How to make the best use of a treasury management system

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A good treasury management system is key to handling your finances.

A treasury management system helps companies with cash and risk management by monitoring important financial processes. We show you here what functions such a system has and how companies of all sizes can benefit from it.

Treasury management system: Overview

A treasury management system supports a company in many of its financial processes. It relieves employees of many routine tasks and performs them automatically, which saves time and ensures that the overview of important financial processes is always up-to-date.

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The treasury management system also has the task of supporting those responsible in their decisions by providing an accurate database on which decisions can be made. In this way, the risk for the company is to be minimised and its success increased.

Treasury management system modules

A treasury management system consists of several modules that cover various financial processes. The most important functions of such a system include:

Cash flow management

The cash flow of a company is displayed in real time in the treasury management system and is therefore always up-to-date. Expenditures and revenues are clearly displayed so that those responsible can see the cash situation of the company at all times. This helps them to better distribute the liquid funds within the company.

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Cash flow forecasting

In addition to a cash flow overview, a treasury management system also offers cash flow forecasting functions. With these, income and expenditure can be estimated for the future based on past cash flows. This drastically reduces the risk of cash shortages, as those responsible can see at an early stage whether a bottleneck will arise.

Reconciliation of accounts and transactions

The treasury management system matches the transactions on the company accounts with the related data. For example, invoices stored in the system are checked and as soon as the related transaction takes place on the bank account, the invoice is marked as paid and its status is updated.

In addition, the treasury management system also balances the bank accounts. If, for example, one account is in the red at the end of the day, the system automatically makes a transaction from another account so that no unnecessary overdraft is used. This reduces costs for the company.

Debt management

All types of debt are also managed in the treasury management system. Monthly repayments of loans are clearly displayed and automatically transferred on the due date. The system also transfers this information to the cash flow forecast.

With the help of debt simulations, those responsible can also run through different credit scenarios, for example, they can compare the credit offers of different banks with each other and thus filter out the most favourable one.

Risk management

Another important task of a treasury management system is risk management in the financial area. The many different monitoring functions in cash and debt management reduce the risk that the company will default on payments.

If a company is internationally active, a treasury management system also provides functions that minimise exchange rate risks. By monitoring exchange rates in real time and setting limits, transactions in foreign currencies can be carried out automatically at a favourable time.

What is the best treasury management system?

There are many treasury management systems on the market. Some of them are designed for corporate groups and offer a very high range of functions. Such systems are unsuitable for small companies, because on the one hand they only need a fraction of the functions and on the other hand such systems are very expensive.

The best treasury management system for a company depends on its size and the functions it needs. Since the core of a treasury management system is cash management, it is often sufficient for many companies to purchase software that only offers cash management and cash forecasting.

Treasury management system examples

An example of a treasury management system suitable for small and medium-sized enterprises is Agicap. It covers all cash management functions. It displays account transactions in real time as income and expenses in customisable categories, which is particularly useful for cost control.

It can also be integrated with other accounting tools, such as the ERP system or invoicing software. Relevant data is retrieved from there and transferred to the cash flow planning, making it even more accurate.

With the help of the cash flow forecasting function, in addition to the main planning, you can also create different cash flow scenarios and look in detail at how different events could affect the cash situation of the company. This drastically reduces the risk of cash shortages.

Why do you need a treasury management system?

Companies of all sizes benefit from a treasury management system, as the efficient management of cash flow is of high importance for both individual entrepreneurs and multinational corporations.

By keeping an eye on the cash situation at all times and seeing the expected development of liquidity in the cash flow forecast, cash flows can be directed to the right places in the company and the risk of payment defaults minimised.

The treasury management system helps managers to make important decisions because it provides an accurate database. Under these circumstances, it is often even possible to negotiate better conditions for loan agreements with banks, because a complete presentation of the cash flow and cash flow forecast creates confidence.

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