How to Select a Treasury Management System

That’s because every vendor is focused on the same technology advances and the same buzzwords right now. These include AI agents, LLMs, MCP servers, chatbots, and using AI as your assistant. When every vendor gets to control their own demo and show you what they want you to see, everything looks good, easy, and “sexy.” Every demo person seeks to show their product in its best light; that is what they are paid to do. And after several demos, you’re left with a team full of opinions, scorecards that have several products around the same average, and uncertainty regarding which system is best for you.

In fact, you may ask yourself: Did we actually see the right vendors? Did we ask the right questions? Do we even know what we need?

Does that resonate with you? Because you aren’t going about the selection process “wrong” by industry standards. You are likely taking a very common approach, one that was designed for a different era of software buying but not really designed to help you make a confident decision given the state of treasury technology today.

That’s why we developed ERR NOT™.

What is a treasury management system?

A treasury management system (TMS) is the system of record for a corporate treasury function. It supports key treasury functions such as cash positioning and forecasting, balance and transaction reporting, payments, in-house banking and intercompany loans, financial instruments (FX, debt, investments, commodities), hedging, bank account management and more.

A treasury management system can provide great value by providing:

• Automation of manual processes,
• greater data visibility for identification of idle cash to invest or pay down debt,
• visibility into strategic opportunities with intercompany loans, pooling or netting, and
• automated reporting for other teams or executives.

The treasury management system market covers a wide range of products. Some are all-in-one systems covering many modules and functions, while others are best-of-breed solutions that focus on one core area.

When does a treasury team need a TMS?

Treasury functions exist even before companies have a defined internal treasury team; however, the accounting and finance groups often bear the responsibilities. Treasury teams typically take shape as a company grows and the treasury functions become too much for a “pre-treasury” finance department.

Implementing a TMS is the next step in a treasury department’s evolution and the tipping point is rarely a single event, but some common signals are:

• Setting your daily cash position is manual and time-consuming.
• Cash forecasting lives in a spreadsheet that only one person understands and can maintain.
• The questions: “How much? Where is it? What is it earning?” can’t be easily answered
• The number of entities or bank accounts has grown beyond what manual processes can handle.
• Payments are initiated from several portals with inconsistent controls and approvals.
• Internal audit or a new CFO has asked for controls the current processes cannot produce.

The traditional TMS selection approach doesn’t work

Before we walk through the ERR NOT™ method, let’s talk about why the traditional approach doesn’t work.

Roughly 50% of TMS selection projects end in “no decision.” That means treasury teams spend months talking to vendors, sitting through demos, writing and issuing an RFP, reading and scoring responses, and then making no decision at all.

And for those that do make a decision, there is no guarantee that they’ve selected the right one, the one that best fits their requirements.

Not only that, but of those that make a decision, most are surprised during the implementation by what the system can’t do that they thought it could. Surprised by needed workarounds or the need to subscribe to even more modules.

Only 5% are truly happy from beginning to end.

• 50%No decision
• 30%Happy, surprised
• 15%Unhappy
• 5%Happy

RFP fails

Ask most treasury teams (or consultants) how they start a TMS selection, and the answer is usually the same, “We issue an RFP.” It’s the tried-and-true preferred method because procurement loves it, and it gives the appearance of objectivity.

But the problem is that vendors are very good at answering RFP questions in ways that sound positive without ever clearly saying “no.” It’s a skill taught to everyone who answers RFPs.

Common responses like:

• “Yes, with configuration”
• “Yes, with services”
• “Yes, on the roadmap”
• “Yes, with a workaround” (though they’ll never use that word)
• OR, just plain “Yes.”

If five vendors respond and 99% of the answers are some version of “yes,” what exactly did you learn? Nothing. What you did was spend an enormous amount of time on something that gave little value, if any, toward understanding the functional differences between vendors.

And it’s worth noting that the traditional TMS RFP was built for a different period in software development. When companies were buying installed software, worrying about hardware and infrastructure and major upgrade cycles, long and detailed technical checklists made sense.

But treasury technology today is SaaS; you are subscribing to a platform served from the cloud, not installing software. The questions that matter most, functional fit, ability to meet the requirements, and ease of setup, don’t get answered by a 400-question RFP. They are best answered by seeing the product in action.

Demo fails

Even when teams get to the demo stage, the traditional approach leaves the demo in the hands of the vendor. That doesn’t work because a vendor demo can be like a cooking show where everything is prepped in advance so that it goes fast and every dish looks easy to make.

You should understand that a demo person’s job is to show the product in its best light; they are not going to volunteer anything negative about the product. So, if you don’t ask the right questions, you won’t get the information you desire.

Buying guide fails

Many teams start their search by reading an analyst market report, a quadrant, a ranking, a “magic” chart of some kind, or a TMS buying guide, and treating it as the authoritative view of the market. Did you know that most of those reports are pay-to-play? Vendors pay for inclusion. That means the chart or guide you’re using as your starting point may reflect a narrow, outdated slice of the market that’s tilted toward large legacy systems, not the full landscape of the current marketplace.

The most visible vendors aren’t always the best-fit vendors. Legacy and large vendors are highly visible. Emerging and innovative vendors are underrepresented.

At Real Treasury, vendors do not pay for inclusion in our market charts, our Treasury Tech Portal, or this guide. Every vendor on our marketplace chart is included in the segment listings and in the matrix. It’s entirely free.

We believe that knowledge of the segments, and the products within each segment, gives you a better view of your available options so that you can find the best-fit product to meet your unique requirements.

What are the segments of the TMS market?

Real Treasury divides the cash and treasury management system marketplace into three segments:

Large multibillion-dollar companies can have fairly simple treasuries. Conversely, small “mid-market” companies can have very complex operations. So, complexity isn’t about size nor revenue.

Are you mainly focused on cash? Do you trade in several different asset classes (investments, debt, FX, derivatives, commodities)? Do you have many different banking partners and counterparties? Do you have multiple ERPs and many different entities? All these things add complexity. A ‘simple’ tool won’t handle complexity well, and a complex tool can make what should be easy more difficult.

See the Real Treasury market chart and what defines each segment.

What should you evaluate when assessing a treasury management system?

ERR NOT™ is Real Treasury’s proprietary selection methodology. Every step was designed to correct specific failures in the traditional process, to cut through the noise, avoid the common pitfalls, and get treasury teams to a confident, well-reasoned decision faster.

1. EducationStart with a current view of the market.
2. RequirementsWrite and prioritize your requirements.
3. RFIIssue a short RFI to gather needed information about the vendor, support, and estimated pricing to meet your requirements.
4. uNique DemoConduct scripted demos focused on your requirements.
5. Obvious WinnerChoose the winner based on best fit to your requirements.

ERR NOT™ = smarter decisions

Read the full walkthrough of the ERR NOT™ method.

The five most common selection failures

You have likely heard of companies that love their TMS and others that definitely do not. The ones that feel like they aren’t getting “value,” or just outright hate their TMS usually made a less than ideal selection. And that poor selection was compounded by an implementation that was doomed before it began. You can’t “out-implement” a poor selection.

Because treasury teams frequently make the same avoidable mistakes during the selection process. Once you know what these mistakes are, they’re surprisingly easy to avoid.

1. Not having clear, written, and prioritized requirements.
2. Buying what looks good, including beautiful dashboards and the latest technology buzzwords.
3. Buying from the salesperson you like the most.
4. Hitting the “easy button” and choosing the most familiar name or the system someone used at a previous company.
5. Buying the cheapest option because the systems mistakenly appear to be the same.

A structured, objective process leads to a confident decision and greater ROI.

Read each mistake and how to avoid it.

Conclusion

Selecting a TMS should not come down to the best demo, the best-known name, or the vendor that checks the most boxes on an RFP. From education through transformation, ERR NOT™ is designed to help you understand the market, define what you truly need, compare the right vendors on a level playing field, and make a decision you can clearly defend.

With a better selection process, you can dramatically improve the odds that the technology you choose will deliver the results you expect.

Frequently asked questions

How long should a TMS selection take?

The selection process generally scales to the requirements and complexity of the project. For a treasury with simple requirements, it may only take four to six weeks to make a final decision. A complex global treasury operation may take three to four months.

Do we need a full RFP?

Not unless your company requires it. A better way to understand if a company can meet your requirements is through a short non-functional RFI and a demo script for apple-to-apple demos.

How many vendors should we shortlist?

The market is changing rapidly as technology development cycles are compressed. Three to five products allow for a better evaluation and comparison of what is currently available.