Choosing treasury software: the decision grid for an SME or mid-sized company

The market for treasury tools has grown considerably for SMEs and mid-sized companies. The available comparisons set feature lists against each other, which is close to useless: projects that fail almost never fail for lack of a feature.

Why projects actually fail

• Bank data collection is more fragile than promised: a connection that breaks one week in four turns the tool into a source of doubt.
• Forecast entry stays manual and nobody does it: the tool then displays an obsolete forecast, which is worse than no forecast.
• The initial configuration was done by the vendor and nobody internally knows how to change it: the first reorganisation freezes the tool.
• Multi-currency is handled by automatic conversion at the day's rate, which destroys any ability to analyse variances.

The six questions to ask

1. 1
   How exactly does bank data arrive?

   Aggregation through a third party, direct EBICS connection, file deposit? Ask for the observed availability rate and what concretely happens when a connection drops. « We have a support team » is not an answer.

2. 2
   What becomes of a currency amount inside the tool?

   The test: enter a receipt of USD 100,000 and check that the tool keeps the amount in the currency, the date, the rate used and where it came from — hedge rate, forward rate or spot rate. If it only displays a euro amount, the tool is not multi-currency, it is single-currency with conversion.

3. 3
   Who can change the configuration without the vendor?

   Adding a flow category, an entity, an account, an allocation rule: these have to be doable in house. Otherwise every change becomes a quote, and the tool freezes.

4. 4
   How is the forecast fed?

   Import from the ERP, manual entry, automatic rules on the aged balance? The only model that holds up over time is one where most of the forecast is derived automatically from data already captured elsewhere.

5. 5
   Are FX hedges managed?

   Most treasury tools aimed at SMEs do not handle them, or handle them as a simple cash flow line, with no valuation and no maturity schedule. If you have a hedge portfolio, that is a separate component to plan for — not a flaw, but better known in advance.

6. 6
   What is the full three-year cost?

   Licence, implementation, bank connections charged per unit, training, annual configuration days. Implementation cost often exceeds the first year of licence, and it does not appear in published price lists.

The sequencing that works

The order in which you equip yourself matters more than the tool you choose.

The tipping point

A simple criterion for when the tool becomes necessary: measure the weekly time spent collecting data against the time spent analysing it. As long as collection is less than a third of the total, the spreadsheet is enough. Above half, the tool pays for itself on time saved alone — in practice around fifteen bank accounts or three entities.