By now, it’s well documented how treasury roles have transformed in recent years from operational tasks to providing strategic insight, enhancing risk management, and advising executive leadership on investments.
This new scope of responsibilities has led treasury professionals to explore expanding their tech stack beyond ERP systems, and investing in cash management software. In fact, many finance leaders are aiming to bridge this gap through the increased use of technology and automation in their finance and cash management teams, with almost 39% expecting to undertake a major system implementation in 2024. But, what’s the difference between ERP and treasury software?
An ERP system is a pivotal solution for accounting services like budgeting and invoicing. However, when the treasury department wants to focus on more strategic objectives, such as creating insightful cash flow forecasts to identify excess and idle cash or minimize foreign exchange-related risk (to name only a few options), it’s time to roll out a modern cash management platform.
But, what exactly are the differences between an ERP and a cash management software like Trovata? What are the applications for each and how can they be used together to streamline your workflow? In this blog post, you’ll learn the key differences between each system, their use cases, and how they integrate to provide a comprehensive suite of benefits.
Trovata vs. ERP
What is a Cash Management System?
Trovata is a cloud-native treasury platform that specializes in cash management and forecasting. It aggregates data from various sources such as banks, ERPs, and other financial systems to provide real-time visibility into cash flow. Trovata aims to streamline cash reporting and forecasting processes, helping businesses make more informed financial decisions.
What is an ERP?
ERP (Enterprise Resource Planning): ERP systems are comprehensive software solutions that integrate various business processes and functions across departments within an organization. These systems typically include modules for finance, human resources, supply chain management, manufacturing, accounting and more. ERP systems aim to improve efficiency, visibility, and decision-making by providing a centralized database and a suite of tools to manage core business operations. They may have some treasury functions within the ERP but not made specifically for treasury/finance professionals.
Why Trovata is More Beneficial for Treasury Professionals
While ERPs are undoubtedly powerful tools, they are designed to be comprehensive solutions encompassing various business functions across departments.
Their strength lies in centralizing data and streamlining operations for functions like accounting, human resources, and supply chain management. While some ERP systems do offer basic cash reporting and forecasting modules, these features often lack the depth and real-time capabilities required by today’s treasury professionals.
On the other hand, cash management software like Trovata is specifically built to address the unique needs of treasury teams. It focuses on aggregating high-volume financial data from various sources, including banks, ERPs, and other financial systems, to provide a real-time, holistic view of cash flow.
This level of granular detail and specialization empowers treasurers to make informed decisions regarding:
- Liquidity: Optimizing cash positions to avoid idle funds and ensure sufficient resources for upcoming needs.
- Forecasting: Creating accurate cash flow projections based on real-time data and historical trends.
- Risk Management: Proactively identifying and mitigating potential risks associated with cash flow fluctuations.
Summarizing The Difference Between ERP and Treasury Software
Delivering Value Faster: Quick Implementation with no IT Required
Time and cost are top priorities in any project, but when it comes to implementing a new system, especially for the treasury department, there’s another crucial factor: value. A treasury-driven approach to implementation goes beyond just ticking the time and budget boxes, offering significant qualitative benefits as well.
Trovata works with the treasury team to configure the platform specifically for the daily workflows of the department. This empowers treasurers to customize key functions such as transaction tagging and search capabilities to the unique liquidity attributes of the organization.
This allows for an independent rollout, free from the complexities and potential delays of larger IT projects. This flexibility empowers the treasury team to set their own timeline and prioritize functionalities based on their specific needs.
Now, let’s compare this to traditional ERP implementations. These projects often involve integrating various systems across the entire organization, creating a web of dependencies that can significantly extend the timeline. Additionally, as business-wide initiatives, ERP projects are susceptible to shifting priorities across different departments, leading to further delays.
As a result, ERP implementations can take months to complete, while Trovata can be up and running in as little as 6-12 weeks. This faster time to value makes Trovata a powerful solution for treasurers seeking to optimize their operations and maximize their return on investment.
Recommended: Check out our recent episode of Fintech Corner as our very own Joseph Drambarean chats with McKenzie Knudson, Senior Treasury Analyst at Sealaska, about her team’s transition from spreadsheets to the almost magical experience of API-based treasury tech, and how it helped to centralize data, streamline reporting, and foster collaboration.
Why Use Both? A Synergy for Stronger Treasury Management
While ERPs and Trovata serve distinct purposes, they can be powerful allies when used in tandem. Integrating the two systems offers a multitude of benefits for treasury teams:
Integrating Trovata with your existing ERP system offers several advantages:
Streamlined Cash Management and Data Flow:
Eliminate manual data entry errors: Trovata automatically populates your ERP with accurate and consistent data from all your bank accounts, saving time and resources.
Improved data consistency: Say goodbye to discrepancies between your ERP and bank statements. Trovata ensures seamless data synchronization, providing a unified financial picture.
Enhanced efficiency: Streamline your workflows and free up your team’s time for more strategic tasks by eliminating manual data entry and reconciliation processes.
Enhanced Cash Visibility:
Real-time insights: Gain immediate access to your complete cash position across all accounts, allowing for quicker and more informed decision-making.
Comprehensive financial view: Trovata empowers your ERP to offer a holistic view of your finances by integrating real-time cash flow data.
Improved forecasting accuracy: Make better budgeting and planning decisions with reliable and up-to-date cash flow information readily available within your ERP.
Improved Bank Connectivity:
Secure and efficient data transfer: Trovata utilizes secure API integrations to exchange bank data, eliminating the need for outdated and potentially insecure methods like BAI files.
Faster data exchange: Experience real-time data transfer between your banks and your ERP, ensuring you always have the most recent information at your fingertips.
Reduced manual intervention: Eliminate the need for manual file uploads and downloads, streamlining your bank reconciliation process.
Optimized Liquidity:
Informed investment decisions: With real-time cash flow transparency, you can make data-driven decisions about investing surplus funds and optimizing your return on investment.
Strategic funding allocation: Allocate funds strategically across different areas of your business based on real-time cash flow insights.
Improved working capital management: Trovata empowers you to optimize your working capital by identifying and managing idle cash effectively.
Mitigated Financial Risk:
Proactive risk identification: Anticipate potential cash flow issues early on with Trovata’s advanced forecasting capabilities, allowing you to take proactive measures to mitigate risks.
Improved decision-making: Make informed financial decisions with confidence, knowing you have a clear understanding of your current and future cash flow situation.
Enhanced compliance: Maintain accurate financial records and meet reporting requirements more easily with reliable and consistent data from Trovata.
Scalability and Flexibility:
Cloud-based solution: Trovata eliminates the need for expensive and time-consuming on-premise software implementations.
Adaptable to your needs: Trovata easily scales to accommodate your growing business needs, ensuring your cash management solution remains efficient and effective.
Future-proof your technology stack: Embrace a future-proof solution with Trovata’s cloud-based and scalable architecture.
Reduced IT Burden:
Minimal IT resources required: Trovata’s user-friendly interface and seamless integration with your existing ERP minimize the need for extensive IT involvement during implementation and ongoing maintenance.
Reduced downtime and disruptions: Trovata’s cloud-based nature minimizes disruption to your existing IT infrastructure, ensuring a smooth and efficient implementation process.
Focus on core IT initiatives: Free up your IT team’s time and resources to focus on other critical business priorities by leveraging Trovata’s user-friendly and low-maintenance features.
Integration Methods:
Direct API Integration: Trovata offers seamless API integration with leading ERP systems like Sage, Oracle, and NetSuite.
Streamlined Data Flows: Data flows smoothly from banks to Trovata and then to the ERP, or vice versa, depending on your needs.
Workarounds for Non-Integrated ERPs: For ERPs not supported by direct API integration, workarounds involving web development expertise can be explored.
Optimizing Cash Visibility with Trovata
ERPs are powerful tools for managing various business functions, but they may not fully equip treasurers with the specialized functionalities and real-time insights needed for optimal cash management.
By integrating a cash management software solution like Trovata alongside your ERP, you can empower your treasury team with the tools they need to streamline operations, gain deeper cash flow visibility, and make informed financial decisions that drive business success.
With Trovata you can gain unmatched visibility of cash daily across all accounts, empowering you to better understand liquidity to make the most out of excess cash. Aggregate, search, tag, analyze, forecast, and report; gain everything you need to make smarter, faster decisions. Elevate your enterprise treasury operations with Trovata’s superior tools. To learn more, book a demo today!
