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]

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 2 3 4 5 Chan, Yvonne (2018). "What Is A Treasury Management System?". Compare the Cloud. Retrieved 2019-04-14.
  2. 1 2 3 "Treasury management systems overview" (PDF). Ernst&Yonug.
  3. 1 2 "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. 1 2 3 4 5 "Treasury Management Systems and Software | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-05-12.
  6. 1 2 3 4 "Treasury Management | The 2019 Ultimate Guide to Treasury Management | TFG Business Hub". Trade Finance Global. Retrieved 2019-06-07.
  7. 1 2 "Cash and Liquidity Management | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-06-07.
  8. 1 2 3 "Making real-time cash management a reality" (PDF).
  9. 1 2 "Cash Management". www.homefederalbank.com. Retrieved 2019-06-07.
  10. 1 2 3 "Definition of cash flow forecast | Accounting glossary". FreeAgent. Retrieved 2019-06-07.
  11. 1 2 3 "How to make a cash flow forecast". FreeAgent. Retrieved 2019-06-07.
  12. 1 2 "IBM Knowledge Center". www.ibm.com. Retrieved 2019-06-07.
  13. 1 2 3 "What Are Account Reconciliations?". BlackLine Magazine. 2017-11-02. Retrieved 2019-06-07.
  14. 1 2 3 Elmblad, Shelley. "Why Reconciling Bank Accounts Is Important". The Balance. Retrieved 2019-06-07.
  15. 1 2 Bankrate.com. "What is debt management?". Bankrate. Retrieved 2019-06-07.
  16. 1 2 "Trade Finance Explained: 2019 Update for Brexit/ Trade Wars & Free PDF". Trade Finance Global. Retrieved 2019-06-07.
  17. 1 2 3 "Trade Finance Software | 2019 Trade Finance Global Treasury Management Hub". Trade Finance Global. Retrieved 2019-06-07.
  18. 1 2 3 4 5 6 "Treasury Management Systems: Trends and functionalities #GrowthCrossings". Standard Chartered: Growth Crossings. Retrieved 2019-05-12.
  19. 1 2 3 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)
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