Treasury management system explained

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.A TMS is commonly used to maintain financial security and minimize reputational risk.^[2] It can be used by a company's internal management, and may be purchased from a technical supplier.^{[3] [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.^[8] 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,^[9] including savings and lending balances and transaction histories.
• Cash-flow forecasting: This projects expectations of revenue, operating expenses and profit^[10] and is a primary business task.^[11] 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.^{[12] [13] [14]} 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,^[15] and a TMS can manage debt to minimize cost. 
• 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. A TMS reduces the amount of paperwork involved in trade finance,^[17] 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.

Trends

See also

• Treasury management

Notes and References

1. Web site: What Is A Treasury Management System?. Chan. Yvonne. 2018. Compare the Cloud. en-GB. 2019-04-14.
2. Web site: Treasury Management Systems and Technology: Better and Faster Crystal Delta. crystaldelta.com. 2019-05-12.
3. Web site: Treasury management systems overview. Ernst&Yonug.
4. Web site: The True Value of A Treasury Management System (TMS). www.kyriba.com. 2019-04-14.
5. Web site: Treasury Management Systems and Software 2019 Trade Finance Global Treasury Management Hub. Trade Finance Global. en-GB. 2019-05-12.
6. Web site: Treasury Management The 2019 Ultimate Guide to Treasury Management TFG Business Hub. Trade Finance Global. en-GB. 2019-06-07.
7. Web site: Cash and Liquidity Management 2019 Trade Finance Global Treasury Management Hub. Trade Finance Global. en-GB. 2019-06-07.
8. Web site: Making real-time cash management a reality.
9. Web site: Cash Management. www.homefederalbank.com. 2019-06-07.
10. Web site: Definition of cash flow forecast Accounting glossary. FreeAgent. 2019-06-07.
11. Web site: How to make a cash flow forecast. FreeAgent. 2019-06-07.
12. Web site: IBM Knowledge Center. www.ibm.com. en-US. 2019-06-07.
13. Web site: What Are Account Reconciliations?. 2017-11-02. BlackLine Magazine. en-US. 2019-06-07.
14. Web site: Why Reconciling Bank Accounts Is Important. Elmblad. Shelley. The Balance. en. 2019-06-07.
15. Web site: What is debt management?. Bankrate.com. Bankrate. en-US. 2019-06-07.
16. Web site: Trade Finance Explained: 2019 Update for Brexit/ Trade Wars & Free PDF. Trade Finance Global. en-GB. 2019-06-07.
17. Web site: Trade Finance Software 2019 Trade Finance Global Treasury Management Hub. Trade Finance Global. en-GB. 2019-06-07.