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Do you really need a TMS? Or can your own solution/combination be better? Sometimes

“Do we really need a treasury management system?” has been asked ever since corporate treasury management departments emerged in the 1980s. Most consultants and advisers believe they should, yet survey after survey reports that many corporate treasury departments don’t have a TMS, e.g. the 2015 AFP/gtnews Treasury Management System Survey of 400+ organizations representing a strong cross section of size and region only half reported they are using a Treasury management system. 

The survey found that “corporations with less than $1 billion in revenue aren’t using a TMS because the benefits of using one aren’t worth the fees, implementation burden and other costs. Instead, they continue to rely on spreadsheets for core treasury functions, such as forecasting, cash visibility and bank account management.” But the report, sponsored by Bloomberg, commented that, “as smaller companies get past the growing pains around establishing their treasury structure and scope, their need for technology and automation increases as they grow larger.”

However, corporate treasury departments are well aware that a TMS is never the complete solution that other systems and services will always be needed as well. Running a corporate treasury department always involves ‘cobbling together’ (there is no elegant term for what is involved) systems and services. 

The alternatives to a full blown TMS

A new breed of standardised cloud based TMS has emerged over the last 2-3 years which are much easier and less costly to implement than a full blown TMS for a small fraction of the original price, for example:

  • Bloomberg’s TRM, which in many ways pioneered this new breed, offers most of cash and treasury management + risk management that a corporate treasury department need which can be implemented in weeks.  (Bloomberg and other suppliers are finding that few, if any, corporate treasury departments can move this fast.) Bloomberg positioned TRM as ““Run all your treasury activity from one simple platform – integrate cash management, risk management, trade execution, lifecycle management and hedge and treasury accounting, together with enterprise resource planning systems (ERP) and SWIFT integration; all in one workflow.” 
  • Reval Cloud Platform offers the Reval Core for “the underserved mid-market: A pre-configured package of core treasury functionality built on TRM best practices to deliver instant visibility, automation, and control over basic treasury activities.”  
  • Salmon Software’s cloud based service.

In the connectivity space, TMS light solutions are emerging which offer much more than connectivity, such as:

  • TIPCO’s control centre
  • Bottomline’s Universal Aggregator® 

which provide the connectivity piece and other key functions such as cash flow forecasting. These solutions  are often combined with other systems, e.g. dealing systems or even with a TMS.

Another increasingly important ingredient in automating the corporate treasury department are the cash management banks’ electronic banking services, e.g.:

CTMfile take: The TMS products and services are under increasing competitive pressure from the new services from the cash management banks, and other specialist providers. A TMS is not always the answer in automating your corporate treasury department, just as SWIFT is not the answer for every corporate in connecting to their bank and other FI service providers. It is cobbling together the appropriate solution that matters. 

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