July 13, 2023
3
MIN READ

Why Treasury and Cash Management Software Is Essential in 2023 [+ Best Tools]

Finance

Treasury and cash management are crucial to financial planning. Discover key tools and strategies to optimize your cash management in 2023's unique landscape.

by
Stephen Boachie-Mensah

It’s extremely important for companies to have a firm grasp of their financial data. Especially, when they’re growing fast. 

The days of relying on spreadsheets and manual accounting are long gone. Today, CFOs and their teams can rely on cash and treasury management software to take control of their finances and optimize their cash and asset management. 

In fact, there are new cash and treasury management tools coming out every year. And Grand View Research forecasts that the sector’s market size will exceed $25.37 billion by 2027. 

If you’re looking for a solution that can simplify your treasury and cash management, this post is for you. We’ll dive into:

  • The differences between cash management software vs treasury management software 
  • The current state of treasure management for tech companies (and the impact of Silicon Valley Bank’s failure)
  • Key tips for choosing the right cash management software
  • Our top cash flow management software tools 

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Cash Management Software vs Treasury Management Software [+ Main Benefits]**

The terms “cash management software” and “treasury management software” are often used interchangeably. But are they referring to the same thing? In short, no. Cash management and treasury management software serve two different purposes.

Treasury management software focuses on managing financial risks at a high level. This type of software is used to analyze:

  • Interest rates
  • Credits
  • Currency risks
  • Treasury investments in bonds and stocks

On the other hand, cash management software focuses on day-to-day cash flows, including:

Cash management software aims to optimize cash flow and ensure liquidity to cover operational needs. 

Whether focused on cash or treasury, these types of financial management tools help teams to:

  • Automate repetitive tasks
  • Centralize key data and automate reporting
  • Simplify their security and compliance processes
  • Estimate financial risks accurately, at speed
  • Stay on top of financial KPIs with minimum information delay

Now that we’ve agreed on a definition of both cash management and treasury management, there’s a question worth diving into. Are these types of tools particularly relevant or useful in 2023?

In this landscape of economic uncertainty, they are. In the next section, we’ll dive a little deeper. 

Did Silicon Valley Bank’s Failure Change Treasury Management for Tech Companies?**

In March of 2023, the bank with the highest degree of specialization in products and services for tech startups suffered an unforeseen failure. A brief look at what happened with Silicon Valley Bank (SVB) can shed light on the unique financial context tech companies are facing today. This event raised new questions about how to strategize cash and treasury management during this economic downturn.

Experts suggest that SVB’s failure may impact startups in two key ways:

  • It may be harder for them to access certain essential financial products, such as debt financing
  • They’ll be more likely to spread their cash across several banks, to diversify risk

SVB's bankruptcy does not change treasury management’s foundational principles. But it can motivate greater caution. Especially when it comes to:

  • Cash management systems
  • Risk assessment processes 

All in all, one of fast-growing companies’ main goals should be to mitigate existing risks and secure their financial standing. You can achieve this by adhering to emergency cash management protocols

To optimize your daily cash flow during times of crisis, we recommend:

  • Considering your short-term cash needs
  • Keeping your deposits in multiple banks
  • Reconsider how you allocate your cash
  • Developing contingency funding plans
  • Staying informed
  • Chasing overdue payments more aggressively

Consider Your Short-term Cash Needs

Evaluate your cash needs by looking at indicators such as days sales outstanding (DSO). This will provide a clear picture of your customer's payment patterns. Naturally, cash management tools can assist in this process.

Moreover, another strategy to boost your cash flow could be to shorten immediate billing periods. But that’s not always possible. 

Plus, you may want to re-evaluate: 

  • Pre-financing strategies 
  • Just-in-time purchases 

Keep Your Deposits In Multiple Banks

The collapse of Silicon Valley Bank highlighted that some startups made the mistake of putting all their funds in one bank. It became obvious that distributing funds across institutions might be a better approach.

Nevertheless, for this to be manageable, you’ll need a sophisticated cash management system that’s capable of consolidating data from various financial institutions.

Reconsider How You Allocate Your Cash

After the SVB events, you may want to revisit a well-known cash management strategy: Moving your money from cash sweep accounts to segregated securities accounts.

For non-experts, this expression refers to moving surplus cash from a "cash sweep" account to a separate, "higher-yield" account that exclusively holds securities such as:

  • Stocks
  • Bonds
  • Mutual funds 

Basically, segregated accounts only store financial assets and are independently managed, so they provide an added layer of security for your funds. Consequently, you'll minimize your financial risks and protect your capital from any unforeseen financial events.

Develop Contingency Funding Plans

Economic uncertainty calls for more frequent cash management forecasting. Therefore, your team should create strategies to explore alternative funding sources, if needed.

These funding sources could include:

  • Bank and non-bank loans
  • Non-dilutive financing platforms such as Pipe, Vitt, or Founder’s Path

Review your contingency financing plans periodically to ensure they continue to meet your needs.

Stay Informed

Keep an eye on your bank and the banking system in general. That way, you’ll be able to:

  • Recognize potentially problematic trends and prepare your company
  • Go out of your way to make sure your bank is still the trustworthy and solvent institution you engaged with initially

Make sure to stay on top of:

  • Regulatory changes that may affect your relationship with your bank
  • Your bank’s latest news & annual reports

Resolve Your Overdue Payments

Collecting overdue payments from customers or collaborators might seem like an obvious strategy to get the cash flow you need. But it works. While the process may be manual, it could help you get some emergency liquidity during times of crisis. 

Reach out to your debtors and remind them of their outstanding balances. In some cases, you may even want to negotiate discounts. Especially if:

  • The debt is long-standing
  • There’s a high risk that the debt will be uncollectible

How to Choose the Right Treasury/Cash Management Software**

As you already know, cash and treasury management software can help you significantly streamline your financial operations. However, with so many choices available, deciding which tool’s right for you can be challenging. 

Some key factors to keep in mind when evaluating potential platforms are:

  • Ease of use
  • Security
  • Essential features
  • Customization
  • System Integration
  • Collaboration features
  • Support
  • Multiple currencies and entities
  • Free trials and demos

Let’s take a closer look.

Ease of Use

When selecting a cash or treasury management system, you should prioritize a user-friendly interface that’s intuitive and transparent.

A good user experience will:

  • Make it easier for your team to complete tasks using the platform
  • Reduce the time it’ll take for your team to fully adopt the tool
  • Maximize the chance of team-wide adoption
  • Prevent human error

Security

To find the perfect cash management software provider, we suggest that you look for software that complies with relevant laws and standards. For instance:

Additionally, it's important to take a closer look at your tool of choice’s data security processes. 

Check if the company has a solid process to:

  • Guarantee that sensitive financial data remains secure
  • Prevent data breaches 
  • Protect your company's financial well-being

Essential Features

There are likely some features that you can’t do without. These could be:

  • Fraud detection and prevention mechanisms
  • Seamless integration with your current financial stack 
  • Scenario planning
  • Accurate and real-time cash positioning
  • Ability to combine funds from different currencies for added flexibility
  • Automated cash transactions segmentation (e.g: A/R, A/P, taxes, etc.)
  • Integration with fintech solutions like mobile payment, digital wallets, and peer-to-peer lending solutions

Consider the essential features that treasure or cash management software should have to meet your company's needs. 

Customization

Check if your cash/treasury management software of choice allows you to customize your experience according to your particular needs. 

You may want to customize:

  • Cash receipts and disbursements categorization
  • Tax calculation settings (especially if you operate across jurisdictions)
  • Reporting
  • Access permissions

Integrations

Integrations are key for making sure you’re always operating with accurate data. If your cash/treasury management tool of choice doesn’t integrate with your current financial stack, you may end up relying on manual data entry. This could lead to:

  • Low forecast accuracy
  • Slow time-to-insight
  • Data breaches

You’ll probably want your cash/treasury management solution to integrate with:

Collaboration

Go for a cash/treasury management solution with strong collaboration features. That way, your entire financial team will be able to access and maintain key information. Additionally, collective access to your treasury or cash management tool can help you establish it as a common source of truth. And this could prevent discrepancies and keep everyone aligned. 

Considering that these tools work with financial data, proper access management is also key.

Support

Setbacks can happen at any time, and they're especially common when you're first using new software. So, it's crucial to have quality user support available to your team, whenever they need it.


Good support is characterized by:

  • Wide availability through multiple channels
  • Properly trained and communicative representatives
  • High-quality documentation

Some tools may only offer “white glove” onboarding (comprehensive support during the implementation phase). But support should remain available in the long run.

Multiple Currencies and Entities

If your company operates globally or plans to do so, your treasury or cash management software should be equipped to handle multiple currencies and entities.

Your system of choice should support:

  • Transactions in different currencies 
  • Exchange rates calculations
  • Accurate conversions to mitigate currency risk

If your company has multiple entities or subsidiaries, it's important to consider software that can accommodate them. Ask your vendor about the number of entities that can access their software and if they can provide a centralized view of your entire company and its capital.

This will radically simplify your accounting and positively impact visibility.

Free Trials and Demos 

Free trials and demos allow you to experience the product first-hand before making any financial commitments. 

Requesting a demo or free trial of your next cash/treasury management platform will:

  • Help you become familiar with the product's functionality, ensuring that it meets your needs and requirements
  • Enable you to make an informed comparison with other suppliers and identify any unique features you require
  • Identify potential adoption challenges, saving you time and effort

Best Cash Flow and Treasury Management Software Providers for Fast-Growing Companies**

Now that you know the importance of treasury and cash management software, and the features you should look for when choosing a tool, you may be wondering: What’s the best cash and treasury management software in the market? Well, here are some of our top picks:

  • Kyriba
  • TIS
  • Trovata

Kyriba

Kyriba has been the leading contender among cloud-based treasury and cash management software solutions for the last 20 years.

The platform was recognized as one of the most innovative financial technology companies in the world in 2022. Its track record shows that when it comes to assessing market volatility sustainably, Kyriba stands out as an ideal tool.

 Its main financial functions include:

  • Treasury positioning and forecasting
  • Journal entries for bank transactions,
  • Posting transactions to the general ledger
  • Reconciliation of bank transactions with accounting entries.
  • Develop and evaluate predictions of cash flow
  • Carry out payment processing
  • Managing financial risks

TIS

Another popular solution is TIS, a Walldorf company that began its journey into cash management back in 2010. As of today, the company offers over 11,000 banking options to more than 2,000 clients around the world. 

In fact, the platform has won the 2019 “Best Customer Experience Award" from the Treasury Management International Awards. 

Some of TIS' main features include:

  • Global payments
  • Automated toll collection
  • Wide Bank connectivity
  • Real-time visibility of cash flow and liquidity
  • Machine learning for cash flow and balance position predictions
  • Real-time transaction monitoring

Trovata

Trovata is a banking management software (another name for the same concept) with more than 20 years of history in treasury and cash management. Recently associated with the Spanish Santander Bank, Trovata's management capabilities include:

  • Bank fees detailed analysis
  • Integration with a wide range of accounting, ERP, and banking systems
  • Machine learning algorithms for accurate cash flow forecasting

Take Back Control of Your Software Spending with Cledara**

In this post, we reviewed the importance of treasury and cash management software, especially in 2023’s uncertain economic landscape. Having complete cash flow visibility can help you keep costs and liquidity under control. And the right tools can help you, achieve it and maintain it in the long run.

Nevertheless, obtaining full cash flow visibility isn’t the only factor that can bring financial transparency to your business. 

Software is most businesses’ second largest expenditure. Do you know how many SaaS tools are in your stack? Do they all bring significant value to your team? Here’s where Cledara can help.

  • Cledara is a SaaS management platform that allows you to:
  • Get full visibility over your SaaS subscriptions
  • Recognize unnecessary tools and unsubscribe with one click
  • Identify tools that are used most frequently and those that aren’t
  • Spot redundant tools
  • Avoid shadow IT
  • Manage software access easily and securely
  • Streamline subscription approval workflows
  • Monitor trial periods and subscription renewals

Financial transparency is just a click away. Book a Cledara demo today.

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Stephen Boachie-Mensah

Stephen is Cledara’s in-house Finance Manager who thrives in businesses with fast-paced growth. Stephen’s role is to provide insights to the wider business, he has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures. Outside of work, football and American football are his favourite pastimes.

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