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Cloud vs. On-premise TMS: Demystifying what’s better for enterprise treasury?

What you’ll learn

  • Discover the differences between on-premise and Cloud software.
  • Identify what works best for large companies.

On-Premise TMS Vs. Cloud Solutions: Comparison

The following are the differences between On-premise treasury management software and Cloud solutions:

Parameters TMS Cloud solutions
Cost Depending on the solution complexity, licensed TMS costs from $200K – $400K. Users also need to pay an extra annual maintenance fee. SaaS business cash flow software runs on an annual subscription basis. The price can range from $45,000 – $60,000, including a one-time setup fee.
Ease of use A TMS doesn’t support all devices, and it requires training before use.

Only high-end TMS vendors have an excellent round-the-clock customer support system.

Cloud treasury solutions have an easy-to-use interface.

It is device-independent and has an excellent customer-support module.

Updates and maintenance TMS requires frequent updates with the help of IT on a weekly or monthly basis. Updates and maintenance are the responsibility of the vendors, not the users. The updates are also customizable.
Time-saving TMS can save up to 50% of the time spent performing repetitive tasks such as:

  • Manual data gathering
  • Data consolidation
Cloud-based treasury systems can help recover as much as 80% of the hours wasted on manual tasks per year.
Implementation  Implementation takes 5 to 6 months. Implementation takes only 3 to 4 weeks.

Understanding On-premise Treasury Management System

What is an On-premise TMS?

An On-premise Treasury Management System (TMS) is a locally hosted software. It helps automate, record, and control core treasury functions.

What are its drawbacks?

The typical use of a TMS involves:

  • The need for back-end server hardware
  • The hiring of programmers or IT employees
  • The payment of large amounts of money for the software licenses.

Scaling business within the TMS ecosystem

Many enterprises assume a TMS can solve all their operational cash management issues. But the costs associated with maintaining the solution can be exponentially higher. Additionally, the return on investment takes years to appear due to these reasons:

  • TMS uses MT940 file formats downloaded from the bank. TMS runs these statements, but the STP rates are low. So, data gathering gets delayed, and it is also error-prone.
  • It is unable to support multiple users to access, update, and share information.
  • Creating custom reports and forecasts is difficult and costly. The treasury team needs to export data and manually cleanse it in spreadsheets.
  • It requires manual intervention and reconciliation due to outdated UI and architecture. Hence, it prevents the treasury from focusing on other important tasks.
  • The maintenance and updates can be cumbersome and expensive.

Understanding the Cloud

What is a Cloud or SaaS solution?

SaaS, or Software-as-a-Service, is a cloud-based technique for delivering software to users. Instead of purchasing and installing an application, SaaS consumers subscribe to it. Users can access the SaaS application from any internet-connected device as the application.

How Cloud treasury software performs better than On-premise solutions

The Cloud is better for digital transformation. It allows for better flexibility and agility across an enterprise. Cloud treasury solutions help enterprises scale faster in the following ways:

How Cloud helps large companies
  • Quicker and more returns on investment:
    There is no update and upgrade costs for the new capabilities of SaaS software. The vendor handles updates and upgrades, which leads to achieving more significant ROI. Large companies can improve their ROI by using business cash flow software through:

    • Decreased interest expense
    • Increased investment income
    • Freed-up resource bandwidth
  • Future-ready solution:
    A cloud-based treasury management system is highly flexible and scalable. Many users can access the cloud at the same time. It adapts to the changes and requirements of an organization. For example, if a billion-dollar firm acquired a new company. This would need a solution to store vast amounts of bank data. Cloud solutions also allow organizations to respond to different scenarios swiftly.
  • More bandwidth for strategic tasks:
    A cloud-based treasury management system frees up the bandwidth of analysts. They can focus on liquidity planning instead of manual data gathering and modeling. With accurate and readily available data, treasurers can make confident investment/debt decisions.

Benefits of using a cloud-based treasury management system for enterprises

The following are the advantages of cloud treasury solutions for large companies:

  • Increased accuracy for long-term & short-term cash forecasts.
  • Faster deployment and implementation of the treasury software.
  • Bottom-up and accurate forecasting across different cash flow categories, regions, and currencies.
  • Global cash visibility over cash position and cash flows across all subsidiaries.
  • Seamless integration using API across banks, ERPs, and FP&A systems.
  • Automated bank reconciliation and bank statement parsing to improve cash flow management.
  • Capability to make data-driven decisions for growth activities like investment and M&A.
  • Automated capturing of intercompany activities like:
    • Tracking balances
    • Recording interest across all mirrored
    • Monitoring notional bank accounts

Customer success stories

A CPG firm achieved 96% accuracy in A/R forecasts and was able to track open invoices of 1000+ customers. The HighRadius cloud treasury solution also offered them these benefits:

  • End-to-end automation in forecasting
  • Daily and long-term visibility
  • Customized models to create scenarios with and without early payments
  • Ability to track open invoices resulting in improved collections

Get in touch with our solution expert to learn how a cloud treasury solution can help you meet your targets.

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The HighRadius™ Treasury Management Applications consist of AI-powered Cash Forecasting Cloud and Cash Management Cloud designed to support treasury teams from companies of all sizes and industries. Delivered as SaaS, our solutions seamlessly integrate with multiple systems including ERPs, TMS, accounting systems, and banks using sFTP or API. They help treasuries around the world achieve end-to-end automation in their forecasting and cash management processes to deliver accurate and insightful results with lesser manual effort.