A treasury management system (TMS) is an enterprise-wide computerized solution that is implemented to improve a company’s overall liquidity. A TMS automates the majority of the routine tasks in managing cash and its flow, improving efficiency, accuracy and control.
It enables companies to better understand their monetary position through real-time information on all types of investments, deposits at banks, outstanding checks, payments being sent out for collection or disbursement, etc. When compared with traditional methods of tracking this information manually with spreadsheets or paper systems, personal contact with financial institutions and so on, a TMS can provide substantial value.
Benefits of a TMS
There are many benefits when investing in a TMS. Some include gaining visibility, reducing risk, increasing profitability and having reliable information at your fingertips.
Having a TMS in place can greatly improve the overall visibility of an organization’s financial position by consolidating cash management activities into one secure system that is easily accessible to all authorized users.
Managers are able to see up-to-the-minute balances across accounts, portfolios and currencies, giving them a complete picture of available liquidity. This allows businesses to make better decisions regarding their investments by understanding how much capital they have on hand at any given time .
Cash managers who work with paper check registers which are manually reconciled monthly or quarterly may be unaware of fraudulent activity until it is too late – when the bad checks have been presented, the account has been debited and there is nothing they can do about it. By being able to see all transactions in real-time, cash managers are more likely to catch fraudulent activity before it goes through. In fact, a TMS can help reduce fraud risk because of its ability for instant access to balances and transactions .
There are usually several layers of financial management within an organization. A TMS gives each layer the tools needed to make informed decisions, giving each party more control over their respective budget or line of business. For example; finance departments will be able to monitor their available capital much easier which helps them better prepare for upcoming expenses like tax payments or payroll .
Having Reliable Information at your Fingertips
In addition to having improved visibility, cash managers benefit from being able to monitor the status of treasury activities in real-time, for example: by knowing if a check has been sent for collection or disbursement as soon as it happens, the risk of fraud and/or bad checks is drastically reduced. Another example would be having up-to-date balance information; this allows users to better plan their liquidity needs and gives them peace of mind that they will not encounter any unexpected shortfalls .
This all leads to a real time disbursement and settlement system that can save businesses on costs associated with payments such as check clearing fees, wire transfers and bank account overdrafts and more.
A treasury management system is essentially a consolidated database that contains information on all types of cash and investments. Information is entered only once; it can then be shared with multiple users across various financial departments. This allows for more accurate and efficient tracking of funds as well as the ability to make better business decisions regarding finances, thus helping to achieve a higher ROI.