evaluating the best banking connectivity setup on a case-by-case basis to ensure optimal performance and cost-efficiency.

Future of EBICS: Changes Until 11/2025

Since November 2023, banks have been offering EBICS 3.0 as the most recent and up-to-date version. This version is binding in the GSA (Germany, Switzerland, Austria) region until approximately November 2025.

Here is a summary of the most important changes:

• Increased Standardization: Local EBICS “flavors” are unified to simplify implementation.
• Enhanced Encryption: Since version 2.5, the minimum encryption level has been 2048 bits. This is continuously increased with the EBICS 3.X version.
• XML Only for EBICS-specifics: Protocols like PTK are migrated to pain.002 HAC.

The new version of EBICS increases the security of the communication standard and makes it more attractive in the EU given its updates. In addition to Germany, Austria, Switzerland, and France, we observe the communication standard is increasingly offered by banks in Spain, Portugal, the Netherlands, as well as in the Nordic countries. Recently, the first banks in Poland have started to offer this communication standard–a rising trend.

In summary, EBICS is a cost-effective and powerful standard that can do much more than just bank connectivity. For companies that mainly use Host-to-Host or SWIFT for bank connectivity within the Eurozone, it may be worthwhile to look at EBICS and consider switching their connectivity method, provided their banking partner offers EBICS.

In brief 

• Despite an upturn in the economic outlook, uncertainty remains ingrained into business operations today. 

• As a result, most corporate treasuries are experiencing operational challenges that are beyond their control.  

• Treasuries that adapt by embedding more resilience and flexibility into their operations will be the ones that forge ahead. 

• Zanders created Treasury Business Services to provide a customizable suite of niche expertise and flexible resourcing options for treasuries. 

Treasuries today are expected to adapt faster than ever to challenges that are largely beyond their control. Here we outline the six most pressing issues affecting treasuries today that you not only need to be aware of, but also proactively planning for.  

The financial headwinds that have weighed down on investment activity, liquidity, and returns in recent times are gradually easing. And while optimism is creeping back into our outlooks, it’s not necessarily an end to uncertainty for treasury teams. That appears to be here to stay. Talent shortages, a more transient workforce, an expanding treasury role, large-scale digitalization, the lingering impact of recent global crises and unexpected opportunities too. Deeply engrained uncertainty means there are a lot of plates to keep spinning when you’re running a treasury function today. The following six challenges are making this balancing act more arduous for the corporate treasurer, emphasizing the urgent need to build greater resilience and agility into their operations. 

1. Peak load scenarios where performance is non-negotiable 

There are situations where treasury simply must deliver. Period. Even when it does not have the resources. M&A and IT-related projects are good examples but there are many more. When these peak load scenarios occur, treasuries need to be prepared to handle them in a fast, flexible, and efficient way. 

2. Demand for specialist treasury IT knowledge

A 2023 Treasury Technology survey found 53% of respondents were already using a TMS and a further 16% planned to implement within the next two years. It’s undeniable that technology now commands a dominant role in treasury processes, with investment in ERPs, TMSs, payment factories and e-banking portals a priority across the industry. However, the talent to implement and manage these complex IT systems is scarce, and costly to recruit and retain. And even when someone with the right skills and experience is identified and convinced to join, it often becomes apparent that a dedicated full-time employee might be excessive for the requirements of the role. This makes it even more difficult to fill this critical skills gap effectively and cost-efficiently. 

3. The paradox of lowering labor costs while delivering more

Treasury has never been a department with a high headcount, but it’s still not immune to company-wide edicts to reduce labor expenditure. In this cost-cutting environment, the best most treasuries can hope for is a cap on their existing headcount. So, while treasuries are increasingly called on to deliver more and faster, they’re required to perform this expanded role without increasing headcount.  

4. The evolution from a cost center to a performance-oriented business partner 

Like the rest of your company, treasury must show a tangible contribution to the improvement of productivity and performance. This was the subject of our recent white paper  – Treasury 4.x, the Age of Productivity, Performance & Steering. There are lots of ways to enable treasury to transition into this new more value-driven role – from introducing more automation, improving methodologies, and increasing use of data, to outsourcing certain activities. But all this comes with additional demands on budget, skills, and resources.  

5. The talent pool isn’t sufficient to keep treasuries today afloat 

The 2023 Association for Financial Professionals (AFP) Compensation Report suggests it has become increasingly difficult to fill open treasury positions. According to the survey, almost 60% of treasury and finance professionals said their organization was tackling a talent shortage. There are many reasons given for this. A competitive job market is certainly a dominant cause (as stated by 73% of organizations in the survey). But treasury is also facing a dearth of candidates with the necessary skills for their roles (indicated by 47% of organizations in the survey). As a result, treasury talent shortages are not only due to the general demographic challenges affecting all companies but also because treasury remains underrepresented in the higher education system.  

6. A continually expanding treasury agenda

ESG, increased regulatory demands, the burden of administering digital payments – a constantly shifting treasury landscape not only requires additional resources but also niche skillsets and significant cross-departmental collaboration. In addition, the unprecedented challenges businesses have faced in recent years have placed a spotlight on treasury management as a critical resource for businesses. In 2022, an AFP survey found 35-43% treasury professionals were reporting a consistent increase in communication between treasury and the CFO. Further to this, a 2023 TIS survey found almost 50% of treasury professionals have become strategic partners with the CFO. This is further fueling an expanded and more complex treasury agenda, creating another pressure on skillsets and resources.  

Uncertainty meets its match 

These challenges are triggering uncertainty in treasuries. Do you have the resources and skill profiles you need? How can you give your team more bandwidth to deliver a constantly expanding treasury role? Who is going to manage the TMS you’ve just implemented? And what would happen if you unexpectedly lost a member of your team? We created our Treasury Business Services solution to support you as you maneuver uncertainty, enabling you to execute rapid performance improvements when you need them most.  

TBS is a special unit of Zanders offering a wide range of niche treasury expertise and flexible resourcing options to treasuries. From running your treasury-IT platform and covering routine back-office tasks, to taking care of highly specialized activities and filling your temporary resource needs – our service is deliberately broad to give you optimal flexibility and more control to shape the support you need. 

To find out more contact Carsten Jäkel.  

As organizations continue to adapt to the rapidly changing business landscape, one of the most pivotal shifts is the migration of enterprise resource planning (ERP) systems to the cloud. The evolution of treasury operations is a prime example of how cloud-based solutions are revolutionizing the way businesses manage their financial assets. This article dives into the nuances between SAP’s GROW (public cloud) and RISE (private cloud) products, particularly focusing on their impact on treasury operations. 

The "GROW" product targets new clients who want to quickly leverage the public cloud's scalability and standard processes. In contrast, the "RISE" product is designed for existing SAP clients aiming to migrate their current systems efficiently into the private cloud. 

Public Cloud vs. Private Cloud 

The public cloud, exemplified by SAP's "GROW" package, operates on a shared infrastructure hosted by providers such as SAP, Alibaba, or AWS. Public cloud services are scalable, reliable, and flexible, offering key business applications and storage managed by the cloud service providers. Upgrades are mandatory and occur on a six-month release cycle. All configuration is conducted through SAP Fiori, making this solution particularly appealing to upper mid-market net new customers seeking to operate using industry-standard processes and maintain scalable operations. 

In contrast, the private cloud model, exemplified by the “RISE” package, is used exclusively by a single business or organization and must be hosted at SAP or an SAP-approved hyperscaler of their choice. The private cloud offers enhanced control and security, catering to specific business needs with personalized services and infrastructure according to customer preferences. It provides configuration flexibility through both SAP Fiori and the SAP GUI. This solution is mostly preferred by large enterprises, and many customers are moving from ECC to S/4HANA due to its customizability and heightened security. 

Key Differences in Cloud Approaches 

Distinguishing between public and private cloud methodologies involves examining factors like control, cost, security, scalability, upgrades, configuration & customization, and migration. Each factor plays a crucial role in determining which cloud strategy aligns with an organization's vision for treasury operations. 

1. Control: The private cloud model emphasizes control, giving organizations exclusive command over security and data configurations. The public cloud is managed by external providers, offering less control but relieving the organization from day-to-day cloud management. 
2. Cost: Both the public and private cloud operate on a subscription model. However, managing a private cloud infrastructure requires significant upfront investment and a dedicated IT team for ongoing maintenance, updates, and monitoring, making it a time-consuming and resource-intensive option. Making the public cloud potentially a more cost-effective option for organizations. 
3. Security: Both GROW and RISE are hosted by SAP or hyperscalers, offering strong security measures. There is no significant difference in security levels between the two models. 
4. Scalability: The public cloud offers unmatched scalability, allowing businesses to respond quickly to increased demands without the need for physical hardware changes. Private clouds can also be scaled, but this usually requires additional hardware or software and IT support, making them less dynamic. 
5. Upgrades: the public cloud requires mandatory upgrades every six months, whereas the private cloud allows organizations to dictate the cadence of system updates, such as opting for upgrades every five years or as needed. 
6. Configuration and Customization: in the public cloud configuration is more limited with fewer BAdIs and APIs available, and no modifications allowed. The private cloud allows for extensive configuration through IMG and permits SAP code modification, providing greater flexibility and control. 
7. Migration: the public cloud supports only greenfield implementation, which means only current positions can be migrated, not historical transactions. The private cloud offers migration programs from ECC, allowing historical data to be transferred. 

Impact on Treasury Operations 

The impact of SAP’s GROW (public cloud) and RISE (private cloud) solutions on treasury operations largely hinges on the degree of tailoring required by an organization’s treasury processes. If your treasury processes require minimal or no tailoring, both public and private cloud options could be suitable. However, if your treasury processes are tailored and structured around specific needs, only the private cloud remains a viable option.

In the private cloud, you can add custom code, modify SAP code, and access a wider range of configuration options, providing greater flexibility and control. In contrast, the public cloud does not allow for SAP code modification but does offer limited custom code through cloud BADI and extensibility. Additionally, the public cloud emphasizes efficiency and user accessibility through a unified interface (SAP Fiori), simplifying setup with self-service elements and expert oversight. The private cloud, on the other hand, employs a detailed system customization approach (using SAP Fiori & GUI), appealing to companies seeking granular control. 

Another important consideration is the mandatory upgrades in the public cloud every six months, requiring you to test SAP functionalities for each activated scope item where an update has occurred, which could be strenuous. The advantage is that your system will always run on the latest functionality. This is not the case in the private cloud, where you have more control over system updates. With the private cloud, organizations can dictate the cadence of system updates (e.g., opting for yearly upgrades), the type of updates (e.g., focusing on security patches or functional upgrades), and the level of updates (e.g., maintaining the system one level below the latest is often used). 

To accurately assess the impact on your treasury activities, consider the current stage of your company's lifecycle and identify where and when customization is needed for your treasury operations. For example, legacy companies with entrenched processes may find the rigidity of public cloud functionality challenging. In contrast, new companies without established processes can greatly benefit  from the pre-delivered set of best practices in the public cloud, providing an excellent starting point to accelerate implementation. 

Factors Influencing Choices 

Organizations choose between public and private cloud options based on factors like size, compliance, operational complexity, and the degree of entrenched processes. Larger companies may prefer private clouds for enhanced security and customization capabilities. Startups to mid-size enterprises may favor the flexibility and cost-effectiveness of public clouds during rapid growth. Additionally, companies might opt for a hybrid approach, incorporating elements of both cloud models. For instance, a Treasury Sidecar might be deployed on the public cloud to leverage scalability and innovation while maintaining the main ERP system on-premise or on the private cloud for greater control and customization. This hybrid strategy allows organizations to tailor their infrastructure to meet specific operational needs while maximizing the advantages of both cloud environments. 

Conclusion 

Migrating ERP systems to the cloud can significantly enhance treasury operations with distinct options through SAP's public and private cloud solutions. Public clouds offer scalable, cost-effective solutions ideal for medium-to upper-medium-market enterprises with standard processes or without pre-existing processes. They emphasize efficiency, user accessibility, and mandatory upgrades every six months. In contrast, private clouds provide enhanced control, security, and customization, catering to larger enterprises with specific regulatory needs and the ability to modify SAP code. 

Choosing the right cloud model for treasury operations depends on an organization's current and future customization needs. If minimal customization is required, either option could be suitable. However, for customized treasury processes, the private cloud is preferable. The decision should consider the company's lifecycle stage, with public clouds favoring rapid growth and cost efficiency and private clouds offering long-term control and security.

It is also important to note that SAP continues to offer on-premise solutions for organizations that require or prefer traditional deployment methods. This article focuses on cloud solutions, but on-premises remains a viable option for businesses that prioritize complete control over their infrastructure and have the necessary resources to manage it independently.

If you need help thinking through your decision, we at Zanders would be happy to assist you. 

The recent periods of commodity price volatility have brought commodity risk management to the spotlight in numerous companies, where commodities constitute a substantial component of the final product, but pricing arrangements prevented a substantial hit of the bottom line in the past calm periods.  

Understanding Commodity Risk Management is ingrained in the individual steps of the whole value chain, encompassing various business functions with different responsibilities. Purchasing is responsible for negotiating with the suppliers: the sales or pricing department negotiates the conditions with the customers; and Treasury is responsible for negotiating with the banks to secure financing and eventually hedge the commodity risk on the derivatives market. Controlling should have clarity about the complete value chain flow and make sure the margin is protected. Commodity risk management should be a top item on the CFO's list nowadays. 

SAP's Solution: A Comprehensive Overview 

Each of these functions need to be supported with adequate information system functionality and integrated well together, bridging the physical supply chain flows with financial risk management.

SAP, as the leading provider of both ERP and Treasury and risk management systems, offers numerous functionalities to cover the individual parts of the process. The current solution is the result of almost two decades of functional evolution. The first functionalities were released in 2008 on the ECC 6.04 version to support commodity price risk in the metal business. The current portfolio supports industry solutions for agriculture, oil, and gas, as well as the metal business. Support for power trading is considered for the future. In the recent releases of S/4HANA, many components have been redeveloped to reflect the experience from the existing client implementations, to better cover the trading and hedging workflow, and to leverage the most recent SAP technological innovations, like HANA database and the ABAP RESTful Application Programming Model (RAP). 

Functionalities of SAP Commodity Management 

Let us take you on a quick journey through the available functionalities.  

The SAP Commodity Management solution covers commodity procurement and commodity sales in an end-to-end process, feeding the data for commodity risk positions to support commodity risk management as a dedicated function. In the logistics process, it offers both contracts and orders with commodity pricing components, which can directly be captured through the integrated Commodity Price Engine (CPE). In some commodity markets, products need to be invoiced before the final price is determined based on market prices. For this scenario, provisional and differential invoicing are available in the solution.  

The CPE allows users to define complex formulas based on various commodity market prices (futures or spot prices from various quotation sources), currency exchange translation rules, quality and delivery condition surcharges, and rounding rules. The CPE conditions control how the formula results are calculated from term results, e.g., sum, the highest value, provisional versus final term. Compound pricing conditions can be replicated using routines: Splitting routines define how the formula quantity will be split into multiple terms, while Combination routines define how multiple terms will be combined together to get the final values.  

Pricing conditions from active contracts and orders for physical delivery of commodities constitute the physical exposure position. Whether in procurement, in a dedicated commodity risk management department, or in the treasury department, real-time recognition and management of the company’s commodity risk positions rely on accurate and reliable data sources and evaluation functionalities. This is provided by the SAP Commodity Risk Management solution. Leveraging the mature functionalities and components of the Treasury and Risk Management module, it allows for managing paper trades to hedge the determined physical commodity risk position. Namely, listed and OTC commodity derivatives are supported. In the OTC area, swaps, forwards, and options, including the Asian variants with average pricing periods, are well covered. These instruments fully integrate into the front office, back office, and accounting functionalities of the existing mature treasury module, allowing for integrated and seamless processing. The positions in the paper deals can be included within the existing Credit Risk Analyser for counterparty risk limit evaluation as well as in the Market Risk Analyser for complex market risk calculations and simulations. 

Managing Commodity Exposures 

Physical commodity exposure and paper deals are bundled together via the harmonized commodity master data Derivative Contract Specification (DCS), representing individual commodities traded on specific exchanges or spot markets. It allows for translating the volume information of the physical commodity to traded paper contracts and price quotation sources. 

In companies with extensive derivative positions, broker statement reconciliation can be automated via the recent product SAP Broker Reconciliation for Commodity Derivatives. This cloud-based solution is natively integrated into the SAP backend to retrieve the derivative positions. It allows for the automatic import of electronic brokers' statements and automates the reconciliation process to investigate and resolve deviations with less human intervention.  

To support centralized hedging with listed derivatives, the Derivative Order and Trade execution component has been introduced. It supports a workflow in which an internal organizational unit raises a Commodity Order request, which in turn is reviewed and then fully or partially fulfilled by the trader in the external market. 

Innovations in SAP Commodity Management 

Significant innovations were released in the S/4HANA 2022 version. 

The Commodity Hedge Cockpit supports the trader view and hedging workflow. 

In the area of OTC derivatives (namely commodity swaps and commodity forwards), the internal trading and hedging workflow can be supported by Commodity Price Risk Hedge Accounting. It allows for separating various hedging programs through Commodity Hedging areas and defining various Commodity Hedge books. Within the Hedge books, Hedge specifications allow for the definition of rules for concluding financial trades to hedge commodity price exposures, e.g., by defining delivery period rules, hedge quotas, and rules for order utilization sequence. Individual trade orders are defined within the Hedge specification. Intercompany (on behalf of) trading is supported by the automatic creation of intercompany mirror deals, if applicable.  

Settings under the hedge book allow for automatically designating cash flow hedge relationships in accordance with IFRS 9 principles, documenting the hedge relationships, running effectiveness checks, using valuation functions, and generating hedge accounting entries. All these functions are integrated into the existing hedge accounting functionalities for FX risk available in SAP Treasury and Risk Management. 

The underlying physical commodity exposure can be uploaded as planned data reflecting the planned demand or supply from supply chain functions. The resulting commodity exposure can be further managed (revised, rejected, released), or additional commodity exposure data can be manually entered. If the physical commodity exposure leads to FX exposure, it can be handed over to the Treasury team via the automated creation of Raw exposures in Exposure Management 2.0. 

Modelled deals allow for capturing hypothetical deals with no impact on financial accounting. They allow for evaluating commodity price risk for use cases like exposure impact from production forecasts, mark-to-intent for an inventory position (time, location, product), and capturing inter-strategy or late/backdated deals.  

Even though a separate team can be responsible for commodity risk management (front office) - and it usually is - bundling together the back office and accounting operations under an integrated middle and back office team can help to substantially streamline the daily operations.  

Last but not least, the physical commodity business is usually financed by trade finance instruments. SAP has integrated Letters-of-Credit, as well as Guarantees into the Treasury module and enhanced the functionality greatly in 2016.  

All-in-all, every commodity-driven business, upstream or downstream, consumer or producer, works under different setups and business arrangements. The wide variety of available functionalities allows us to define the right solution for every constellation. Especially with commodity management functionalities active in the supply chain modules of the ERP system, SAP commodity risk management can offer a lot of efficiencies in an integrated and streamlined solution. We are happy to accompany you on the journey of defining the best solution for your enterprise. 

The corporate landscape is continuously reshaped by strategic realignments such as mergers, divestments, and other M&A activities, wherein a company divests a portion of its business or acquires other businesses to refocus its operations or unlock shareholder value. These transactions greatly affect Treasury management, influencing cash flow, banking structures, financial risk management, financing, and technology. This article explores the challenges Treasurers face during the disentanglement or carve-out process, emphasizing the need for strategic realignment of Treasury activities and focusing on the Treasury perspective of a divesting company. It acknowledges the transitional complexities that arise and the demand for agile response strategies to safeguard against financial instability. We will have a look at the special carve-out situation of building a Treasury function for a stand-alone company in a second part of this article.

Treasury Challenges in Carve-Out Situations

In the dynamic world of corporate restructuring, carve-outs present both a new frontier of opportunity and a multifaceted challenge for Treasurers. While divesting a part of an organization can streamline focus and potentially increase shareholder value, it can place unique pressures on treasury management to reassess and realign financial strategies. 

When a corporation decides to execute a carve-out, the Treasury immediately takes on the critical task of separating financial operations and managing transitional service agreements. From the perspective of the divesting company, preserving liquidity and ensuring compliance with financial covenants is a key priority. This intricate division process demands the disentanglement of complex cash flows, re-evaluation and unwinding of cash pooling and internal as well as external debt structures, as well as a review of financial risk and investment policies. Such an endeavour requires rigorous planning and flawless execution to ensure that operational continuity is maintained. Additionally, it requires going into the details, such as the allocation of planning objects (e.g., vendor contracts, machines, vehicles) to the right business for purposes of liquidity forecasting. 

Our experience shows that factors like company revenue, industry complexity, and operating countries affect the volume and frequency of treasury transactions. This can increase complexity and workload, especially for intricate transactions. An interesting remark is that carve-out transactions also impact the remaining group. Potentially, the geographic footprint is smaller, or the number of individual business models within the group is less than before – with a significant impact on Treasury. 

The Role of Technology in Carve-Outs 

A key component in the disentanglement process is represented by Treasury technology. In evaluating treasury technology during a carve-out, scrutiny of the landscape and meticulous planning are paramount to ensuring a smooth transition. The systems must not only handle specific needs such as segmenting data, independent entity reporting, and tracking discrete cash flows and risks, but they must also facilitate a seamless detachment and swift reconfiguration for the newly autonomous entities in the course of the disentanglement of a business. It is essential that these systems support operational independence and continuity with minimal disruptions during the restructuring process.  

Implementing the right technology for the new entity, e.g., to cover stand-alone requirements, is crucial. It must meet current transaction needs and be robust enough to handle future demands. Given our breadth of experience across various technological domains and in various M&A scenarios, we have enriched many discussions on which solutions possess the adaptability and scalability necessary to accommodate the evolving needs of a redefined business. 'Right-sizing' the systems, structures, and processes, tailored specifically to the unique contours of the carved-out entity, is a decisive factor for laying the groundwork for sustainable success post-divestiture.  

Strategic Realignment for Treasury 

Any M&A transaction significantly changes the Treasury Process Map for both the remaining group and the carved-out entity. It has inherited risk and different risk types. We think that Treasury should deal with operational risks first, such as filling resource needs and/or stabilizing business operations. The resource issue requires an analysis of the available employees and their specific skill sets. Onboarding interim resources and back-filling resource gaps until the onboarding of dedicated new staff are alternative options to cover shortfalls.  

The operational issue focuses on the impact on cash management and payment operations. Treasury needs to assess the impact on the existing banking and cash management structure and on liquidity as funds received by one entity are required by another. Bank relationships are foundational to Treasury operations and must be revisited and sometimes reinvented. Treasuries must work diligently to maintain trust and communication with old and new banking partners, articulating changes in the company's profile, needs, objectives, and strategies. Beyond negotiation and administration, the process often entails renegotiating terms and ensuring that the newly formed entity's financial needs will continue to be met effectively. The technical and operational ability to execute and receive payments through the company’s (new) bank accounts is a core requirement, which needs to be at the top of the list of priorities. Next, centralization of liquidity and cash structures is essential to avoid cash drag if inflows cannot be invested and/or concentrated in a relatively short time. 

Treasury may also deal with different types of financial risk, such as interest rate or foreign exchange exposures. The financial risk management perspective is a crucial one for companies, but in the context of carve-out activities, it is often a second-order priority (depending on the financial risk profile of a company). However, proper identification and assessment of financial risk shall always be a top priority in a disentanglement process. Process implementation can be approached following the establishment of sound business and treasury processes if there is no significant financial risk.  

If your organization is contemplating or in the midst of a carve-out, contact Zanders for support. Our consultative expertise in Treasury is your asset in ensuring financial stability and strategic advantage during and post-carve-out. Let Zanders be your partner in transforming challenges into successes.

The productivity and performance of the treasury function within insurance companies have undergone a transformative evolution, driven by the emergence of what is now termed Treasury 4.x. In this digital era, characterized by rapid technological advancements, Insurance Treasury is transitioning towards a more dynamic and strategic role. Treasury 4.x is distinguished by its capacity to envision and operate within various financial scenarios, reflecting a forward-thinking approach. The contemporary Insurance Treasury aligns itself with the principles of "Fit-for-purpose" – emphasizing a centralized organizational structure embedded seamlessly within the financial supply chain. Highly automated processes, often referred to as "exception-based management," are integral to this paradigm shift, enabling treasuries to focus resources on critical issues and exceptions, thereby enhancing efficiency and minimizing manual intervention. This evolution underscores the imperative for insurance treasuries to leverage cutting-edge technologies and embrace a proactive, scenario-driven mindset, ensuring adaptability and resilience in the face of dynamic market conditions. 

Innovation of Payment Landscape

In the ever-evolving landscape of payment innovation within the treasury functions of insurance companies, a pivotal focus has been placed on migrating to the ISO 20022 XML messaging standard and moving away from FIN MT messages. This migration, driven by SWIFT, is not just a strategic choice but an industry-wide mandate, compelling all financial institutions, including insurance companies, to transition to the ISO standard by November 2025. This migration is a cornerstone in revolutionizing payment processes, offering a standardized and enriched data format that not only enhances interoperability but also facilitates more robust and information-rich communication. As insurance companies navigate this time-sensitive transition, a review of address logic within payment files becomes even more critical. The insurance companies are mandated to review and refine address logic within payment files by November 2026. Ensuring that the company is compliant with evolving financial messaging standards will not only improve the overall efficiency, speed and compliance of payments, but it will also provide the opportunity to redefine the best-in-class cash management operating model. 

In additional to the industry migration to a new messaging standard, the introduction of Central Bank Digital Currency (CBDC) could impact the traditional roles of treasuries by offering new means of payment, settlement, and potentially altering liquidity management strategies. CBDCs could enhance efficiency in cross-border transactions, simplify reconciliation processes, and influence investment strategies. Insurance treasuries might need to adapt their systems and processes to incorporate CBDCs effectively, ensuring compliance with regulatory requirements and taking advantage of potential benefits associated with this digital form of currency. We are also witnessing an increase in momentum around the use of distributed ledger technology within the wholesale banking domain. In December, JP Morgan announced it was live on Partior, the Singapore-based interbank payment network that uses blockchain and is designed as a multi-bank, multi-currency system for wholesale use, with each bank controlling its own node. This is clear evidence we are starting to gain real traction around potential solutions using both blockchain and CBDC’s that will further increase the number of payment rails available to support the payments ecosystem.  

Finally, the payment landscape of insurance companies sees further innovation with Faster Claims Payment (FCP). This solution streamlines the disbursement of claims, decoupling it from traditional monthly processes. FCP integrates seamlessly with the Vitesse payment platform, ensuring direct access to insurer funds and significantly reducing delays in payments. This paradigm shift promotes efficiency and enhances customer satisfaction through its accelerated claims payment system. The innovative payment landscape, however, could highlight a potential impact for processes of insurance treasuries. Increased application of faster and real-time payments requires insurance treasuries to have sufficient liquidity readily available to meet the immediate financial obligations. This demands careful planning of cash reserves to ensure uninterrupted claim processing while maintaining financial stability and stresses the importance of effective cash management for navigating any potential downside impact of FCP. 

Changing Macroeconomic Environment

The insurance treasury is profoundly influenced by macroeconomic events, and the convergence of several geopolitical challenges has introduced heightened uncertainty and downside risks. Elevated geopolitical tensions, particularly the intensified strategic rivalry between the United States and China, the Russia-Ukraine war, and the recent Middle East conflict, pose significant threats to the insurance industry's stability. These events bring the potential for energy price shocks, amplifying concerns about increased insurance industry losses stemming from geopolitical and economic upheavals. Furthermore, the scheduled elections in 76 countries, with pivotal ones in the United States, Taiwan, and India, add an additional layer of uncertainty. Political transitions can introduce policy shifts, impacting regulatory environments and potentially altering economic landscapes, further complicating risk assessment for insurance treasuries. As the global geopolitical landscape remains dynamic, insurance treasuries must navigate these challenges prudently, emphasizing resilience and adaptability in their financial strategies to mitigate potential adverse impacts. 

Interest rate changes command a substantial impact on the treasury functions of insurance companies, and the recent shifts in central bank policies have introduced a dynamic landscape. The conclusion of the central banks' rate tightening cycle, coupled with the Federal Reserve's announcement of rate cuts for 2024 and beyond, signals a pivotal change. While these rate cuts are aimed at supporting economic recovery, they pose challenges for insurance treasuries that traditionally benefit from higher interest rates. The insurance industry faces the paradox of modest GDP growth across advanced economies, with the downside risk of a potential rebound in inflation and further geopolitical shocks. The relatively elevated interest rates, however, offer a silver lining for (re)insurers, providing a boost to future recurring income. As maturing assets are reinvested at higher rates, this strategic advantage could help mitigate some of the challenges posed by the shifting interest rate environment, fostering resilience and adaptability in the treasury functions of insurance companies. 

Taking into account the aforementioned macroeconomic changes, insurance treasuries must ensure they possess local treasury experts capable of supporting multiple regions with adapting to shifting business dynamics.

Changing Market Rates

The impact of changing market rates on the asset management activities of insurers is profound, extending to collateral management practices. Market rate fluctuations exert direct influence on the valuation and performance of their investment portfolios, notably affecting the required Variation Margin (VR) and Uncleared Margin Rules (UMR) on derivatives holdings. As rates oscillate, the value of derivative positions can vary significantly, necessitating adjustments in margin requirements to effectively manage risk exposures and collateral obligations. 

Additionally, these changes in market rates affect the liquidity position of insurers, prompting the need for more dynamic models to optimize liquidity management. Given the importance of maintaining sufficient cash and liquid assets, insurers must adapt their strategies to ensure they can meet obligations promptly, especially considering the impact of FX fluctuations on assets denominated in non-base currencies. This entails employing more dynamic models to gauge liquidity needs accurately and employing strategies such as RePo agreements to enhance flexibility in accessing cash when required. Thus, navigating the complexities of changing market rates requires insurers to employ a comprehensive approach that integrates risk management, liquidity optimization, and currency hedging strategies. 

Data Analytics and Predictive Modelling

The integration of artificial intelligence (AI) and predictive analytics has revolutionized the treasury function within insurance companies, particularly in the realm of cash flow forecasting. These advanced technologies enable insurance treasuries to analyze vast datasets, identify patterns, and make more accurate predictions regarding future cash flows. AI algorithms can process information rapidly, taking into account a multitude of variables, such as market trends, policyholder behavior, and economic indicators. This enhanced predictive capability is instrumental in optimizing liquidity management, allowing insurance companies to proactively anticipate cash needs and allocate resources efficiently. The importance of AI and predictive analytics in cash flow forecasting cannot be overstated, as it empowers treasuries to make informed decisions, mitigate financial risks, and navigate the complexities of the insurance landscape with greater precision and agility.

Regulatory Compliance

Regulatory compliance is pivotal for insurance company treasuries, significantly influencing financial strategies and operations. The complex regulatory landscape, including directives like the Insurance Recovery and Resolution Directive, Solvency II, and EMIR Refit, aims at ensuring financial stability, consumer protection, and market integrity. These requirements, from solvency standards to reporting obligations, impact how treasuries manage assets, liabilities, and capital. Non-compliance can lead to severe consequences, prompting insurance treasuries to invest in sophisticated systems for continuous monitoring. Striking a balance between compliance and strategic financial goals is crucial for navigating the regulatory environment and ensuring long-term organizational sustainability. 

Additionally, insurance companies operating across different jurisdictions face fragmented compliance regulations, consisting of local laws and regulations. This has become a prominent challenge experienced by insurance company treasuries and visible in various treasury processes, from payments to liquidity management. Establishing robust processes and conducting regular compliance reviews could help insurance companies to address the fragmented compliance framework. By proactively addressing compliance challenges and embracing innovative solutions, insurance companies could achieve robust global operations and success in an increasingly interconnected world.   

For more information about Treasury 4.x, download our latest whitepaper: Treasury 4.x - The age of productivity, performance and steering.

In large organizations, the tendency is to select large scale ERP systems to support as much of the organization's business processes within this system. This is a goal that is driven typically by the IT department as this approach reduces the number of different technologies and minimizes the integration between systems. Such a streamlined and simplified system architecture looks to mitigate risk by reducing the potential points of failure and total cost of ownership.

Over the years the treasury department has at times chosen to rather deploy “best of breed” treasury management systems and integrate this separate system to the ERP system. The treasury business processes and therefore systems also come with some significant integration points in terms of trading platforms, market data and bank integration for tasks such as trade confirmations, payments, bank statements and payment monitoring messaging.

The IT department may view this integration complexity as an opportunity for simplification if the ERP systems are able to provide acceptable treasury and risk management functionalities. Especially if some of the integrations that the treasury requires does overlap with the needs of the rest of the business – i.e. payments, bank statements and market data.

Meanwhile, the treasury department will want to ensure that they have as much straight through processing and automation as possible with robust integration. Since their high value transactions are time sensitive, a breakdown in processing would result in negative transactional cost implications with their bank counterparts.

Deciphering Treasury System Selection: Below the Surface 

The decision-making process for selecting a system for treasury operations is complex and involves various factors. Some are very much driven by unique financial business risks, leading to a functional based decision process. However, there are often underlying organizational challenges that play a far more significant role in this process than you would expect. Some challenges stem from behavioral dimensions like the desire for autonomy and control from the treasury. While others are based on an age-old perception that the “grass is greener on the other side” – meaning the current system frustrations result in a preference to move away from current systems.

An added and lesser appreciated perspective is that most organizations tend to mainly focus on technical upgrades but not often functional upgrades on systems that are implemented.  Meaning that existing systems tend to resemble the version of the system based on when the original implementation took place. This will also lead to a comparison of the current (older version) system against the competing offerings latest and greatest.

Another key observation is that with implementing integrated TMS solutions like the SAP TRM solution in the context of the same ERP environment, the requirements can become more extensive as the possibilities for automating more with all source information increase. Consider for example the FX hedging processes where the source exposure information is readily available and potential to access and rebalance hedge positions becomes more dynamic.

Closing thoughts

There is no single right answer to this question for all cases. However, it is important to ensure that the process you follow in making this decision is sound, informed and fair. Involving an external specialist with experience in navigating such decisions and exposure to various offerings is invaluable.

To support these activities, Zanders has also built solutions to make the process as easy as it can possibly be, including a cloud-based system selection tool.

Moreover for longer term satisfaction, enabling the evolution of the current treasury system (be it best of breed or integrated) is essential. The system should evolve with time and not remain locked into its origin based on the original implementation. Here engaging with a specialist partner with the right expertise to support the treasury and IT organizations is key. This can improve the experience of the system and this increased satisfaction can ensure decision making is not driven or led by negativity.

In support of this area Zanders has a dedicated service called TTS which can come alongside your existing IT support organization and inject the necessary skill and insight to enable incremental improvements alongside improved resolution timeframes for day-to-day systems issues.

For more information about out Treasury Technology Service, reach out to Warren Epstein.

Mid 2023, Bolt successfully implemented its new full-fledged treasury management system (TMS). With assistance of Zanders consultants, the mobility company implemented Kyriba – a necessity to support Bolt’s small treasury team. As a result, all daily processes are almost completely automated. “It's about reliability.”

Bolt is the leading European mobility platform that’s focused on more efficient, convenient and sustainable solutions for urban travelling. With more than 150 million customers in at least 45 countries, it offers a range of mobility services including ride-hailing, shared cars and scooters, food and grocery delivery. “Bolt was founded by Markus Villig, a young Estonian guy who quit his school to start this business with €5,000 that he borrowed from his parents,” says Mahmoud Iskandarani, Group Treasurer at Bolt. “He built an app and started to ask drivers on the street to download it and try it out. Now we have millions of drivers and passengers, almost 4,000 employees and several business lines. Last August, we celebrated our 10th anniversary. So, we have one of the fastest growing businesses in Europe. And our ambition is to grow even faster than so far.” 

Driven by technology 

Because of its fast growth, Bolt’s Treasury team decided to look for a scalable solution to cope with the further expansion of the business. Freek van den Engel, Treasury manager at Bolt: “We needed a system that could automate most of our daily processes and add value. Doing things manually is not efficient and risks are high. To help us scale up while maintaining efficiency, we needed our Treasury to be driven by technology.” 

Iskandarani adds: “Meanwhile, our macro environment is changing and we had some bank events. In the past years, startups or scale-ups have seen big growth and didn't focus too much on working capital management. Interest rates were low, which made it easy to raise money from investors. Now, we need to make sure that we manage our working capital the right way so that we can access our money, mitigate risks, and that we get a decent return on our cash. That’s when it's controlled by Treasury and invested correctly.” 

Choosing Kyriba

Van den Engel led a treasury system selection process three years ago for his previous employer, where he also worked together with Iskandarani. “That experience helped us to come up with a shortlist of three providers, instead of having a very long RfP process looking at a long list of vendors. We started the selection process in June 2022 and two months later we chose Kyriba because of its strong functionality. Also, it’s a solution offered as SaaS, which means we don't have to worry about upgrades – a very important reason for us. Kyriba has been working with tech companies similar to ours. Another decisive factor was their format library, called Open Format Studio. It allows us to use self-service when it comes to configuring payment formats, reducing our costs and turn-around time when expanding to new geographies.” 

Implementation partner 

For Bolt, Kyriba will function as in-house bank system, and support its European cash pool. During the selection process, the team had some reference calls with other Kyriba users to discuss experiences with the system and the implementation. “One piece of feedback we received was that it works very well to bring in implementation partners to complete such a project successfully. Zanders stood out, because of its proven track record and the awards it had won. Also, Mahmoud and I both had experience with Zanders during some projects at our previous employer. That’s why we asked them to be our implementation partner.” 

In October 2022, the implementation process started. In July 2023, the system went live. Kyriba’s TMS solution covered all treasury core processes, including cash position reporting (including intra-day balance information), liquidity management, funding, foreign exchange with automatic integration to 360T and Finastra, investments, payment settlements and risk management.  

Trained towards independency 

As part of the implementation process, Zanders trained Bolt on how to use the new tool, and assisted in using the Open Format Studio. In this way, the team built the knowledge and experience needed to roll out to new countries more independently.  

Van den Engel: “We aimed to be independent and do as much as possible ourselves to reduce costs and build up in-house expertise on the system. Zanders helped us figuring out what we wanted, explained and guided us, and showed what the system can do and how to align that with our needs in the best possible way. Once we were clear on the blueprint, they helped us with our static data, connectivity and initial system set-up. After the training they led, we were able to do most of it ourselves, including the actual system configuration work, for which Zanders had laid the foundation.” 

Rolling out the payment hub 

With assistance of Zanders consultants, Bolt also set up a framework to roll out the payment hub, for the vendor payments from its ERP system called Workday and its payroll provider, Immedis. The consultants assisted with configuration of initial payment scenarios and workflows. “We made the connections, tested them and did a pilot with Workday last summer. After training and with the experience that we've built up using Open Format Studio, we can roll out to new countries and expand it ourselves. Starting in August, we continued to roll out Kyriba’s payment hub to more countries, and to implement Payroll. With the payment hub we are now live in 16 countries and that's basically fully self-serviced. Apart from some support for specialized cases, we don’t need support anymore for the payment hub.” 

Many material benefits 

Having a small hands-on project team meant no need for a complex project management organization to be set-up. Naturally Bolt and Zanders started using agile project management, with refocus of priorities to different streams as necessary. The Kyriba implementation project was closed within the set budget in 9 months’ time.  

Iskandarani is happy with the results. “It is clear there are benefits of this implementation when it comes to efficiency and risk management. We now have the visibility over our cash and the fact that we have a system telling us that there’s an exposure that we should get rid of, that has a lot of value. Also, we have some financial benefits that we could not have achieved without the system. Today we can pool our cash better, we can invest it better, and we can handle our foreign exchange in a better way. Before this, we have overpaid banks.” 

Reliability and control 

“We could have hired more people”, Van den Engel adds. “But some things are just very difficult to do without this system. It's also about reliability. Even if you have a manual process in place that works, you will see it breaking down from time to time. If someone deletes a formula, or a macro stops working, that becomes very risky. It’s also about the control environment. As a company we're looking to become more mature and implement controls that should be there – that too is very difficult to do without a proper system that can generate these reports, be properly secured with all the right standards that we need to adhere to, or do fraud detection based on machine learning in the future. It's impossible to do all that manually. Those are material benefits, but hard to quantify.”