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