Treasury management system
{{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.{{Cite web|url=https://www.comparethecloud.net/articles/what-is-a-treasury-management-system/|title=What Is A Treasury Management System?|last=Chan|first=Yvonne|date=2018|website=Compare the Cloud|language=en-GB|access-date=2019-04-14}} It helps companies to manage their financial activities, such as cash flow, assets and investments, automatically.
A TMS is commonly used to maintain financial security and minimize reputational risk.{{Cite web|url=https://crystaldelta.com/treasury-management-systems-and-technology-better-and-faster/|title=Treasury Management Systems and Technology: Better and Faster {{!}} Crystal Delta|website=crystaldelta.com|access-date=2019-05-12}} It can be used by a company's internal management, and may be purchased from a technical supplier.{{Cite web|url=https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/assurance/assurance-pdfs/treasury-management-systems-overview.pdf|title=Treasury management systems overview|website=Ernst&Yonug}}{{Cite web|url=https://www.kyriba.com/blog/bob-stark/what-true-value-treasury-management-system|title=The True Value of A Treasury Management System (TMS)|website=www.kyriba.com|access-date=2019-04-14}}
<span id="Mechanism"></span><span id="Real-time cash management"></span><span id="Function"></span><span id="Payment Reconciliation"></span><span id="Cash-flow forecasting"></span><span id="Debt management"></span><span id="Trade finance"></span><span id="Technology"></span>Functions
A TMS can use data to analyze and report payments, cash management and flow, banking and accounting.{{Cite web|url=https://www.tradefinanceglobal.com/treasury-management/treasury-management-systems-software/|title=Treasury Management Systems and Software {{!}} 2019 Trade Finance Global Treasury Management Hub|website=Trade Finance Global|language=en-GB|access-date=2019-05-12}} Its functions are:
- Real-time cash management: Cash management{{Cite web|url=https://www.tradefinanceglobal.com/treasury-management/|title=Treasury Management {{!}} The 2019 Ultimate Guide to Treasury Management {{!}} TFG Business Hub|website=Trade Finance Global|language=en-GB|access-date=2019-06-07}}{{Cite web|url=https://www.tradefinanceglobal.com/treasury-management/cash-liquidity-management/|title=Cash and Liquidity Management {{!}} 2019 Trade Finance Global Treasury Management Hub|website=Trade Finance Global|language=en-GB|access-date=2019-06-07}} aims to increase available cash and reduce shortfalls as quickly as possible.{{Cite web|url=https://www.smartstream-stp.com/~/media/Files/www/NewsEvents/InThePress/2009/Banking_Technology_Making_real_time_cash_management_a_reality.pdf|title=Making real-time cash management a reality}} It enables companies to eliminate unnecessary expenses and possible financial risks. A TMS provides a range of uses for cash balances and can access business accounts at any time. Users can view accounts in detail,{{Cite web|url=https://www.homefederalbank.com/Cash-Management.aspx|title=Cash Management|website=www.homefederalbank.com|access-date=2019-06-07}} including savings and lending balances and transaction histories.
- Cash-flow forecasting: This projects expectations of revenue, operating expenses and profit{{Cite web|url=https://www.freeagent.com/glossary/cash-flow-forecast/|title=Definition of cash flow forecast {{!}} Accounting glossary|website=FreeAgent|access-date=2019-06-07}} and is a primary business task.{{Cite web|url=https://www.freeagent.com/guides/small-business/cash-flow-forecast/|title=How to make a cash flow forecast|website=FreeAgent|access-date=2019-06-07}} A TMS can predict estimated annual sales and expenses (including time frames), influencing a company's direction.
- Payment reconciliation: A TMS' payment-reconciliation software reports discrepancies in account transactions between internal and external sources.{{Cite web|url=https://www.ibm.com/support/knowledgecenter/en/SS8S5A_7.0.1/com.ibm.curam.content.doc/Financials/c_FIN_BatchProcessesPaymentReconciliation.html|title=IBM Knowledge Center|website=www.ibm.com|language=en-US|access-date=2019-06-07}}{{Cite web|url=https://www.blackline.com/blog/account-reconciliations/what-are-account-reconciliations/|title=What Are Account Reconciliations?|date=2017-11-02|website=BlackLine Magazine|language=en-US|access-date=2019-06-07}}{{Cite web|url=https://www.thebalance.com/what-is-account-reconciliation-1293657|title=Why Reconciling Bank Accounts Is Important|last=Elmblad|first=Shelley|website=The Balance|language=en|access-date=2019-06-07}} Reconciliation automatically ensures that a business's financial transactions match those of a bank, credit card company or other financial institution for investigation by accounting staff and analysis of discrepancies. The software includes auditing and local work-process approval, standardizing workflow, and collating and integrating financial documents for review.
- Debt management: Debt may help a business achieve its objectives,{{Cite web|url=https://www.bankrate.com/finance/debt/what-is-debt-management.aspx|title=What is debt management?|last=Bankrate.com|website=Bankrate|language=en-US|access-date=2019-06-07}} and a TMS can manage debt to minimize cost.
- Trade finance: A TMS can manage trade finance, a driver of economic development.{{Cite web|url=https://www.tradefinanceglobal.com/trade-finance/|title=Trade Finance Explained: 2019 Update for Brexit/ Trade Wars & Free PDF|website=Trade Finance Global|language=en-GB|access-date=2019-06-07}} It includes lending facilities, issuing letters of credit, export factoring (assets against invoices or accounts receivable), and export credit and delivery insurance. A TMS reduces the amount of paperwork involved in trade finance,{{Cite web|url=https://www.tradefinanceglobal.com/treasury-management/trade-finance-software/|title=Trade Finance Software {{!}} 2019 Trade Finance Global Treasury Management Hub|website=Trade Finance Global|language=en-GB|access-date=2019-06-07}} and can help free up cash (via factoring) and centralize data. Trade-finance software offers businesses automated processing of import and export documentation, remittances and negotiation.
- Technology: TMS software has become more sophisticated to deal with globalization. With a single local function, TMS technology might rely on a spreadsheet or bank system for bank reporting, financial evaluation and lending management.
There are two types of the TMS: local and cloud-hosted (or cloud-based) systems. Local systems are installed on a business's home server, and enable maximum control of features and security protocols. Cloud-hosted systems are more economical, more serviceable and can be deployed more quickly.
<span id="Prospects and trends of the TMS"></span>Trends
TMSs are transferring to, and improving, the cloud-based system. Software as a service (SaaS, a subscription system) can upgrade more quickly and is becoming more popular. The most important part of a cloud-based system is data protection, 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. An increasing number of companies have adopted cloud-based systems, which are evolving in features and security.