The ultimate goal of a profitable business is to maximize the wealth of its owner. For companies, this means an increase in shareholder wealth. Treasury management promotes value creation by increasing the liquidity of companies whose cash flows and requirements fluctuate frequently. This is achieved through treasury flow management, short term financing, and medium term financing. Financial management plays an important role in ensuring that a company always has the money it needs to run its business.
Getting the right amount of money in the right currency at the right time immediately after taxes is one of the hallmarks of a successful cash function. However, it can be very difficult to achieve success if the Treasury only has “hand tools” (eg spreadsheets, some bank websites, e-mails, etc.). Moreover, there is little time to know whether “success” has been achieved when all of the Treasury’s scarce resources are devoted to processing transactions.
Definition Of Treasury Management System?
Treasury management includes the process of managing company cash, investing and other financial assets. The objective of this activity is to optimize current and medium term liquidity and make the right financial decisions, including invested and invested assets. If necessary, cash management also includes hedging to reduce financial risk.
Below are some of the basic functions of financial management:
- Cash Management: This involves efficient collection and disbursement of cash to domestic and third parties.
- Funding Management: Assist in planning and finding sources of cash needs for the company in the short, medium and long term. Cash management supports capital structuring and predicts future interest rates and exchange rates for decision making, i. e. Currency risk management in accordance with company policy.
- Currency Management: This helps to manage currency risk, exchange rate risk and reduce the currency to be used for overseas billing, etc.
- Corporate finance: Including mergers and acquisitions, capital structure, order issues, etc.
- Banking: Cash Management helps maintain good relations with bankers and conduct initial negotiations with them for short-term loans.
- Venture Capital Financing: This includes new venture capital companies.
Treasury Management important:
Using a treasury system simplifies the payment process by minimizing the time it takes to authorize and initiate payments.
With Single Login, you save valuable time every day thanks to software instead of multiple web banking entries. The simplified and distributed solution process further minimizes the time required and removes organizational barriers. The ability to automate and schedule payment initiations means you no longer have to be at your computer to make a payment .
The clarity and complete information and intelligence provided by TMS allows you to know the price of expensive interbank transactions instantly. Additional tools to automate routing rules and the flexibility of using multiple bank accounts give you the perfect tools to minimize interbank transactions and associated costs.
By mapping business processes and digitizing workflow processes, you eliminate “assumptions” and instantly minimize the potential for human error. Modern TMSs offer the ability to set multiple authorization points and automate routing rules, eliminating the two main causes of payment processing errors.
Complete and accurate audit control:
The digitization authorization, application and registration process in some cases creates a complete, detailed and accurate audit trail within a system. There is always a comprehensive list of all actions associated with a particular payment. This is not limited to the Ministry of Finance but includes a comprehensive list of TMS communications with banks.
Detailed and acceptable data:
The TMS serves as a platform for combined and consolidated analysis and reporting. In this way, it provides useful statistics for identifying inefficiencies and optimization opportunities such as interbank payments, historical cash flows and balance sheet volume, etc.
Flexibility of the provider bank:
Your TMS acts as a single interface / bridge to multiple banks and accounts. Coupled with the software and emerging global financial messaging standards (such as SWIFT, SEPA, ISO20022), you now have the option to switch banking providers without impacting your productivity and daily workflow. Remember that with TMS you no longer have to rely on a specific bank web interface!
Compliance and system standardization:
By introducing a cash management system, you are implicitly standardizing processes and systems. Your team can now be trained in a single system, which means faster times. In addition, make your organization fully compatible with emerging global and regional standards for financial communications such as SWIFT, SEPA, ISO20022.
As you can probably see, there are many advantages to using a treasury system for your business. And if software works properly, CFO’s dream to collect accounts can now come true.
Cash management products and services are designed to help a company develop the best combination of services for that company. Regardless of the size of your company, our solutions are scalable to meet your needs and impact profits.