When it comes to managing the financial health of a business, the Finance or Accounting department tends to “steal” all the limelight. Not many would pay attention to the Treasury function, an equally strategic and crucial team that often plays a background role. Over time, the role of treasury becomes more prominent and complex, thus giving rise to the need for dedicated tools.
When it comes to treasury management solutions, there is no shortage of available options, from the one-size-fits-all Enterprise Resource Planning (ERP) software to the best-of-breed treasury management system (TMS), and not to mention, in-house solutions from scratch.
The big question is, which approach is worth investing in? In this article, we will help you navigate these options to find the perfect fit for your business.
Read more:Treasury Management Solution: Does Your Business Need One?
Comparing your options for treasury management solutions: ERP vs TMS vs DIY
Enterprise Resource Planning (ERP) is a powerful and comprehensive solution. It generally encompasses the entire organisation, including treasury management capabilities. Despite that, they often fall short of specific, targeted functionality that treasurers sought after and might still need to conduct some processes manually due to functionality gaps. This negates the benefit of having an integrated application.
It is not just finances that businesses have to worry about; ERP implementation also consumes lots of time – a couple of months at best and several years at worst.
Read more:Moving from Legacy to Cloud Financial Management Software? Here’s Your Plan
Pros of using ERP’s treasury management capabilities
– Centralisation and integration: An ERP system provides a single, integrated platform for a wide range of business functions. The solution aims to help streamline operations and improve data flow across departments.
– Unified data: As all data resides within one system, ERP can provide a more unified view of the company’s financial and operational health.
– Broad functionality: The system offers a wide array of features, making it a powerful tool for a company’s overall management.
Cons
– Lack of specialised functionality: The treasury modules in ERPs often lack the deep, specific functionalities required for complex treasury operations. As a result, businesses might resort to customisation, which in turn increases costs.
– High cost and complexity: Implementing an ERP is a hefty investment, can consume lots of resources and time and can disrupt business operations.
How about building an in-house solution, a.k.a., the business develops its own treasury management solution from scratch? This is a sound decision, right? Despite their perfect fit with the company’s unique needs, DIY treasury solutions do come with their own set of challenges.
Pros of building an in-house treasury management solution
– Perfect fit: An in-house solution is tailored to the company’s exact needs, workflows, and unique processes.
– Full control: The business has complete control over the system’s development, features, and future roadmap.
– Competitive advantage: A well-built, proprietary system can provide a unique competitive edge by optimising a core business function.
Read more:Looking Beyond the Fiscal Year: How to Transition to Strategic Budgeting
Cons
– Building and maintaining a custom solution requires a dedicated, skilled technical team.
– In-house solutions often struggle to integrate with other corporate systems and banking partners, leading to manual data entry, increased errors, and inefficient processes.
– The business is entirely responsible for all development and updates when regulatory requirements change or transaction volumes expand, which can be a significant burden.
– Without proper integration, an in-house solution can create data silos, limiting the ability to get a complete, real-time view of cash positions across the organisation.
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And finally, we have the “best-of-breed” treasury management solution (TMS). Unlike general financial tools, a TMS brings together all treasury-related data and processes, including:
– Cash and liquidity management with real-time tracking of positions
– Centralised bank account management and reconciliation
– Risk identification and mitigation for interest rates and foreign exchange
– Debt and investment portfolio optimisation
– Reliable financial reporting and compliance tools
– Smooth interfaces with banking partners and trading platforms
Learn about the key differences between treasury and financial management in more detail in this article.
Pros of using a dedicated treasury management solution
– Specialised, targeted functionality: It offers deep, rich functionality to handle the daily tasks of the treasury department.
– Robust integration: These solutions are designed to seamlessly integrate with a company’s ERP, banks, trading platforms, and other financial systems, which reduces manual data entry, improves accuracy, and provides a “single source of truth.”
– Enhanced cash visibility and forecasting: By consolidating all treasury data, a TMS provides real-time, comprehensive visibility.
– Continuous updates and support: The solution is regularly updated by the vendor to meet changing regulatory requirements and industry best practices. The vendor also provides ongoing support and maintenance.
Cons
– Some of the functionalities might overlap with the company’s existing ERP or other financial tools.
– While typically less expensive than a full ERP implementation, a TMS is still a significant investment. However, its dedicated features and long-term benefits often outweigh the initial cost.
– While designed to integrate, the process can still be complex depending on the number of systems and banks involved.
Each approach has its pros and cons, and implementation depends largely on the business’ size, industry, complexity, and specific treasury needs.
Choosing the right treasury management system vendor
Choosing the right treasury management system vendor needs evaluation that goes beyond features and pricing. Your vendor becomes a long-term financial partner. Their capabilities and reliability matter just as much as the software itself.
Read more:What to Look for in a Treasury Management Solution
A vendor’s reputation is the first thing businesses need to pay attention to when evaluating treasury management system providers. Their track record with existing customers shows industry recognition and market presence, while their financial health affects their ability to provide ongoing support and system improvements. These are the foundational criteria that businesses need to review first and foremost before making any commitment.
Vendors differ substantially in their implementation capabilities. Traditional TMS implementations usually take 4 to 18 months. However, modern SaaS platforms can be deployed much faster. These timeline differences affect both immediate costs and the organisation’s benefit realisation.
Look for vendors who provide:
– Clear implementation methods that work
– Industry-specific or business model expertise
– Quick support with defined service agreements
– Training resources that suit your team’s technical skills
Security capabilities have become vital as treasury systems handle sensitive financial data. Make sure potential vendors follow resilient data privacy standards and use strong encryption protocols to protect data during transit and storage.
Read more:Introducing CS Lucas Treasury Management Solution to the TRG Portfolio
Questions to ask before signing a contract
“How will this new treasury management solution integrate with our existing software?”
Uninterrupted connectivity supports not just the treasury function but also the finance department and eventually the entire business. Without proper bank and ERP integration, teams cannot access relevant data and get the visibility they need.
“What does the TMS vendor’s product roadmap look like?”
A vendor’s development plans show their strategic vision and dedication to new ideas. Request their 1-3 year roadmap to match your future needs.
“What will the implementation process involve?”
Knowledge about resources, timelines, and setup support helps prevent unexpected delays or costs.
“How does the TMS vendor approach security and compliance?”
Treasury systems must protect sensitive financial data while meeting regulatory requirements. Check their security certifications and compliance capabilities.
“What is the TMS vendor’s approach to customer success?”
The vendor’s customer success team plays a key role in onboarding and support. They help you get the most value from your system. Their implementation approach, domain expertise, and best practice recommendations shape your experience significantly.
Ultimately, the choice between a dedicated TMS, ERP, or DIY solutions requires careful consideration and depends significantly on your organisation’s size, complexity, and specific needs. Moreover, your TMS vendor of choice is just as vital as the software itself.
Regardless of which path you choose, remember that moving from old treasury processes to a modern TMS does more than upgrade technology; it is a complete shift in how businesses handle their financial operations.
However, the software is only part of the equation. A strong IT partnership will ensure you get the most value from your investment and are well-equipped to navigate the ever-evolving world of financial management.
How can we help you? TRG International is proud to partner with CS Lucas, one of the leaders in treasury management systems. With its robust cash forecasting, payments, borrowing, and investment capabilities, CS Lucas complements our existing offerings well, such as Infor SunSystems Cloud, Yooz, EPM, and more.
To learn more about why TRG International decided to partner with CS Lucas, check outthis article here, or to learn more about the solution and what it has to offer, visit our website.
