Choosing a TMS or a projected cash flow modeling solution ?

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Choosing a TMS or a projected cash flow modeling solution ?

Do you know the difference between these 2 tools ?

ACA’s decision to complement its Thétys range of business software for treasurers with the CashSolve line of solutions provides real added value for Finance departments. ACA now provides a way to cover all of their cash management needs: from day-to-day cash flow optimisation to modelling of cash flow budgets, projected financial statements, or even 5-year business plans.

On the one hand, Thétys is positioned as a TMS (Treasury Management System) that provides treasurers with a complete platform of value-added services that combine productivity, security and traceability: daily bank reconciliations and cash pooling on the value date, management of investments and financing sources, monitoring of bank conditions and fees, secure payments, paper or electronic bank account management…

On the other hand, CashSolve is primarily intended for cash management and financing directors, but also for CFOs and financial controllers. With CashSolve modelling and reporting solutions, you can forecast, simulate and analyse at many different time scales and levels of granularity: cash forecasting, financing needs, WCR, balance sheets, financing tables, and more…

People are often confused about the need to choose one OR the other of these solutions. In fact, they are not mutually exclusive, but actually complement one another. Understand their distinct functions and combine them to optimise your daily cash flow management while improving your control over your business’s cash performance.

Deploying a new system can sometimes raise fears of an overcomplicated “Rube Goldberg machine”, but you should instead see it as an opportunity to effectively rethink all of your business processes and your internal organisation.

We’re here to help. Ready to think about it together? Fill out the form at the end of the article to set up an appointment!

cashsolve thétys trésorerie aca

A winning combination: Cash flow Forecasting Management and Modelling software

Financial managers spend a very large part of their time on collecting, reprocessing and entering significant volumes of sparse data on a frequent basis and on an ever-tighter schedule. TMS software (for “Treasury Management System”) has relieved many treasurers and accountants of this burden by eliminating manual data collection and entry; these systems now interface easily in both directions with ERP systems or accounting software, making management and accounting of daily cash flow operations more reliable and secure.

Beyond these business software tools for cash flow management, other applications dedicated entirely to cash forecasting have started to appear, and are used alongside TMSs.

What are the differences in how they are used? What advantages do each of them have to offer? And what if they could complement one another?

Different user groups, different purposes

  • TMS (Treasury Management System) software was developed in the early 1980s to meet the needs of Group treasurers in particular, allowing them to automatically collect bank account statements from all the companies in a Group in a centralised way, and to automate bank reconciliations and daily cash pooling operations on the value date.

Over the years, software publishers have enhanced TMS functionalities by developing modules to automate other tasks handled by cash flow services (bank account management), or to secure payment methods against fraud (issuing secured cheques), while also supporting digitalisation of bank interactions (routing and workflows for electronic signatures on transfer documents, electronic bank account management or “eBAM”). As a result, their scope of use has expanded to include accounting departments involved in payment processes.

Even so, the primary uses of TMS software remain focused on efficiency and security in the daily management of cash, investments and financing, coverages and interactions with banks. These applications are essential for cash flow services’ operational needs, but also for those of accounting departments in charge of payments.

  • Cash flow forecasting services are a more recent development with an entirely different role: the goal here is no longer to help treasurers manage cash flow, but more generally to allow financial officers (financial controllers, CFOs and treasurers) to project future cash flow.

There is often some confusion between these software systems and TMS software, due to the fact that the latter use terms like “projected cash flow” to refer to payments recorded by the company (or in the process of being recorded) that have not yet reached the bank, to distinguish them from payments recorded by the bank… these “projected” flows are quite real, and serve “only” to perform bank reconciliations.

With the CashSolve line of solutions, however, you can actually generate, model, and simulate cash flow forecasts for your business, on a time scale and at a level of detail that can be adapted to meet your needs.

The needs covered by these solutions go beyond those of cash management and financing directors, who are of course the most likely to require cash flow forecasts to carry out their mission of ensuring the company’s short-, medium- and long-term liquidity and to plan for their financing negotiations.

CashSolve also addresses the needs of CFOs more generally: predicting the cash generated by the business, an essential indicator that influences the company’s sustainability; getting a clear view of the structure of the projected balance sheet and financing table; monitoring sources of financing and the financial covenants that may be associated with them; and managing financial communications if the company is listed, and the rating if it has received one.

Finally, modelling tools like these help to establish a cash culture and strengthen your financial culture among everyone involved in financial management: Controllers extend their “P&L vision” to the balance sheet, treasurers move beyond their “cash in / cash out” perspective, accountants understand the impact of their payment cycles on cash flow… in short, everyone is working together toward the shared goals of improving control of WCR and optimising cash levels.

Linking cash forecasting to business data is a must!

With a tool like CashSolve, cash flow forecasts are “anchored” in your business. Using a structured methodology, CashSolve draws on budget scenarios or business plans prepared by management controllers or financial planning departments, and also on accounting balances and timetables, then transforms that data into a complete package of projected financial statements with a single click.

Companies can freely configure the level of detail, depending on the desired level of analysis and within the limits of the analytic data available for actual cash flow, so that they’re able to explain the differences between the actual and projected figures.

For example, a business in the mass distribution sector might decide to manage its cash at the level of each retail chain, updating and consolidating its receipts/disbursements every week based on continuously updated sales and supply forecasts for each retail chain.

The added value of such tools lies in their ability to “crank out” consolidated cash flow forecasts with a single click based on the latest budget version approved by the executive committee or updated by the controller.

Simulating forecasts to make better decisions

Whatever domain it applies to, a forecast is always based on a set of hypotheses.

The core function of intelligent simulation engines is to imagine multiple scenarios based on business drivers and compare them, archive them, and measure their impact. This helps the user to be agile in repeatedly producing predictive scenarios to ensure the best possible conditions for project financing.

SO… combine your management tools AND cash flow forecasting tools

Looking to optimise the day-to-day financial and administrative management of your cash flow department, and secure your methods of payment?

Do you want to fully understand the key indicators of cash generation for your business activities, and measure the risks associated with your plans? (A real added value in sectors where cash is a highly important factor…)

Together, Thétys and CashSolve from ACA are a winning combination to help your finance department establish itself as a strategic business partner to the executive committee, your shareholders and bankers.

Learn more about our solutions and set up an appointment !