Treasury management system

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.²³ It can be used by a company's internal management, and may be purchased from a technical supplier.²⁴

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 management⁶⁷ aims to increase available cash and reduce shortfalls as quickly as possible.⁶⁷⁸ It enables companies to eliminate unnecessary expenses and possible financial risks.⁸ A TMS provides a range of uses for cash balances⁸ 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 profit¹⁰ and is a primary business task.¹⁰¹¹ A TMS can predict estimated annual sales and expenses (including time frames),¹¹¹⁰ influencing a company's direction.¹¹ 
• Payment reconciliation: A TMS' payment-reconciliation software reports discrepancies in account transactions between internal and external sources.¹²¹³¹⁴ Reconciliation automatically ensures that a business's financial transactions match those of a bank, credit card company or other financial institution¹⁴¹² 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.¹³¹⁴   
• 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.¹⁶⁶ 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 sophisticated³ 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: local⁵¹ and cloud-hosted (or cloud-based) systems.⁵¹ Local systems are installed on a business's home server, and enable maximum control of features and security protocols.¹⁵ Cloud-hosted systems are more economical, more serviceable and can be deployed more quickly.¹⁵

TMSs are transferring to, and improving, the cloud-based system.¹⁸ Software as a service (SaaS, a subscription system) can upgrade more quickly¹⁹ and is becoming more popular.¹⁸ The most important part of a cloud-based system is data protection,¹⁸¹⁹ 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