We’re in a new era of cash management.
Decades ago, large companies would invest enormous sums of money to build their treasury management systems (TMS). Companies that didn’t have the capital to invest in those massive proprietary software assets were stuck with spreadsheets.
But thanks to continuous innovation in software, modern solutions are much more powerful and much less costly than they were. Now, you can implement an automated cash management platform in less than seven weeks with no IT resources.
In addition, they give you the power to manage cash flow proactively, so you’re better prepared to manage risk and find growth opportunities.
That’s a tremendous change in just a few decades. Here’s how that evolution happened and why today’s solutions can save your team considerable money and time.
Evolution of Treasury Technology
Treasury tech has transformed alongside the broader tech environment, evolving from on-premise installed software to cloud-native platforms.
On-Premise Installed Software
Companies installed the first software applications to help treasury teams manage cash flows directly on-premise. The largest companies could have had access to specialized cash management programs, but for many companies, these were simply spreadsheets.
On-premise installed software could be expensive because the purchasing company was responsible for building and maintaining the computing infrastructure needed to run the applications—and that investment was usually quite substantial. In addition, updates for these programs were relatively infrequent, and new software releases could take between 12 and 24 months to roll out.
Dedicated cash management software applications were often prohibitively expensive because the purchasing company was responsible for the software and maintaining all the hardware to run the tools. And even more, simple spreadsheet applications had significant limitations.
Hosted Software
Engineers built the next generation of software to run on a server hosted by an application service provider (ASP). The purchasing company accessed the application on a private cloud via a Citrix connection over the internet.
The software was single-tenant, meaning each customer required a separate instance of the software.
This method was more cost-effective for the purchasing company, but they still had some hardware maintenance costs. And new updates were still slow—it took between 12 and 24 months for new releases to roll out.
Software-as-a-Service
In the last decade, there has been a rise in SaaS companies offering web-based, automated cash management solutions. These companies developed and delivered their tools via a virtual private cloud.
The purchaser accesses the software through the web, not needing hardware to run the application. Instead, all they need is reliable access to the internet. These multi-tenant applications can serve multiple customers simultaneously.
This model eliminates the need for the purchasing company to buy or maintain any special hardware, which significantly reduces their costs.
Another benefit of this software model is that vendors can quickly build and release new features and updates. Releases generally take less than three months to deploy.
Cloud-Native Software
In the last few years, cloud service companies have allowed vendors to develop cloud-native SaaS and even platform-as-a-service (PaaS) services. In other words, rather than the vendor or purchaser hosting the server, a cloud computing provider manages the platforms these software applications run on.
This structure makes it much more efficient to manage computing resources, resulting in significant cost savings. And because of improvements in artificial intelligence and machine learning that have come along with the power offered by cloud computing, this new generation of software applications can offer more powerful functionality like robotic process automation (RPA) and artificial intelligence (AI).
Features of Next-Gen Cash Management Solutions
The newest generation of treasury management tools can offer several features:
- Cloud services. These products run on cloud computing services, enabling you to scale up or down your use of the applications quickly and cost-effectively.
- Data aggregation. The amount of data that companies have access to is exploding. Automated cash management platforms make collecting and organizing this mountain of data easy as it completely automates the process through banking APIs.
- Business intelligence. Next-gen cash management platforms also offer powerful analytics tools so you can draw insights from your data and use them to inform business decisions.
- RPA & AI. Sophisticated machine learning and automation functions let you build algorithms that help you get more value from your data.
- Fraud prevention. You can configure systems to send alerts about anomalies in your data, providing a robust mechanism for fraud detection.
Why It’s Time to Consider New Cash Management Solutions
Next-gen, automated cash management solutions offer many advantages that save you time and money. Here are just a few:
Increased Time Savings
The Strategic Treasurer’s 2020 Treasury Perspective Survey found that over a third of respondents say they neglect some of their business-critical responsibilities because they don’t have enough time. They overlooked the top three tasks: financial risk management, relationship management, and fraud monitoring. A robust cash management solution gives time back to you by automating repetitive low-value tasks.
Fewer Errors
Manual data management often leads to human errors. Automating data collection through open banking APIs means that you are less likely to introduce mistakes into your data and can remain confident that you are making decisions based on accurate data.
Confidently Manage Cash Like a Pro
Next-gen, automated cash management solutions that automate data extraction and transformation give you access to real-time data. That means you get the most recent numbers without any refreshing or recompiling. As a result, you have the most accurate reports and forecasts at your fingertips whenever you need them.
No Internal IT Required
Automated cash management platforms require no computing resources on your end—just internet access. In addition, some tools, like Trovata, don’t require any IT resources to implement. As a result, you can deploy it with no code.
The Power of an API-First Approach to Cash Management
Technology for treasury and finance teams has come a long way.
Finally, we’re at the point where a single platform can connect to all your financial institutions, automatically extract, transform, and load your data in real-time, and even help you analyze it.
We’ve moved a long way past Excel. However, if your team is still using spreadsheets, you may be wasting time and money, introducing unnecessary errors into your cash management process.
Learn how spreadsheets are holding you back and how you can digitize your treasury with automated cash management platforms to establish a single source of truth for all your cash data. This way, you can ensure confidence in your data and make more accurate business decisions.
