Treasury management software tells a company how much cash it has, where, and how much it will have next week, and then moves it. It connects to every bank the company uses, gathers balances and transactions each day, forecasts liquidity, and executes and controls payments.
What it does
A company with a handful of accounts can read balances from bank portals. A group with dozens of entities and banks in several countries cannot. Treasury systems collect bank statements through direct connections, bank APIs or networks such as SWIFT, normalise them and show a daily cash position by entity, bank and currency. From there they forecast cash, propose transfers between accounts, and send payments through a single controlled channel with approvals and audit trail.
Payments travel over different rails. In the United States, the Federal Reserve's Fedwire Funds Service is a real-time gross settlement system, and its FedNow Service supports instant payments; a treasury system routes each payment to the rail and bank that fits. Larger treasury systems also manage debt, investments, intercompany loans and netting, and currency and interest-rate exposures. Hedges are recorded under the accounting rules for financial instruments, such as IFRS 9, and foreign currency positions under IAS 21.
Who uses it
The treasurer and treasury analysts run it. Accounts payable and payroll send payment files through it. Controllers use its bank data for reconciliation. The CFO reads the cash position and forecast.
The parts a typical product has
- Bank connectivity and statement collection
- Daily cash positioning by entity, bank and currency
- Cash forecasting, short and medium term
- Payment hub: approvals, sanctions screening, bank formats
- Bank account management and signatory records
- In-house banking, intercompany netting and cash pooling
- Debt, investments, foreign exchange and hedge accounting
Where it meets other categories
Outgoing payments come from accounts payable and incoming cash from accounts receivable. Bank data feeds cash reconciliation in the close and journal entries in the ERP. Longer-range cash plans belong to FP&A.
Questions to ask a vendor
- How do you connect to our banks (API, host-to-host, SWIFT), and who maintains each connection?
- Which payment formats and rails are supported in each country we operate in?
- How is the cash forecast built, and can it be compared with actuals?
- How are payment approvals and user rights separated from those in the ERP?
- Which hedge accounting and debt features are included, and which are add-ons?
- Where is our data hosted, and what happens to bank connectivity during an outage?