What is Treasury Management?

Written by Trovata Team
June 24, 2021

Successfully managing liquidity and exposure to risk is critical to ensure your organization has the capital to achieve your strategic objectives. To accomplish this, you and your organization need to have a deep understanding of treasury management. Treasury management involves overseeing your enterprise’s holdings and financial assets to optimize liquidity and mitigate operational, financial, and reputational risk.  

Managing an organization’s treasury processes typically falls to the company’s treasurer, accountant, or financial officer, depending on its size. If you have this role in your organization, you must execute the following processes to successfully manage your treasury operations:

  • Collate transaction data from disparate systems and bank accounts. To have the data visibility you need to manage liquidity, working capital, and risk, you must consolidate and normalize transaction data, from a multitude of sources, into one platform.

  • Improve the cash conversion cycle. It’s difficult to discover new opportunities to free up working capital and to ensure you have enough cash on hand for short-term investments and debts when you have to manually comb through accounting data. Automating cash reporting and forecasting empowers you to stay on top of current trends in real-time.

  • Forecast and report on changes in cash positioning and flows. Forecasting and reporting on liquidity and risk is critical to understand a company’s financial health. You must deliver that information succinctly to their executive team to help them make better business decisions.

  • Stay on top of regulatory requirements. Helping your organization manage their cash in accordance with evolving tax codes and regulations is key to reducing their exposure to risk.


Traditional Treasury Management Technologies

Traditionally, treasurers have turned to treasury management systems (TMS) or enterprise resource planning systems (ERP) to execute their treasury management strategy successfully. However, these traditional technologies have struggled to keep up with the times and meet the needs of modern treasury functions due to the outdated architecture they are built upon. Data transfers from the banks to these legacy systems are not instantaneous, and also lead to an increase in manual work to consolidate and normalize transaction data. Many growing businesses have realized they need access to real-time cash insights to make faster decisions based upon accurate data, and these aged systems have inhibited many from accomplishing this simple objective.


Enterprise Resource Planning Systems

ERPs are traditionally used to track a company’s product chain, from procurement to sales.  Some businesses choose ERPs to keep their financial teams all in one software, however there are many limitations with ERPs when using it as a complete or future proof treasury management solution. 

Customizing an ERP system to meet the needs of treasury is incredibly costly, resource heavy and time-consuming as ERPs were never built to handle the complete suite of treasury operation. Adding new integrations is entirely manual, which leads to IT teams being buried in manual workflows as they are responsible for maintaining current and future integrations.


Treasury Management Systems

Treasurers have traditionally utilized Treasury management systems (TMS) to manage their treasury processes. TMS helps manage liquidity, financial risk, cash reporting, and cash forecasting, but still has many limitations that generate manual workflows.

For one, TMS struggle with consolidating and normalizing transaction data from multiple banks. Many treasurers have to consolidate their bank data manually through normalizing numerous bank statements into one single format.  Manually consolidating bank data from multiple sources is a guaranteed way to produce inaccurate data through human error.

Handling integrated global cash transaction data is immensely difficult to manage in TMS due to scalability issues. Companies that offer global services require visibility into data generated by their global payment gateways. However, core TMS functionalities are not equipped with the scalable computing resources needed to analyze big data sets and provide visibility into a company’s global cash transactions.


Automating Treasury Management with Open-Banking Platforms 

These TMS limitations have empowered organizations to find solutions that make it easier to monitor, analyze, and automate their cash workflows. Many treasurers are entrusting open banking platforms to better manage their treasury operations.

Built on modern architecture and industry-first APIs, open banking platforms automate the consolidation and normalization of your bank data in real-time, empowering you with real-time access to your transaction data in one secure platform. Your organization can eliminate manual processes through automating your cash reporting, analysis, and forecasting by utilizing an open banking platform. 

Open bank platforms are designed to address frustrations with traditional TMS systems because its out-of-the-box automation and reporting capabilities empower you to:

  • Save countless hours spent consolidating your disparate cash data from multiple spreadsheets

  • Track your cash position and cash flow in real-time, across any number of bank accounts, subsidiaries, and currencies

  • Make better and quicker data-led decisions with a comprehensive suite of automated reporting functionality that provides a rich trove of real-time cash insights


Conclusion

Open banking platforms, like Trovata, empowers you with more control over your treasury operations by automating your cash management, reporting, and forecasting.  Many of our clients have saved 25 hours a week by utilizing Trovata to replace their manual treasury workflows. That is time you can gain back to discover new opportunities to grow your business and accomplish strategic objectives.

Download the Trovata Platform Data Sheet to learn how you can monitor, analyze, and automate your business’s cash reporting, analysis, and forecasting with ease.

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