Do I Really Need a Treasury Management System?

The more widespread a company’s business is, the harder it is to get the visibility needed for cash positioning and forecasting. PYMNTS research from 2020 shows that 72 percent of treasury and finance professionals are still manually collecting and categorizing data for forecasting purposes.

Larger organizations may have an ERP or TMS already in place, but many smaller businesses aren’t yet ready to make that financial investment. For treasury and finance professionals working in small to midsize companies, spreadsheets are often a necessary evil, along with logging into multiple bank portals to capture the information necessary for reconciliation and forecasting. And as the business grows, the amount of time spent on manual data aggregation grows right along with it.

Companies hedging their currency or interest rate swaps, issuing and managing debt, performing hedge accounting, or executing a high number of transactions, generally want to automate and streamline these processes. And as most finance professionals have heard of treasury management systems, that is typically the starting point for time-savings research.

Treasury management systems offer increased efficiency and decreased costs and risk – often through automating repetitive processes. A TMS can centralize operations, integrating with other backend systems to deliver the visibility organizations need within treasury. And having all transactions logged and monitored through a single system makes compliance and responding to audits far less painful.

But what many treasurers don’t realize is that a TMS doesn’t automatically include all the bank connectivity that is vital for cash and liquidity management. While many TMS providers offer bank connectivity as part of their solution, it typically is not an area of expertise. And the message format that each financial institution uses for transactions and reconciliation may or may not be compatible with the standard formatting set by the TMS provider. It’s a little like asking McDonalds to produce a car, they could probably figure it out, but it’s not exactly playing to their core strengths.

Whether you’re working with a large multinational bank, a tiny bank in an emerging country, a third-party payment provider, or all of the above, you need to be able to exchange communications securely and reliably, in the right formats. That’s what bank connectivity is all about.

Establishing connections with financial institutions is slowly getting easier thanks to APIs — but for organizations that need to onboard smaller banks, banks in emerging countries, or banks that have decentralized branches, it can take extensive IT work and time, and a lot of paperwork (yes, often real paper is still involved in these exchanges!)

A bank connectivity solution from a multibank connectivity provider (also referred to as a treasury aggregator) can help you streamline payments and reporting activities. It can be used to connect to one or more financial institutions, giving you a single point of access that consolidates all of your data from all of your banks and payment providers. And you can choose the channels and methods of connection — anything from SWIFT to API to FTP — that best suit your business needs and budget.

No more logging into individual bank portals. No more manually taking that data and entering it into spreadsheets. You’ve now reduced risk, increased efficiency, and gotten the cash visibility you need. And you can add more banks, accounts and payment providers as needed.

Regardless of your business needs, you’ll most certainly want to be able to manage your cash and payments. And if you can automate that entire process without the need for manual steps, spreadsheets, or having to find hard-pressed IT resources to help you, then working with a multibank data aggregator for connectivity is a no-brainer. More complex organizations can then send that data right into the treasury management system or ERP of your choice and have those “rails” connected to all of your banks and accounts globally.

You can implement a bank connectivity solution at any time. It can be a standalone solution in lieu of a TMS, or the first step in your journey from spreadsheets to full automation, allowing you to collect data that could be fed into a TMS in future. It can also be integrated with any TMS or ERP to provide better global connectivity and straight-through processing.

And the best part is that a solution from a third-party provider gives you far more flexibility: If you decide to add or change TMS or ERP providers, you avoid the disruption of losing any of the underlying connectivity.

So, do you really need a TMS?

Click the Download button at the top and download our handy checklist to find out if a bank connectivity solution might be the answer.

Fides is the world leader in multibank connectivity, payments and transaction communications. A market leader for more than a century, Fides is committed to the principles of Open Banking, making treasury and financial operations as efficient, transparent and secure as possible for all organizations.

Fides provides everything organizations need for efficient cash and liquidity management, all through a single platform — along with connectivity to more than 13,000 financial institutions through an unmatched range of methods and channels. Thousands of companies around the globe rely on Fides’ connectivity capabilities and comprehensive workflow, reporting, conversion, validation and security services, for their own businesses and for extending services to their clients.

Whether you access via the secure Fides ONEHub or take advantage of our seamless integration with third-party ERP, TMS and other backend systems, Fides is the only platform you need.