How to Choose the Best Corporate Treasury Management Software

Corporate treasury management tools are gaining popularity amongst medium-sized businesses to help them track liquidity, mitigate risks and optimise working capital. Historically, due to their price tag and level of complexity of the interface, treasury management tools were reserved mostly for larger, enterprise-level companies, however the modern solutions are fast adapting to the demands of the middle market. This opens the door for even better financial management which promises to deliver stability, resilience and competitive edge in the complex economic landscape.

However, choosing the best tool that aligns with the goals and policies of the business is a task on its own. It can be the difference between thriving and merely surviving in a competitive market.

In this guide we explore the essential features that treasurers of the mid-sized, multi-entity business should look at and discuss common challenges and pitfalls to avoid.

There are many vendors on the market offering a treasury management solution however, in order to make the best choice for your business and not get overwhelmed it's important to look at firstly, the essential features each treasury management systems should have, and secondly, the ones that distinguish the best tools from the rest.

Real-Time Cash Management

A complete visibility into cash position as well as inflows and outflows in real-time makes a cornerstone of effective treasury management. This overview across accounts and entities allows businesses to plan and make better-informed decisions. The absolute non-negotiables here:

Integration with your existing banks: Real-time data exchange between your banks, and financial institutions and the treasury system. The connection should be stable and updated continuously so you're not missing the important data or basing your decisions based on the outdated information. The best treasury management systems offer API connection to your banks, however it is still common practice especially with some older treasury tools to rely on file transfer protocols (eg. FTPS) and custom-build connections which are very costly to implement and maintain.

Integration with your ERP system: For a full visibility into inflows, outflows, revenue and spending, a seamless connection to the ERP is a must. Similarly to the bank account connection, it should be a seamless and real-time connection that does not require costly implementation or maintenance.

With these tools, businesses can maintain a clear understanding of their cash position and overall health at all times, ensuring liquidity is allocated to the areas that need it most.

Liquidity Management

Beyond visibility, treasury management is also about optimising liquidity performance and working capital. Ensuring that business has sufficient funds to run both the day-to-day operations and long-term investments is a key responsibility of the treasury management department so the best tool should support them with the following features:

Proactive alerts: Automated notifications flag impending cash issues such as imbalances so that funds can be reallocated to where they are needed the most.

'Just-in-time' funding: Cash transfers and investments are automated to ensure resources are utilised effectively.

Cash pooling: Consolidating cash positions for better resource allocation and improving returns on surplus funds.

Treasury Automation

Treasury departments in mid-sized, growing businesses are often short on human resources and need to allocate their time and effort wisely to support the business along their growth trajectory. Automation of day-to-day treasury operations such as payments and reconciliation can minimise manual workload and improve accuracy. Key automation in the best treasury management systems on the market include:

Virtual accounts and automation of payments: Ability to create master virtual accounts to consolidate and simplify banking operations. This helps to reduce fees and accelerate access to new markets should a new currency be required to make payments to suppliers or staff. Using virtual accounts with local IBANs can help reduce FX costs and speed up transfers.

Reconciliation automation: Automating matching bills and invoices with incoming and outgoing transactions and automatically updating statuses in the ERP not only minimises manual work and risk of errors, but most importantly, from treasury management and liquidity perspective, gives an up-to-date insight into inflows and outflows.

Risk Management

Exposure to financial risks is a major challenge for businesses, especially those operating cross-border as it affects their bottom line and potentially, reputation and future growth and investment opportunities. A robust TMS should help mitigate compliance and FX through real-time monitoring of foreign exchange rates for desired currencies. This reduces the FX exposure when operating cross border and helps to make decisions proactively rather than reactively. If the system offers FX tools like hedging that allow you to lock in a rate for a future date this can not only mitigate risk but also positively impact the bottom line.

Reporting and forecasting

A good treasury management software is incomplete without reporting and forecasting capabilities. Most systems offer a library of templates that base on historical and live data to generate analysis and projections, however, for more advanced analytics, you may consider a treasury management systems that allows you to export the reports and data into your Power BI system to build custom cash flow forecasts.

Scalability and Flexibility

For mid-size businesses, with multiple entities and operating cross-border growth is an undeniable objective. Therefore, the best system should align with their needs offering scalability and adaptability to new markets and jurisdictions. In this case look for:

Modular design: This means you don't need to use the entirety of the system from the get-go. Features can be added as per need basis, avoiding unnecessary complexity.

Support for growth: The more jurisdiction, currency and language agnostic system is, the better. It means over time it will be able to handle the challenge of the multi-subsidiary, multi-jurisdiction set up.

Choosing and implementing any software, in the market saturated with tools with seemingly similar offerings is a difficult task, that comes even before the implementation needs to be considered. Both processes - of selecting the right vendor and implementing the software are full of challenges and awareness of them can help organisations make informed decisions and achieve a smoother roll-out:

Overlooking Integration Requirements

A treasury system must come with a stable and seamless connection to your existing ERP platform, bank accounts, and other essential financial systems. Failure to ensure compatibility, even of one element of the financial ecosystem, or picking a TMS that requires custom-built connections can lead to silos in data, inefficiencies, delays and costly maintenance which can not only impact decision-making but also the bottom line.

Focusing Solely on Cost

While affordability is important given the current economic landscape and growing pressure to justify any software spending, prioritising a solution that offers lower cost may lead to inadequate functionality and support in the long term. In order to avoid this common trap, carefully evaluate the return on investment, potential growth of the company and the future need to scale the financial ecosystem, costs of training, maintenance, as well as any additional tools you might need with the lower-cost option. Summing everything up may reveal that the lower-cost option may be the more expensive one in the long run.

Underestimating Training Needs

Investing in comprehensive training of the treasury and finance team helps to leverage the full capabilities of the solution and maximise its value. While it may require initial money and time investment, teams that are well-versed in the system are more bought into the process of change, can contribute to process improvements and identify additional ways to optimise treasury operations.

Ignoring Future Scalability

It's not a surprise that business needs evolve over time. Selecting a tool that cannot grow with your business can limit your progress and create bottlenecks. To ensure you're selecting the best option for your treasury valuate the system's ability to handle increased transaction volumes, additional subsidiaries, and evolving compliance requirements.

User Experience and Support

Focusing exclusively on features and ignoring the user experience of the interface as well as responsiveness of the customer support can impact buy-in from the treasury teams and the ability to maximise the value of the new treasury system. During the vendor selection process, assess whether the software provides the basics of easy navigation and customisation to help users access relevant data quickly, onboarding resources and support to enhance adoption as well as ongoing technical support.

Once you've selected the best vendor, the next step is implementation. A successful implementation process hinges on strategic planning and collaboration between treasury, finance, IT department and the vendor. Key steps include:

1. Define Clear Objectives for your treasury management system. Agree across departments and with your treasury management system vendor on the core functionalities you want it to handle such as: Managing multi-currency operations. Improving visibility of cash positions. Automating day-to-day treasury tasks. These objectives will guide configuration, ensuring it addresses the organisation's most pressing needs.

2. Develop a detailed implementation roadmap to minimise disruption to daily operations and allow for smoother transition. The plan should include: Timelines: Key stages and milestones for the implementation process. Resource allocation: Who will oversee the project, communicate with the vendor and ensure support. Training programs: Resources and plan to train staff in the new tool to maximise its use.

3. Prioritise security and compliance to avoid breaches and penalties. Financial data is highly sensitive therefore you need to ensure configuration with appropriate encryption, access controls and audit trails.

Selecting the right tool and rolling it out to the wider the business in a way that ensures buy-in from key stakeholders, users and maximises its value starts with assessing the needs and challenges, requires careful evaluation of available options and then testing. Follow these steps to maximise your chances of success:

Assess Current Needs and Challenges. Consider involving key stakeholders such as the treasury and finance department to conduct a needs assessment to understand the specific processes your TMS must address, such as cash management, risk mitigation, and integration with existing systems.

Compare Deployment Options. Consider whether a cloud-based (SaaS) or on-premise solution best suits your organisation's preferences. SaaS solutions offer greater flexibility and lower upfront costs, automatic updates and maintenance. On-premise tools guarantee greater control but come with higher investment, more complex implementation and need for maintenance. The deployment option will then guide your vendor selection.

Evaluate Vendors Thoroughly. Based on the needs of your business - evaluate the vendors taking into account not just the features they offer but also their track records including customer reviews, case studies, and industry recognition. To gain a better understanding of the usability and functionalities, schedule demos and don't limit yourself to one.

Test Scalability and Flexibility. Before committing fully, double-check if the system can accommodate for future growth, new subsidiaries and different markets. Modular systems that allow incremental feature adoption are ideal.

Collaborate with Experts. If you are still unsure or feel lost about your treasury management journey collaborate with trusted partners - reach out to your ERP vendor that may be able to recommend the best corporate treasury management software for your needs, with the added benefit of the reassurance that it already integrates with some of your systems..

Alternatively, reach out to us. Our team of experts will help you asses your current financial ecosystem, needs and guide you towards the best outcome.

Fyorin helps mid-sized companies unify cash, automate treasury operations and diversify liquidity risk through a single, user-friendly, cloud-based platform with direct access to nearly 100+ currencies.