What is a Treasury Management System (TMS)?

Treasury management systems are software applications that allow businesses to manage their financial operations by tracking and automating processes like cash flow, investments, and payments.

What is a Treasury Management System (TMS)?

A treasury management system (TMS) is software that automates certain processes involved in a company’s cash management. It offers a centralized view of financial data while automating the movement of cash between operating and investment accounts, allowing businesses to maximize returns while ensuring enough cash is available to cover bills and operating costs.

Treasury management software can calculate upcoming payments and strategically invest idle cash, keeping only the necessary amount of cash-on-hand in an operating account. By integrating with a company’s bank accounts and other platforms where they store financial data, like accounts payable or enterprise resource planning (ERP) software, these systems can optimize cash flow and eliminate the manual work usually required to export data and make decisions about where and how to move funds.

Functions of treasury management systems

TMS serve multiple functions aimed at optimizing an organization’s financial operations. Some of the primary treasury functions include the following:

Cash and liquidity management

Through direct bank connections, a TMS gathers and displays real-time data to support daily cash management functions, including cash positioning, funding, and investment. This allows businesses to monitor liquidity, making sure financial obligations are met and unused cash balances are invested strategically.

Payments

TMS streamline payment processes by integrating with accounts payable systems to automate workflows and ensure timely vendor payments. They often support various payment methods, including ACH, wire transfers, and virtual cards. Features like payment scheduling and extended payment terms help businesses optimize cash flow while maintaining strong vendor relationships.

Automation of financial tasks

TMS automate repetitive tasks such as payment processing, reconciliation, and financial reporting, minimizing the need for manual intervention and reducing human error. This allows finance teams to spend more time on high-value strategic activities.

Cash flow forecasting

TMS predict cash flow by leveraging historical data and current financial trends. This helps businesses plan for future liquidity needs, address potential shortfalls, and allocate resources more effectively.

Risk management

TMS can identify and mitigate financial risks related to currency fluctuations, interest rate changes, and credit exposure. They may provide tools for treasurers to to evaluate these risks, ensuring compliance and protecting the company's financial stability.

Benefits of treasury management systems

Maximized yield on operating cash

By leveraging data across a business’s bank accounts and financial platforms, TMS can identify surplus funds and invest them strategically, ensuring maximum returns while maintaining sufficient liquidity for operational needs.

Time-saving automation

Typical weekly processes for treasury managers involve exporting business account balances into Excel spreadsheets, calculating upcoming payments, and choosing where to invest excess cash. TMS not only automate these tasks, but optimize cash flow so that the maximum amount of cash is earning interest at any given time.

Centralized financial visibility

TMS offer a centralized view of your company’s bank balances and returns on investments, along with upcoming payments and payment history, all in one dashboard. This visibility supports better forecasting and financial decision-making.

Extended vendor payment terms

Some TMS offer extended payment terms on invoices, enabling you to pay vendors on time while opting for 30-, 60-, or 90-day repayment terms to the treasury provider for a small fee. This frees up working capital for business operations without risking missed payments or straining vendor relationships.

What is the difference between a treasury management system and an ERP?

Enterprise Resource Planning (ERP) systems are general tools that companies use to manage accounting, procurement, and business operations, while a treasury management system is dedicated to managing cash flow, maximizing yield on investments, and forecasting future liquidity needs.

Earn on your operating cash with Ramp Treasury¹

You shouldn’t have to compromise between yield and liquidity. With Ramp Treasury, you can earn 2.5%² on operating cash while saving hours every week on cash management. Automate fund transfers to keep your balances optimized, and schedule deposits so you always have enough cash on hand.

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Free, same-day ACH helps you extend vendor payment terms by up to three days, giving you valuable extra working capital. Pay bills exactly when they’re due without incurring fees or delays, all while keeping vendors happy and your cash flow flexible.

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Enjoy peace of mind with FDIC insurance³ up to millions of dollars in the Ramp Business Account. Open a free Ramp Treasury account in under a minute.

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1) Ramp Business Corporation is a financial technology company and is not a bank. All bank services provided by First Internet Bank of Indiana, Member FDIC.

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2) Get up to 2.5% in the form of annual cash rewards on eligible funds in your Ramp Business Account. Cash rewards are paid by Ramp Business Corporation and not by First Internet Bank of Indiana, Member FDIC. Cash rewards are subject to change. See the Business Account Addendum for more information.

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‍3) Customers with a Ramp Business Account can use the ICS service provided by IntraFi Network LLC. Ramp is a financial technology company, not an FDIC-insured depository institution. Banking services are provided by First Internet Bank (FIB), member FDIC. Subject to the terms of the applicable ICS Deposit Placement Agreement, FIB will place deposits at FDIC-insured institutions through IntraFi’s ICS service. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. Certain conditions must be satisfied for “pass-through” FDIC deposit insurance coverage to apply. To meet the conditions for pass-through FDIC deposit insurance, deposit accounts at FDIC-insured banks in IntraFi’s network that hold deposits placed using an IntraFi service are titled, and deposit account records are maintained, in accordance with FDIC regulations for pass-through coverage. Deposits are insured by the FDIC up to the maximum allowed by law; deposit insurance only covers deposits in the Ramp Business Deposit Account in the event of the failure of the FDIC-insured bank.