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Areas where treasury software solutions outperform legacy TMS

What you’ll learn

  • What are the challenges of a legacy treasury management system?
  • What are the advantages of using corporate treasury software in treasury management?

What are the problems of legacy systems?

The challenges with legacy technology go well beyond any unreasonable expenses involved with continued investments and upkeep in outdated systems, and data accessibility is the single most significant point of legacy failure. The case for modern treasury solutions software begins to emerge at this point.

Limitations of legacy treasury management systems

For treasurers, access to real-time data is crucial for treasurers, especially for companies that rely on decentralized treasury functions. Legacy technology also hinders corporations from achieving a single source of truth.

What are the problems of legacy systems?

  • Limits access to accurate cash data due to disparate data sources

    TMS uses MT940 file formats acquired from the bank to consolidate and normalize bank data on a single platform. These statements get passed through the TMS.

    Users spend hours cleaning up your bank statements, developing scripts to normalize columns, and converting currencies to gain a complete view of your cash position.

    Manually handling transaction consolidation increases the risk of mistakes and delays, potentially resulting in erroneous data.

  • Restricts innovation and access to getting insights into cash flows

    Because legacy TMS frequently eliminates control, finding new possibilities and insights into your cash flows is challenging. Customized reporting and forecasting often necessitates either custom projects (a significant and costly undertaking for IT) or exporting data and manually cleansing it in spreadsheets.

    Companies usually follow inefficient treasury operations since improving reporting in TMS is time-consuming. Also, maintaining old treasury management technology is more expensive than switching to cloud treasury management.

  • Creates obstacles to the treasury’s growth potential

    The more time a company and its team spend reading through thousands of transactions, the less time they have to investigate and assess their cash flow and position. Discovering new investment possibilities, optimizing working capital, improving the cash conversion cycle, and uncovering new cash insights becomes difficult.

A company’s treasury management system should not be a stumbling block to its treasury’s efficiency. It’s better to disrupt this unproductive loop if the system stifles innovation, limits access to correct cash data, and limits the treasury’s development potential.

What should be considered in choosing a treasury software solution?

A well-chosen treasury software system helps a business simplify processes and improve efficiency. However, with so many alternatives available, it’s difficult to pick one that meets all the requirements.

These four guidelines can assist in keeping the selection process on track:

Considerations for choosing treasury software solutions

  • Examine the current treasury operations

    Creating the groundwork for a robust treasury software solution provides the ideal chance to evaluate how things are currently operating. Examine the following things:

    • What are current procedures and processes?
    • Are they performing to their full potential for you?
    • Have the company’s real day-to-day duties changed?
    • Are the processes and procedures documents still relevant?

    This type of analysis makes it possible to improve company processes before implementing a new treasury software solution and getting the most out of it.

  • Establish the system requirements

    Know the requirements at a high level, for example:

    • Seamless integration with banks, ERPs and TMS
    • Capabilities for hedging
    • Time savings and ROI
    • Automated data aggregation
    • Automated cash forecasting with increased accuracy

    Sort the requirements according to their significance. Assign weightages by creating a scorecard. Shortlist the vendors or technologies based on the scores.

  • Prioritize needs

    There’s a genuine risk of getting carried away with items a firm doesn’t truly need at the price of things they need. Separate the ‘must-haves’ from the ‘good to have’ and return to the original list of needs. Any treasury solutions software that a firm chooses must address the fundamentals. A fancy, expensive treasury technology with a thousand distinct features will be useless to the team if they can’t use it for the most basic tasks.

  • Plan the implementation thoroughly

    In addition to budgetary assistance, successfully deploying treasury software solutions requires the complete support of management. Create a strong project team that includes members from your organization’s core financial and business divisions and sponsors, stakeholders, and suppliers. To lead the team and oversee the implementation process, the company must engage an experienced project manager.

Let’s look at how treasury software solutions are better than legacy treasury management systems.

Areas where treasury software solutions outperform legacy TMS

How treasury software solutions are better than legacy TMS

Advantages of cloud-based treasury software solutions

A cloud-based corporate treasury software provides an exceptional opportunity for treasury process reform. Keeping up with treasury trends and the cloud transition is also a critical first step.

Benefits of treasury management solutions:

  • Centralizing corporate treasury software:
    Because of the bottom-up approach, centralized treasury management solutions outperform decentralized ones. Forecasting in centralized systems is done at the entity level and then rolled up to the global level. This allows for:

    • Detailed cash flow information
    • Informed decision-making
    • Reduced mistakes

    Centralization enables a unified picture of an organization’s worldwide operations’ cash flow and risk scenarios. This allows financial managers to make choices based on overall performance rather than individual regional areas.

  • Forecasting accurate cash flow:
    Cash flow forecasting is critical for:

    • Driving finance
    • Capital expenditure
    • Investment choices

    An accurate projection assists in:

    • Forecasting future financial positions
    • Preventing cash shortages
    • Allowing for the earning of profits on any cash surpluses
  • Anticipating risks:
    A company inherits a variety of hazards, including:

    • Operational risk
    • Commodity risk
    • Liquidity risk
    • Interest rate risk
    • Foreign currency risk

    Effective treasury management services may assist firms in reducing risks by implementing an effective risk management strategy. The risk management policy represents the acceptance of critical hazards, and the instruments required to manage them.

  • Keeping track of things:
    Corporate treasury necessitates the management of many documents, which must be filed in the proper sequence. And a copy must be saved on the company’s server, accessible only to the treasury team. The best treasury management solutions aid in:

    • Automatically tracking and reporting a company’s financial flows.
    • Management of cash flows across several corporate offices and bank accounts.
  • Reporting:
    Cloud treasury management evaluates a company’s performance effectively. A treasury module integrated with ERP or a standalone corporate treasury software delivers the precise reporting required for executive decisions.
  • Embracing AI and automation:
    Automation frees teams to focus on essential tasks by reducing manual labor. On the other hand, AI-enabled cash forecasting leads to:

    • Reduced turnaround time: Accurate forecasting enables quick and smart decisions to keep ahead of market volatility.
    • Effective cash management: Faster cash conversion cycle tracking improves liquidity management by unlocking trapped working capital.
    • Shortened idle cash: With idle cash, CFOs can allocate capital to their short-term and long-term goals. This allows businesses to put their excess cash to work and earn interest.
    • High strategic investments: M&A and business expansion decisions are made accurately with more credibility.

Benefits of replacing legacy treasury management systems with HighRadius’ treasury software cloud:

  • Predicting cash balances via cash flow forecasting.
    Assisting with cash flow management to maximize cash use and cut unexpected debts.
  • Improving investment allocations based on credit line availability and predetermined targets makes decisions more efficient.
  • Auto-reporting with transaction-level drill-down capabilities.
  • Tracking and managing accounts and other types of signatories.

Customer success story with HighRadius:

A $28.727B multinational food-products corporation faced these challenges:

  • Manual handling of thousands of invoices resulting in an inaccurate A/R forecast.
  • Forecasting model allowed only short-term forecasting with a maximum horizon of 20 days.
  • Manually tracking customer and invoice-level payment status was time-consuming.
  • Customer-level discounts for early payments were hard to plan due to inadequate visibility, accuracy and time.

HighRadius AI-Powered Forecasting provided it with the following results:

  • 96% accuracy in A/R forecasts achieved within the first 30 days.
  • Long-term (6 months) forecasts are created automatically.
  • Automatically highlighted variances in A/R forecasts at a customer and invoice-level.
  • Created ‘what-if’ scenarios to compare forecast behavior.

Schedule a demo with our experts and learn how switching to corporate treasury software is always beneficial for a company.

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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.