What is a Treasury Management System (TMS)?

Introduction

Treasury management systems (TMS) have improved of late because of the advancements in cloud technology and remote banking communication solutions. TMS platforms have become essential for businesses because of the advent of EBICS and the growing effects of SWIFTNet. A TMS enables enterprises to automate important financial processes such as communicating with banking partners and pulling cash flow information in real time while ensuring the security of the finance data.

TMS is often compared to ERP (enterprise resource planning) products since both play similar roles. However, ERP solutions are all-in-one platforms that offer a single system for back-office functions. To meet complex treasury demands and to provide dedicated treasury support, you need a TMS, as it enables you to perform critical tasks such as complying with federal finance regulations, covering complex products, and performing high-level analytics for risk management.  

Features of Treasury Management Systems

A specialist TMS helps treasurers with the below functions:

• 360° view and real-time management
• An inclusive view of worldwide cash balances for regional and central treasury centers
• Full data confidentiality and security
• Forecasting, including business flows and contracted transactions
• In-house banking, zero balancing, and cash pooling
• Debt management including lease finance, mortgages, and loan portfolios.
• Straight Through Processing (STP) using intermediate checking points
• Extended configuration and customization (scheduling, task automation, workflows)
• Transaction management
• Effortless maintenance and administration (reduces TCO)
• Increased control over user access definition, workflow management, and audit tracking

Benefits of Treasury Management Systems

Save Money and Time with Automation

TMS facilitates automation, which gives treasurers more time to perform important tasks such as dealing with cash flow projections, risk, and regulations.

Improve Cash Management

Cash flow forecasting is an important function of the treasury unit as it influences many other aspects including investing and funding decisions. However, an accurate cash flow forecast is difficult when you need to manually take info from multiple platforms, which can cause errors.

A TMS allows you to centralize data from all departments, facilitating a more accurate and effective cash forecast. Plus, you can quickly evaluate your enterprise’s bank transactions and also effortlessly integrate info from other financial solutions. Plus, the treasurer can align cash flow forecasts with business needs, thereby producing more cash from inside the company and reducing the requirement for external borrowing.

Create a Payment Hub

A TMS can enhance your firm’s accounts payable and accounts receivable functions. You can use it to import info from various platforms to create a payment system for accounts payable. This enables you to batch payments and send instruction to your company’s banks. With this method, you can centralize your corporation’s payment forecasts and executions in a single platform, which facilitates faster and smarter decision making.

Generate Accurate Forecasts

You can consolidate all accounts receivables in the TMS, which will help you create accurate forecasts. This approach allows your treasury unit to efficiently identify clients who are not adhering to the agreed payment terms, and follow up with them. In addition, to get a more accurate picture, you can adjust expected receipt dates to indicate the payment history of every entity.

Reduce Risk

A TMS offers enhanced insight on your company’s cash position and gives you greater control over transactions, which improves risk management. For example, corporations working at a global level face foreign exchange risks, which can be reduced with a TMS. The platform can be utilized to automatically track foreign exchange rate shifts, and you can make decisions and transactions according to these shifts to minimize risk.