Finance:Treasury management system

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Short description: Financial software application

A treasury management system (TMS) is a software application which automates the process of managing a company's financial operations.[1] It helps companies to manage their financial activities, such as cash flow, assets and investments, automatically.[2] A TMS is commonly used to maintain financial security and minimize reputational risk.[2][3] It can be used by a company's internal management, and may be purchased from a technical supplier.[2][4]

Functions

A TMS can use data to analyze and report payments, cash management and flow, banking and accounting.[5] Its functions are:

  • Real-time cash management: Cash management[6][7] aims to increase available cash and reduce shortfalls as quickly as possible.[6][7][8] It enables companies to eliminate unnecessary expenses and possible financial risk.[8] A TMS provides a range of uses for cash balances,[8] and can access business accounts at any time.[6] Users can view accounts in detail,[9] including savings and lending balances and transaction histories.[9]
  • Cash-flow forecasting: This projects expectations of revenue, operating expenses and profit,[10] and is a primary business task.[10][11] A TMS can predict estimated annual sales and expenses (including time frames),[11][10] influencing a company's direction.[11] 
  • Payment reconciliation: A TMS' payment-reconciliation software reports discrepancies in account transactions between internal and external sources.[12][13][14] Reconciliation automatically ensures that a business's financial transactions match those of a bank, credit-card company or other financial institution[14][12] for investigation by accounting staff and analysis of discrepancies.[13] The software includes auditing and local work-process approval, standardizing workflow and collating and integrating financial documents for review.[13][14]   
  • Debt management: Debt may help a business achieve its objectives,[15] and a TMS can manage debt to minimize its cost.[15] 
  • Trade finance: A TMS can manage trade finance, a driver of economic development.[16] It includes lending facilities, issuing letters of credit, export factoring (assets against invoices or accounts receivable), and export credit and delivery insurance.[16][6] A TMS reduces the amount of paperwork involved in trade finance,[17] and can help free up cash (via factoring) and centralize data.[17] Trade-finance software offers businesses automated processing of import and export documentation, remittances and negotiation.[17]
  • Technology: TMS software has become more sophisticated[3] to deal with globalization.[18] With a single local function, TMS technology might rely on a spreadsheet or bank system for bank reporting, financial evaluation and lending management.[18]

There are two types of the TMS: local[5][1] and cloud-hosted (or cloud-based) systems.[5][1] Local systems are installed on a business's home server, and enable maximum control of features and security protocols.[1][5] Cloud-hosted systems are more economical, more serviceable and can be deployed more quickly.[1][5]

Trends

TMSs are transferring to, and improving, the cloud-based system.[18] Software as a service (SaaS, a subscription system) can upgrade more quickly[19] and is becoming more popular.[18] The most important part of a cloud-based system is data protection,[18][19] and improved data encryption or databases in a country with tight data security laws is a TMS trend; market consolidation is also a trend, enhancing functionality.[18] An increasing number of companies have adopted cloud-based systems, which are evolving in features and security.[19]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 Chan, Yvonne (2018). "What Is A Treasury Management System?" (in en-GB). https://www.comparethecloud.net/articles/what-is-a-treasury-management-system/. 
  2. ↑ 2.0 2.1 2.2 "Treasury management systems overview". https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/assurance/assurance-pdfs/treasury-management-systems-overview.pdf. 
  3. ↑ 3.0 3.1 "Treasury Management Systems and Technology: Better and Faster | Crystal Delta". https://crystaldelta.com/treasury-management-systems-and-technology-better-and-faster/. 
  4. ↑ "The True Value of A Treasury Management System (TMS)". https://www.kyriba.com/blog/bob-stark/what-true-value-treasury-management-system. 
  5. ↑ 5.0 5.1 5.2 5.3 5.4 "Treasury Management Systems and Software | 2019 Trade Finance Global Treasury Management Hub" (in en-GB). https://www.tradefinanceglobal.com/treasury-management/treasury-management-systems-software/. 
  6. ↑ 6.0 6.1 6.2 6.3 "Treasury Management | The 2019 Ultimate Guide to Treasury Management | TFG Business Hub" (in en-GB). https://www.tradefinanceglobal.com/treasury-management/. 
  7. ↑ 7.0 7.1 "Cash and Liquidity Management | 2019 Trade Finance Global Treasury Management Hub" (in en-GB). https://www.tradefinanceglobal.com/treasury-management/cash-liquidity-management/. 
  8. ↑ 8.0 8.1 8.2 "Making real-time cash management a reality". https://www.smartstream-stp.com/~/media/Files/www/NewsEvents/InThePress/2009/Banking_Technology_Making_real_time_cash_management_a_reality.pdf. 
  9. ↑ 9.0 9.1 "Cash Management". https://www.homefederalbank.com/Cash-Management.aspx. 
  10. ↑ 10.0 10.1 10.2 "Definition of cash flow forecast | Accounting glossary". https://www.freeagent.com/glossary/cash-flow-forecast/. 
  11. ↑ 11.0 11.1 11.2 "How to make a cash flow forecast". https://www.freeagent.com/guides/small-business/cash-flow-forecast/. 
  12. ↑ 12.0 12.1 "IBM Knowledge Center" (in en-US). https://www.ibm.com/support/knowledgecenter/en/SS8S5A_7.0.1/com.ibm.curam.content.doc/Financials/c_FIN_BatchProcessesPaymentReconciliation.html. 
  13. ↑ 13.0 13.1 13.2 "What Are Account Reconciliations?" (in en-US). 2017-11-02. https://www.blackline.com/blog/account-reconciliations/what-are-account-reconciliations/. 
  14. ↑ 14.0 14.1 14.2 Elmblad, Shelley. "Why Reconciling Bank Accounts Is Important" (in en). https://www.thebalance.com/what-is-account-reconciliation-1293657. 
  15. ↑ 15.0 15.1 Bankrate.com. "What is debt management?" (in en-US). https://www.bankrate.com/finance/debt/what-is-debt-management.aspx. 
  16. ↑ 16.0 16.1 "Trade Finance Explained: 2019 Update for Brexit/ Trade Wars & Free PDF" (in en-GB). https://www.tradefinanceglobal.com/trade-finance/. 
  17. ↑ 17.0 17.1 17.2 "Trade Finance Software | 2019 Trade Finance Global Treasury Management Hub" (in en-GB). https://www.tradefinanceglobal.com/treasury-management/trade-finance-software/. 
  18. ↑ 18.0 18.1 18.2 18.3 18.4 18.5 "Treasury Management Systems: Trends and functionalities #GrowthCrossings" (in en). http://growthcrossings.economist.com/article/scperspectives-treasury-management-systems-trends-and-functionalities/. 
  19. ↑ 19.0 19.1 19.2 December 20, Susan Kelly |; Treasury, 2017 at 07:01 PM | Originally published on; Magazine, Risk. "Treasury Software Trends in 2018" (in en). https://www.treasuryandrisk.com/2017/12/20/treasury-software-trends-in-2018/. 



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