How does an automated treasury management work exactly?

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First of all, you have to assess what kind of automated treasury management system you need at all.

Automated treasury management enables companies to manage their treasury more efficiently, as digital tools take care of many routine tasks automatically. Here we show you which functions can be automated and what else a treasury management tool can do.

Automated treasury management: What is it?

Automated treasury management makes use of intelligent, digital tools that automate many processes and were developed specifically for treasury and cash flow management. This has the following advantages compared to maintaining and managing Excel tables manually:

  • Data is available in real time, as modern treasury management tools have an API interface through which they can communicate with other tools and systems (e.g. bank accounts)
  • More accurate data basis, as data is obtained from various sources and always complete
  • More detailed analyses are possible, which makes it easier to identify interrelationships
  • Errors no longer occur during data preparation, as can happen in Excel spreadsheets due to typing errors or transposed numbers.
  • Decision-making is easier for those responsible because they have a reliable basis of data.
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What are the functions of an automated treasury management tool?

Treasury management primarily includes the cash and risk management of a company. A treasury management tool therefore covers the following functions:

  • Accounts payable: A company's expenses are monitored to optimise costs. The tool helps reduce bank and other payment fees, and automation allows payments to be made automatically, saving employees time.
  • Accounts receivable: Incoming payments are controlled and invoices are monitored. Treasury management tools assign payments to invoices, even if the payments are made in foreign currency. This saves staff time and leads to cost-optimised receivables management.
  • Foreign currency payments: A treasury management system monitors exchange rates and helps employees make foreign currency transfers so that they are as cost-effective as possible.
  • Risk management: A treasury management tool offers analysis functions that can be used to better assess risks, e.g. how conditions from different suppliers will affect cash flow
  • Forecasting: An automated treasury management tool also has functions that can be used to create cash flow forecasts so that you can better estimate favourable times for investments or other projects.
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Can cash management be automated?

Cash management is an important task in treasury management and can also be automated like many other treasury processes. Intelligent cash flow management tools offer the following functions, for example: Automatically connect to bank accounts and retrieve account transactions in real time, so you can always see the current cash flow balance. Communication with other financial and accounting tools (e.g. invoice management tools) to obtain further data that is important for cash flow management.

  • Creating a cash flow forecast for several weeks and months enables accurate cash flow planning and control, so that cash flow bottlenecks can be identified early on
  • Create different cash flow scenarios (e.g. decreasing customer demand in the coming months) so that you can look even closer at the impact of different events on cash flow
  • Target/actual comparison of cash flow figures to constantly check whether income and expenditure correspond to the planned values

How to start with automated treasury management?

First of all, you have to assess what kind of automated treasury management system you need at all. The size of the company and the complexity of the financial processes play a significant role here. For very large companies or groups, it is worth investing in a holistic treasury management system that covers all functions from cash management to risk management.

For small and medium-sized enterprises that mainly want to keep an eye on their cash flow and create cash flow forecasts, cash management software is often sufficient. This is less extensive in its functions and easier to integrate into existing processes.

Another question to ask in advance is whether to purchase a tool to be installed on the company's own servers or to use SaaS (software as a service). SaaS tools are characterised above all by their rapid integration into the existing tool landscape. They are automatically kept up to date by the provider and no servers need to be purchased because they are cloud-based. This means that you always have access to the automated treasury management tool, even when you are on the road.

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