How corporates look at TMS (Treasury Management System)
TreasurUp has interviewed tens of corporates in the Netherlands and held an online survey which was filled in by >100 corporates. Most corporates have an annual turnover of EUR 20-300 million.
What came out:
- Many companies with a turnover EUR <300 million would like some treasury management tooling but do not have/get the budget for it.
- Companies that do use a TMS platform only use a small part of its functionalities.
- Due to the fact that TMS is (1) expensive for many small- and medium sized corporates and (2) sometimes difficult to connect to ERP and bank accounts, many corporates still use Excel and bank portals for a large part of their treasury operations. This offers opportunities for banks!
TMS step 1: Liquidity insights and management
This is regarded as the basis: a company needs to know what their liquidity position per currency is even with multiple entities, located around the world.
- Around 70% of the small- and medium sized companies are interested in liquidity insights.
- More than half of this group would use a liquidity insights tool from their bank straight away.
- Around 40% of this group of 70% would first need to be convinced that the offered tool is better than their current Excel setup.
TMS step 2: Cash flow forecasting
Companies that grow in terms of turnover, people and professionality will at some point engage into the next level in finance: cash flow forecasting.
- Medium and large companies with a CFO and treasury department consider it as a necessity:
- 75% of the larger mid cap companies were interested in a bank offering a cash flow forecasting solution (N=20 interviews).
- When asked to >80 small and medium sized companies, this percentage was ˜50%. Ie. for many small companies, this is something for the future.
- A good cash flow forecast depends on the quality of data input and preferably with some historical data.
- The process of updating the forecasts and learning from the delta’s is crucial to get better at it.
- Software can help make the data upload from different sources, the data validation & structuring and the output analysis much easier.