Treasury Integration Post-Close: An Opportunity for Improvement

Acquisition integration represents a unique opportunity for your combined enterprise to evaluate treasury environments in order to identify and achieve synergies across systems, processes and teams. Results can include improved cash flow visibility, better control over accounts and ability to make more informed decisions. In addition, this dedicated focus can help set your business up for long-term success. By thinking strategically about the future needs of the consolidated business—not just the task at hand—treasury groups can use the integration period to adopt best practices and introduce efficiencies.

The Essential Components of a Smooth Transition

While processes, resources and end goals vary from company to company, successful treasury integrations generally incorporate two main focus areas.

Online Portal

Consolidating online portals is an important aspect of integration with a focus on streamlining account visibility, introducing efficiencies and reducing costs. Depending on your business needs, this process can be approached in phases.

As a result of an acquisition or merger, a company may end up with multiple portals for the same banking provider (e.g., each entity has its own online portal). From an administration perspective, consolidating these portals can be a first step toward introducing efficiencies to your operations.

If possible, consolidate all online portals to a single banking partner–especially if you don’t have a treasury workstation (TWS). A single online platform provides one place for your view into cash. Speak to your banking partners about multibank reporting and payment solutions, which should be considered as part of the consolidation effort.

As you consider online portals, the following should be included in your plans:

• Reviewing and updating security administration rights
• Structuring and modifying online portal access privileges to introduce efficiencies and enhance controls in the user setup process
  • This includes creating groups of like functions to ensure consistent setup and ease the process of adding users, and introducing role and limit thresholds for payment origination
• Establishing user entitlements—delegate both account- and product-level rights to the appropriate employees to ensure complete visibility and payment initiation capability
• Working with your banking partner to coordinate training with your team

Host-to-Host Payments and Reporting

“Host-to-Host” describes a process where one system generates a file and sends it to another system with a secure communication path between the two. In the context of treasury, one example is an ERP system that can drive efficiency and automation by sending to and receiving files from a bank.

You should strive toward consolidation of file transmissions, products, platforms, programs and reporting; however, that often is not achievable in early post-close activities. Identify immediate efficiency opportunities and leverage the combined enterprises’ strengths to replace manual processing with file-based transmissions, starting by:

• Taking inventory of all manual processes that are being performed today
• Engaging your banking partners to determine options for automation
• Reviewing your systems’ capabilities and IT resource availability to implement changes

It may be best to implement your changes in a phased approach. As an example, accounts payable transactions might be manually entered into your online portal today. If those transactions are sourced from your ERP, determine if a file can be exported for you to import to your online portal. Over time, you can significantly reduce manual efforts by introducing the secure connection between yourself and the bank, and sending files via that route.

Be More Strategic About Integration

Not every company requires full integration of its treasury, payables and receivables processes in its post-acquisition structure. Sometimes, there are strategic reasons for keeping functions separate. Consider whether your current capabilities are sufficient to accommodate the newly consolidated business’s short- and long-term goals. Determine what changes would best serve the business’s interests. Ask yourself and your team the following questions:

• Where are the gaps within the current environment?
• What benefits would consolidation provide the company?
• Which internal stakeholders—e.g., legal, tax, finance and accounting, audit or IT—need to be involved and how will they be impacted?

Once you and your team have addressed these questions, you will need to decide whether to invest in your current platform or purchase a new ERP or TWS. Neither option will be inexpensive, but your decision should support your growth objectives and address any complexities that may arise in the future. Additional considerations include:

• Whether a new ERP will provide enough functionality and enhancement
• Whether you require a TWS—if you don’t have one today
• Involve all relevant enterprise stakeholders in your decision-making process
• Consider your approach, which can be “phased-and-lessons-learned” versus “big-bang”

Leverage Banking Partners

It’s critical to leverage partners early, and your banking partners are critical to your integration efforts, especially as you explore changes in your ERP or TWS. Banking partners can offer useful insight into implementation timeframes and functions, and help you set your expectations against realities. They can also provide a treasury point of view to help address considerations of all impacted parties.

Throughout the project, your banking partners can provide resources and support for your team. Coordination and open communication are critical for meeting your target go-live dates.

Move Toward Optimization

A well-executed integration plan should provide your organization with increased efficiency and enhanced automation. An integrated treasury environment can support a shared service center-like structure with centralized transaction processing and reporting. Take advantage of your hard work by commencing the next level of strategy and structure to transform your treasury operations.