Treasury Management System: Features, Integrations, Financial Outcomes
With 15-year experience in building financial software and practical knowledge of 30+ industries, ScienceSoft offers software development services to help businesses implement effective treasury solutions.
Treasury Management System in a Nutshell
A treasury management system automates corporate treasury activities, including cash, investment, debt, trade finance, and financial risk management. A treasury solution integrates with ERP, accounting software, bank accounts, trading platforms, and more.
The implementation of a custom treasury management system of average complexity takes 6 – 12 months, while building a high-end solution may require a minimum of one year. Average costs for building a custom treasury system vary from $400K to $1M+, depending on the solution complexity.
ROI for the custom treasury management system may reach up to 280%. An average payback period for such a solution is about 5 months.
Below, ScienceSoft shares a sample feature set that forms the core of a treasury management solution. However, each real-life use case for such software is unique, so functionality should be elaborated on and tailored to the business specifics accordingly.
- Tracking real-time cash inflow and outflow transactions on operating, investing, and financing activities.
- Tracking the cash transfer status (sent, in transit, delivered).
- Automated classification of cash transactions (accounts receivable, accounts payable, taxes, payroll, etc.).
- Monitoring cash balances across multiple bank accounts, currencies, regions, entities, etc.
- Automated cash positioning (daily, monthly, etc.) based on the cash flow data provided in bank statements.
- Automatically matching data on cash transactions provided in bank statements with those recorded in the general ledger.
- One-to-one, one-to-many and one-to-all cash matching based on the preset rules.
- Automatically defining outstanding transactions and marking them to be reconciled manually.
- Calculating and monitoring working capital.
- Tracking current and quick liquidity ratios to plan operating, investing, financing cash activities.
- Rule-based cash reallocation between bank accounts and intercompany accounts depending on liquidity needs.
- Scheduled and ad-hoc payments to vendors, suppliers, contractors, etc.
- Automated calculation and scheduling of principal and interest payments on the existing liabilities.
- Assigning optimal bank accounts and payment methods (e.g., ACH, BACS) for various payment transactions based on user-defined rules.
- Multi-currency cash pooling, POBO and COBO services, and multilateral netting via in-house banking.
Debt and investment management
- Monitoring real-time transactions on debt and investment activities across various asset classes, including stocks, bonds, and cash equivalents (loans, bank deposits, marketable securities, etc.).
- Rule-based opening, confirmation, renewal, and closing out of debt and investment transactions.
- Calculating capital gains and losses, accrued interest, average daily balance, weighted yields, duration, total return by investment portfolio, asset class, currency, region, etc.
- Creating custom investment portfolio structures with multiple asset types.
- Automatically created schedules on investment and debt maturity dates.
- Assigning limits to debt and investment transactions (by total amount, volume, asset class, risk position, duration, etc.).
Financial risk management
- Calculating and monitoring liquidity and credit risks based on the current liquidity ratios, up-to-date credit rates, aggregated market data on asset volatility.
- Assigning the maximum exposure limits to liquidity, credit, and market risks.
- Calculating Cash Flow at Risk (CFAR) and Value at Risk (VaR).
- Calculating the fair value of assets and liabilities, credit valuation adjustments (CVA) and debit valuation adjustments (DVA).
- Monitoring real-time FX rates and commodity prices.
- Calculating exposures for FX and commodities.
- Monitoring transactions on hedging activities across various derivative instruments, such as futures, forwards, options, swaps (on equity, commodity, interest rates, etc.).
Trade finance management
- Monitoring trade finance activities, including factoring, forfaiting, etc.
- AI-powered classification of received trade finance documents by type (letter of credit, bank guarantee, trade credit insurance, etc.).
- Extracting, validating, and storing relevant data from trade finance documents to monitor current assets, liabilities, and due dates on payments under trade finance activities.
- Automated calculation of fees, charges, commissions based on interest rates and additional charges under various trade finance forms.
- Setting, tracking, and adjusting trade credit limits.
Electronic bank account management (eBAM)
- Opening, changing, and closing bank accounts.
- Assigning cash transaction limits and cash balance thresholds across bank accounts.
- Tracking, analyzing, and comparing bank fees across various bank accounts.
- Assigning, tracking, and changing signatories.
- FBAR reporting.
Analytics and forecasting
- Cash forecasts based on the historical and current data on cash transactions, the company and customer payment behavior trends.
- Forecasts on financial gains under debt and investment activities based on the historical and current data on debt and investment transactions, financial market data projections on FX, interest and credit rates.
- Short- and long-term liquidity forecasting.
- Analysis and comparison of various hedging strategies using:
- Prospective/retrospective effectiveness tests.
- Regression analysis.
- Stress testing.
- What-if scenarios.
Reports and dashboards
- Drill-down dashboards.
- Customizable reports (by period, currency, region, bank account, etc.) on:
- Financial transactions, including cash, debt and investment, and hedging transactions.
- Cash balance, including cash positions.
- Actual vs. forecasted cash flow.
- Actual vs. forecasted financial gains and losses under debt and investment activities.
- Liquidity ratios.
- Net working capital, and more.
- Customizable notifications on:
- Target cash balance exceeding/dropping below the pre-defined threshold.
- Debt and investment transactions exceeding the pre-set limits.
- Payment due dates, including the financial instrument maturity dates.
- Liquidity and credit risks exceeding the pre-set financial exposure limits.
- Regulatory reporting deadlines.
- Suspicious financial data manipulations and fraud attempts, and more.
Security and compliance
- Multi-factor authentication.
- Role-based access control.
- Data encryption.
- Electronic signature workflow.
- Full audit trail for each financial transaction.
- AI-based fraud protection.
- Regular vulnerability scanning.
- Compliance with IAS 39, IFRS 9, IFRS13, ASC 718, ASC 815, ASC 820, FAS133, EMIR (for EU), SOX, PSD2, ISO 20022, industry-specific regulations.
To enhance visibility of treasury activities, streamline reconciliation and ensure accurate and timely financial transactions recording and reporting, ScienceSoft recommends setting up the following integrations:
- Importing real-time data on financial transactions across various treasury activities from treasury software to ERP/accounting software for automated creation of entries in the general ledger, accounts payable and accounts receivable ledgers.
- Uploading general ledger records data within a specified period from ERP/accounting software to treasury software for faster reconciliation.
- Importing real-time data on financial transactions across multiple domestic and international bank accounts to treasury software for centralized transaction tracking.
- Uploading regular bank reports to treasury software for streamlined reconciliation.
- Uploading trade finance documentation (e.g., letters of credit, bank guarantees) to treasury software.
- Uploading confirmations and settlements of FX trade, investment, and hedging transactions from treasury software to the trading platform.
- Importing real-time data on the open positions from a trading platform to the treasury solution to calculate gains/losses and risk exposures for various investment portfolios and asset classes.
Financial data marketplace
Importing up-to-date and projected asset prices, FX/interest/credit rates, risk exposures from market data platforms to treasury software for investment portfolio valuation and benchmarking, fair value calculation, building data-driven hedging strategies.
Inventory management software
Importing data on current purchase and sales orders from inventory management software to the treasury system for accurate liquidity planning and assessing the need for trade finance activities.
To maximize value and cost-efficiency of the treasury management solution, ScienceSoft always seeks to cover the following important factors:
A high degree of automation
To automate such tasks as, e.g., logging into connected bank accounts and market data platforms, retrieving and reconciliating of relevant financial data, generating financial reports, etc.
AI-powered financial insights
To provide accurate forecasts on future operating cash flow, gains and losses under investing and financing activities for improved liquidity planning, as well as intelligent recommendations on optimal payment, investment, financing, hedging activities.
Embedded BI tool
To enable advanced analysis and reporting on financial data across various treasury activities.
To enable integration between the treasury management solution and the ERP/accounting system, multiple bank accounts, trading platforms, etc.
Average costs for building a custom treasury management system vary between $400K and $1M, depending on the solution complexity.
ROI for the custom treasury system may reach up to 280%. An average payback period for such a solution is around 5 months.
Benefits of a treasury management system
increase in the treasury team productivity due to automation of treasury management tasks and enhanced visibility of financial transactions
cash forecast accuracy due to in-built AI capabilities
increase in accuracy of forecasts on financial risk exposures
reduction in time for reconciliation
reduction in financial risks due to real-time risk exposure tracking
Up to 50%
reduction in idle cash due to timely investing activities
faster monthly financial close
reduction in time to pay suppliers/vendors due to automated processing of trade finance documents and payments
Off-the-Shelf Treasury Software ScienceSoft Recommends
SAP Treasury and Risk Management
- Straight-through processing of various financial transactions, including money market, FX, derivatives, securities, and debts.
- Native integrations with SAP S/4HANA Cloud ERP, SAP Data Intelligence, SAP Cash Application.
- Self-paced user training.
- Automated import of relevant financial market data from external sources.
- Customizable investment categories and investment portfolio hierarchy.
- Credit risk control based on preset limits.
- Automated calculation of key risk and return metrics, including exposure, future values, sensitivities, and value at risk.
- Automated evaluation of hedging strategies based on simulated transactions and market data scenarios.
Managing comprehensive investment, funding, credit, hedging activities for large enterprises.
Active Liquidity Platform by Kyriba
- More than 40,000 pre-built bank payment scenarios for more than 1,000 banks.
- Embedded BI providing advanced financial data visualization and payment analytics.
- ML-powered real-time fraud detection based on the pre-set detection rules.
- In-house banking management.
- Centralized eBAM with signatory authorizing and tracking, audit trails, FBAR reporting, and more.
- Automated bank reconciliation.
- Cash flow and FX exposure forecasting.
- Hedging recommendations based on the approved cash flow forecasts.
Managing liquidity risks, payments, trade finance and investments for midsize businesses.
Reval by ION
- Configurable OOTB bank connectivity service.
- Integrated market data feeds providing accurate derivative valuations.
- Regulatory compliance covering requirements for ASC 815 (FAS 133), ASC 820 (FAS 157), ASC 820-10 (FAS 161), IAS 39, IFRS 7, IFRS 13, IFRS 9, Dodd-Frank, SEPA, FBAR, and more.
- Automated cash positioning and bank reconciliation.
- Support of the centralized payment workflow via cash pooling, payment factory, multilateral netting, intercompany clearing.
- Automated risk exposure calculation for all major asset classes, including FX, interest rates, structured rates, energy, agriculture, metal.
- Financial risk modeling and analyzing based on testing various financial performance scenarios.
- In-built hedge accounting tools for hedge designation, prospective and retrospective effectiveness tests.
- Alerts on suspicious financial data manipulations and fraud attempts.
Managing cash, liquidity, investment risks and hedge accounting for midsize to large organizations.
ScienceSoft recommends choosing custom development in the following cases:
You need a treasury solution providing custom calculations of financial risk exposures and fair value or specific features, e.g., intelligent confirmation and settlement workflows for financial deals.
You need treasury software providing compliance with specific local regulations in the regions your company operates.
You need treasury software with a flexible modular architecture that allows easy functionality extension as your business grows or transforms.
You want to avoid costly and time-consuming integration of the treasury management system with your business-critical software, including legacy software.
Treasury system consulting
- Analysis of treasury management digitalization needs.
- Assessment of the existing treasury management processes, tools and their integration points (if any).
- Suggesting optimal treasury system features, architecture, tech stack.
- Preparing an integration plan (with ERP, accounting software, bank accounts, trading platforms, etc.).
- Implementation project cost & time estimates, expected ROI calculation.
Treasury system implementation
- Treasury management needs analysis.
- Treasury solution conceptualization.
- Architecture design.
- Treasury system development.
- Integrating the solution with the relevant systems (ERP, accounting software, bank accounts, trading platforms, etc.).
- Quality assurance.
- User training.
- Continuous support and evolution (if required).
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. We help businesses build effective treasury systems tailored to their cash, debt, investment, and risk management needs. Being ISO 9001 and ISO 27001 certified, we apply a mature quality management system and guarantee that cooperation does not pose any risks to our customers’ data security. If you are interested in developing a reliable treasury management system, feel free to turn to ScienceSoft’s team.