Treasury management system

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 risks.^[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 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

• Treasury management

References

1. Chan, Yvonne (2018). "What Is A Treasury Management System?". Compare the Cloud. Retrieved 2019-04-14.
2. "Treasury management systems overview" (PDF). Ernst&Yonug.
3. "Treasury Management Systems and Technology: Better and Faster | Crystal Delta". crystaldelta.com. Retrieved 2019-05-12.
4. "The True Value of A Treasury Management System (TMS)". www.kyriba.com. Retrieved 2019-04-14.
5. "Treasury Management Systems and Software | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-05-12.
6. "Treasury Management | The 2019 Ultimate Guide to Treasury Management | TFG Business Hub". Trade Finance Global. Retrieved 2019-06-07.
7. "Cash and Liquidity Management | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-06-07.
8. "Making real-time cash management a reality" (PDF).
9. "Cash Management". www.homefederalbank.com. Retrieved 2019-06-07.
10. "Definition of cash flow forecast | Accounting glossary". FreeAgent. Retrieved 2019-06-07.
11. "How to make a cash flow forecast". FreeAgent. Retrieved 2019-06-07.
12. "IBM Knowledge Center". www.ibm.com. Retrieved 2019-06-07.
13. "What Are Account Reconciliations?". BlackLine Magazine. 2017-11-02. Retrieved 2019-06-07.
14. Elmblad, Shelley. "Why Reconciling Bank Accounts Is Important". The Balance. Retrieved 2019-06-07.
15. Bankrate.com. "What is debt management?". Bankrate. Retrieved 2019-06-07.
16. "Trade Finance Explained: 2019 Update for Brexit/ Trade Wars & Free PDF". Trade Finance Global. Retrieved 2019-06-07.
17. "Trade Finance Software | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-06-07.
18. "Treasury Management Systems: Trends and functionalities #GrowthCrossings". Standard Chartered: Growth Crossings. Retrieved 2019-05-12.
19. December 20, Susan Kelly |; Treasury, 2017 at 07:01 PM | Originally published on; Magazine, Risk. "Treasury Software Trends in 2018". Treasury & Risk. Retrieved 2019-05-12.{{cite web}}: CS1 maint: numeric names: authors list (link)