In house banks is the new trend for global enterprises and it is evolving to a common financial model. Enterprises have been going towards ASP and SaaS models as the providers for free accounting, tax, payments, banking and other services deployed on the cloud are competing with corporate treasury management systems. On a daily basis, treasury management and cash management is handled by organisation’s treasury staff, controller or comptroller. Cash positioning, reconciliation, cash flow forecasting, accounting integration, portfolio management, cash pooling , intracompany lending and financial risk management are the features of a typical Treasury management system.
Treasury management system has evolved into a highly visible system with transparent and controlled processes from a black box system. The evolution was from black box/profit centre treasury to cost centre treasury, controlled treasury and the latest performance treasury. CFO expects the treasury management system to be a strategic advisor at global level. Treasury offices use them to automate cash management, reporting, liquidity management and cash forecasting operations. TMS integration with ERP provides capability to have purchase/sales orders, inventory turns, invoice matching and reconciliation data. This will provide visibility and the decision making is easier with available data. Enterprise users expect 30% of the system is for new software functions and 70% for advisory/best practices.
Users of the treasury management like to have seamless navigation between desktop, tablets and mobile phones for performing activities. Electronic, digital and mobile payments through tablets will be the future way. Enterprise users like to move away from computer and desktop payments in future. Treasury management is managing the enterprise holdings, firm’s collections, disbursements, investment and funding activities. The goal is to manage the firm’s liquidity and mitigate the operational, financial and reputational risk.
The challenge for an enterprise is to handle the balance of new technology and compliance/regulations. Compliance create an opposing force for new technology adoption. Dodd Frank was a opposing factor as it involves documentation and reporting requirements. SOX compliance specifies increase in controls and documentation in treasury and finance operations. In big firms treasury management system includes trading in bonds, currencies, financial derivatives and associated financial risk management. The departments within the treasury of a bank are Fixed Income, Foreign exchange, Capital Markets and Equities. Treasuries are supplementing the use of credit ratings with market sensitive tools such as credit default swap spreads. Enterprise risk management framework need to have capability to handle treasury management controls. This will reduce the risk of fraud and error. Control and governance improves over time through Treasury performance management in an enterprise.
Enterprise users like to have greater flexibility in reporting, workflow and intraday reconciliation process. Treasuries like to implement higher levels of straight through processing to create a hands free environment to reduce the risks of manual error. Treasury management system is expected to adapt to the change in business or regulatory environment. Upgrades are typically done to handle complexity and size of the operations. Company’s treasury operations comes under the control of CFO, VP/Director of Finance or Treasurer in the case of non banking entities.Treasury management system offers entry and admin modules for money market deals, FX deals, interest rate derivatives, commodities, loans, leasing agreements, guarantees, other contingent liabilities and securities.
Multi Bank eBAM (Electronic Bank Account Management) has features for automated bank profiling to handle the variations in different banks portal solutions and messaging formats. Treasury management system need to have integration with treasury workflow and communicate with organisation’s ERP or accounting systems, payment systems and backend systems like front office and back office systems. Combating the security threat and secure environment for entire process execution is expected from enterprise IT.
By the end of 2015, 50% of the banked corporates will be connected to their partners through SWIFT.This is resulting in international trade digitisation, manual, time consuming and error prone processes elimination. Swift objective is to facilitate every transactional exchange between enterprise and banks.Treasurers like to identify the trigger points in the payment transaction lifecycle to provide services for handling foreign exchange, order matching, reconciliation, reporting and trade finance. Enterprises expect treasury systems to move even further up the chain to handle supplier sourcing, RFP, vendor selection, contract management and purchase order management. Cash management processes consist of order to cash and purchase to pay processes in enterprises.