Top 10 must haves for an Efficient Treasury Management Solution

Cash management and cash visibility are big challenges for treasurers who manage financial data dispersed across multiple departments, geographical locations and currencies. A Treasury Management Solution is used to address these challenges to efficiently manage, optimize, and improve global treasury operations.

Some of the important functions required in treasury management are Cash Reporting, Cash Forecasting, Electronic Bank Account Management, Bank Fee Analysis and Bank Account Reconciliation.

A best of breed TMS application should ideally have these important features:

1. Many companies often do not have access to dedicated IT resources for implementing a treasury management solution. The trend is to use Software-as-a-Service (SaaS), with the goal of reducing costs spent on IT by outsourcing maintenance and support of the application to a specialized solution provider in this space.
2. The application should provide instant visibility into multi-bank, multi-currency cash position with FX rate management, automated transaction entries and customized reports.
3. Accurate overview of global balances through a secure and centralized hub vital to monitor daily cash positions is considered an important prerequisite for the treasury team.
4. In-built Bank Account Management (BAM) feature providing consolidated view of all accounts with additional support for SWIFT’s e-BAM, a standardized XML messaging. BAM or e-BAM should be capable of supporting audit compliance to account controls.
5. Accurate forecasting on daily, weekly, monthly, quarterly and yearly cash positions, as needed, to help reduce the necessity for holding excess liquid capital, to predict future shortages and to enable optimized interest rates. The need for a robust cash-forecasting feature is in demand as it gives an outlook to a predictable cash flow for better planning.
6. Balance Reconciliation to eliminate operational risk and inefficiency of the manual process of reconciling end-of-the day & intra-day balances against actuals makes a treasurer’s job easier and faster. It should also integrate with the company’s ERP system to automate the process of balance reconciliation by matching transactions based on specific criteria and flagging any conflicts.
7. Treasury users often use individual bank portals to initiate payments. This necessitates multiple logins, different interfaces and an untold number of tokens, FOBs etc. Initiating payments for funds transfer should simplify the payment cycle from initiation to approval, release, repair, receipt and confirmation utilizing a standard interface across all banking relationships.
8. Treasurers need to know the fees they are being charged by different banks for various services. The bank often reports these charges through EDI 822 messages. A Bank Fee Analysis module should be able to report and identify any discrepancies in fees by cross checking your organization’s accounts with bank billing statements and system updated fee structures, thereby eliminating the potential for over charges.
9. The Treasury Management Solution – Fees Analysis feature should allow for bank fee statements to be received and uploaded electronically. Fee analysis can be centralized to verify fees charged against contractual agreements. This feature also empowers information based on comparative bank fee analysis across multiple banking entities, and also enables the treasury team to negotiate better rates with their banks.
10. TMS applications should be able to consolidate bank communications and accept standardized formats across all banking relationships. The recent trend is to use SWIFT as the consolidating channel to connect all banks to the treasury application. Industry standard TMS applications with streamlined banking communications interface have transformed the operation of cash management to an organized approach.

Selecting an efficient TMS application with all the necessary capabilities is important for the treasury department of an organization. Without proper cash management applications, the business is exposed to risks of improper planning and executing financial transactions that affect the corporate bottom line.

The right TMS application additionally increases productivity and boosts the cash management of an organization to meet the business operational needs at the right time and in the right place.

Fill out the form to the right and let Axletree help you explore if a Treasury Management Solution is right for your organization.

January 29, 2018