Why Companies Can Have a TMS but Still Struggle with Cash Flow Visibility

Written by Jason Mountford
April 12, 2024

As technology evolves, expectations change. Whether it’s food delivery, shopping for clothes, or watching a movie at home, it becomes difficult to accept anything less once we see a new way of doing things.

The same is true for treasurers seeking better cash flow visibility. Technology has improved so many aspects of our lives that it can be frustrating when something seemingly simple—like an accurate cash overview—doesn’t work.

This frustration compounds when the supposed solution to the problem, a TMS, doesn’t solve it. The limitations of a traditional TMS stem from the fact that they were first created way back in the early 1990s.

We’re talking about a time when America’s top three most popular websites were AOL, Prodigy (?) and CompuServe (?!). Web search engines didn’t exist, and Mark Zuckerberg was seven years old.

It’s fair to say that technology has changed a bit since then. While TMS software has also been refined and improved substantially over the past 30 years, it’s still designed to run off a framework created for a time when the internet and technology were totally different from what they are today.

As a result, many treasures are looking to modern, API-first treasury tech solutions to help overcome these limitations and improve their cash visibility and management capabilities.

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The Functions and Limitations of a Traditional TMS on Cash Flow Visibility

At its core, a TMS is designed to help treasurers and finance teams do their jobs better. The software is a specialized and bespoke solution that connects banking data to a central portal, giving treasurers more oversight of their financial position.

An implementation team generally creates the connections between the banking portals and the TMS individually. This ‘built from the ground up’ process also means that the product can be customized to each individual company and treasurer’s highly specialized or niche use cases.

After software implementation, data is batched and updated from the banking portals to the TMS. However, automatic data matching and normalization limitations mean manual work is required to accurately consolidate all of a company’s banking data.

In broad terms, a TMS connects banking data. But as we’ve alluded to, as decades-old technology, the process is far from seamless. There are several limitations to even the most modern TMS:

Implementation Process and Update Cycle

Because each TMS integration is individualized, the implementation process can be lengthy. Setting up a standard TMS suite generally takes six months to one year at minimum, with an upfront investment in the hundreds of thousands of dollars.

Part of the reason for this high cost is that professional services are often required to help configure and maintain your TMS. In addition to the monetary cost, this frequently leads to limited support post-implementation.

The nature of the program architecture means that software updates are limited, often to once or twice per year. This means new bank integrations, security updates, or feature requests are implemented very slowly. 

Data Integration

A traditional TMS typically collects banking data using either SWIFT MT940 or BAI2 statement transfers. These banking data files consolidate transaction listings at the end of each day.

The problem is that these formats have a significant failure rate for auto-matching payments. For MT940 files, the matching rate can be as low as 20%, while for BAI2, it is an improved but still low 65%.

In simple terms, treasury teams need to manually process up to 80% of your transactions when using a traditional TMS. Not only is that time-consuming, but it also creates the potential for errors and inaccuracies in your data.

Reporting and Data Analysis Limitations

Once the data is in the system, there are additional constraints. A TMS’s core capabilities are not designed to analyze large data sets or consolidate global treasury operations.

Because of the different banking architectures used in different regions around the world, TMS usage is typically localized. For example, one system would be set up to manage treasury operations in Europe, and another system would be used in the US. This creates a disjointed and manual process for multi-entity and multinational organizations.

This inflexible configuration, constraints on search capabilities, and an inflexible data model and application make it challenging to generate customizable reports without professional assistance.

All of those issues culminate in limited forecasting capabilities.

“The treasury management systems that I’ve seen just don’t provide enough forecasting functionality to justify their cost.” 

Steven Peterson, Senior Manager of Treasury, Chick-fil-A  


Businesses need to be agile, and a TMS is anything but. The relatively static nature of a traditional TMS creates challenges in adapting to new technology, banking arrangements, and structural business changes. 

For companies that want to embed a culture of continuous improvement, a legacy TMS has the potential to act as a blocker for change.

How Modern Treasury Tech Enables Holistic Cash Management

It all boils down to the fact that the newest traditional TMS is 20 years old. It’s like an original car GPS before Apple CarPlay or Android Auto. The road data was set in stone, and as new roads were built or existing ones changed, the maps in your car stayed the same.

You had to pay $100+ for a physical CD to update it. Now, your phone maps automatically update in real-time, at zero cost, with data continuously fed through without you even knowing. 

What’s the technology behind that data transfer? APIs. 

API-first solution

Application programming interfaces (APIs) are how different software talks to each other. Finance is no exception, with open banking APIs allowing for seamless and real-time transfer of banking data.

This technology transforms the way treasurers access their cash and transaction data. Banking data is automatically sent to a centralized platform like Trovata, giving treasurers real-time access to all of their information in one place.

cash flow visibility

There’s no need for any manual data collection or organization. APIs allow for a mirror of the data in the banking portal to be presented in the treasury platform. There are no daily files to download and transfer. 

For treasurers needing help with cash visibility, even when using a traditional TMS, an API-first solution is the answer.

Recommended: Check out our recent episode of Fintech Corner as our very own Joseph Drambarean and Brett Turner interview John Bolden, the Treasury Director at City Storage Systems, to discuss how APIs are revolutionizing treasury operations and how this cutting-edge technology is creating a wave of new possibilities in finance. 

Cloud-based vs. Cloud-native

Legacy TMSs state that they’re ‘cloud-based.’ However, it would be more accurate to say that these traditional platforms offer ‘access via the cloud.’ Cloud-based solutions have been designed to run on local servers, whereas ‘cloud-native’ applications have been built to be used in the cloud.

Practically speaking, cloud-based programs have been built as a single piece of software designed to be static, with implementation updates requiring shut downs and regression testing. 

The result is a slow and minimal update schedule, with most legacy TMS platforms providing updates just twice a year. 

Cloud-native solutions like Trovata are built using a modular design. Rather than using a single piece of software, users are interacting with a large number of individual applications which are all connected through APIs. The difference is profound, even if the appearance to the end user remains as a single program.

Cloud-native software updates happen with no downtime and on a schedule of just a couple of weeks. This same approach is how cloud-native treasury solutions can be implemented in days rather than months.

Flexibility and Customization

That difference creates far greater flexibility. Treasury teams can create tags allowing automatic data categorization, build almost any report imaginable, and split the aggregated data in many ways.

cash flow visibility

Flexibility is one of the key reasons Marks & Spencer, one of the UK’s largest retailers, switched from a hosted legacy TMS to a SaaS treasury tech option.

“The choice of a SaaS (software-as-a-service) solution was driven by a desire to embed a continuous improvement culture, tapping into periodic upgrades to keep the department developing and adopting solutions to future challenges and industry changes such as ISO 20022 file formats for our banking connectivity. The onset of the pandemic soon validated our decision, and the platform enabled us to adapt to remote working from day one, allowing the team to support the business through this challenging period for UK retail.”

Alexander Murawski – Treasury Operations Manager, Marks & Spencer

AI/ML & Improved Financial Forecasting

That data flexibility allows for the layering of additional technology on top. AI and machine learning are assisting treasury teams in creating financial forecasts faster, with the ability to conduct complex scenario planning in a fraction of the time it would have traditionally taken.

cash flow visibility

It’s now possible to iterate on a base plan in many ways, helping treasurers better assess their options and make more informed decisions.

For example, users can use natural language prompts to find reasons behind changes in the data. Profits down in Europe in Q2? There’s no need to dig into the numbers manually; simply ask the AI assistant why profits are down, and it can highlight the relevant data for closer inspection.

This process shifts the treasurer’s time from digging into the specifics of why something has happened to working out how to improve the situation through strategic decision-making.

How Trovata Improves Cash Visibility and Management

Trovata’s API-first solution provides the treasurer with a whole suite of new tools. Aggregating all banking data into a single source of truth ensures treasurers have full oversight of their cash position at all times.

In addition to providing 100% accurate data in real-time, users can see cash balances consolidated across a parent company and broken down into individual entities, geographic regions, and business units.

Enhanced cash visibility is combined with AI integrations, sophisticated tagging capabilities, a natural language search function, detailed forecasting and scenario planning tools, and even the ability to send payments and invest cash directly on the platform. 

In short, you have an all-in-one solution that turns finance into a key strategic business partner.

If you’d like to learn more about how Trovata could transform your treasury operations, book a demo today

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