A treasury management system (TMS) is a software application which automates the process of managing a company's

financial Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...

operations. It helps companies to manage their financial activities, such as cash flow,

asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

s and

investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

s, automatically. A TMS is commonly used to maintain financial security and minimize reputational risk. It can be used by a company's internal management, and may be purchased from a technical supplier.

Functions

A TMS can use data to analyze and report

payment A payment is the tender of something of value, such as money or its equivalent, by one party (such as a person or company) to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desir ...

s, cash management and flow, banking and

accounting Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activit ...

. Its functions are: *Real-time cash management: Cash management aims to increase available cash and reduce shortfalls as quickly as possible. 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, including savings and lending balances and transaction histories. *Cash-flow forecasting: This projects expectations of

revenue In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some compan ...

, operating expenses and profit and is a primary business task. 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. Reconciliation automatically ensures that a business's financial transactions match those of a

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

, credit card company or other

financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

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, and a TMS can manage

debt Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...

to minimize cost. * Trade finance: A TMS can manage trade finance, a driver of economic development. It includes lending facilities, issuing letters of credit,

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...

factoring (assets against invoices or accounts receivable), and export credit and delivery

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

. A TMS reduces the amount of paperwork involved in trade finance, and can help free up cash (via factoring) and centralize data. Trade-finance software offers businesses automated processing of import and export

documentation Documentation is any communicable material that is used to describe, explain or instruct regarding some attributes of an object, system or procedure, such as its parts, assembly, installation, maintenance, and use. As a form of knowledge managem ...

, remittances and negotiation. *Technology: TMS software has become more sophisticated to deal with

globalization Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide. This is made possible by the reduction of barriers to international trade, th ...

. With a single local function, TMS technology might rely on a

spreadsheet A spreadsheet is a computer application for computation, organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in c ...

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

TMSs are transferring to, and improving, the cloud-based system.

Software as a service Software as a service (SaaS ) is a cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources. SaaS is usually accessed via a web application. Unlike o ...

(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 In Cryptography law, cryptography, encryption (more specifically, Code, encoding) is the process of transforming information in a way that, ideally, only authorized parties can decode. This process converts the original representation of the inf ...

database In computing, a database is an organized collection of data or a type of data store based on the use of a database management system (DBMS), the software that interacts with end users, applications, and the database itself to capture and a ...

s 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.

References

{{Management Management accounting Financial software

Functions

Trends

See also

References