A good treasury management system is indispensable, especially in times of crisis. Only then can cash flows be traced at the push of a button.
The demand for treasury management software (TMS) is high in times of increasing insolvency risk, because especially now many companies have to pay attention to remaining solvent. At trade fairs, companies are therefore asking for cash management solutions just as much as risk management tools that cover, among other things, interest rate optimisation transactions, foreign exchange trading and collateral.
The primary objective when selecting a cash management solution should be to ensure permanent liquidity. To achieve this, treasurers need a tool that provides them with maximum data quality and allows them to act and react with the help of suggested actions.
Cash pooling and the granting and taking out of loans are playing an increasingly important role in internal financing to secure liquidity. This is because, in order to reduce the group’s capital costs, companies often grant loans to affiliated subsidiary units via group financing companies. These financing companies act as a kind of internal bank that ensures risk minimisation and facilitates cost control. For example, if the subsidiary is profitable, but the parent company is loss-making or has tax loss carry-forwards, loan financing of the subsidiary may be considered to offset profits against interest expenses.
Once the “right” loan interest rate has been found that stands up to the arm’s length principle, the processing of these intra-company loans within the treasury software becomes essential: decision-relevant information flows from it into the reporting.
It is precisely here that treasurers can leverage efficiencies: Group subsidiaries and sister companies can be used flexibly as borrowers or lenders – provided they are defined as “counterparties”. The types of repayment commonly used in practice – for example, interest on residual value or on nominal value, annuities and final maturity – are thus available for the “intercompany business”.
The treasurer can have the TMS generate a cash flow from the framework conditions (e.g. loan amount, term, interest rate, repayment and interest rhythm). The system also takes into account unscheduled repayments, changes in repayment or interest rates as well as premiums, discounts and advance or deferred calculations. Alternatively, a classic, purely manual recording of payment flows is possible, which allows for acyclical position movements as well as flexible interest period accruals and deferrals.
Finally, the internal loan processing is rounded off by the possibility to initiate pre-parameterised position and interest postings at the push of a button. The system can inform the respective counterparties and other recipients about the transactions by e-mail with a PDF form attachment. If integrated bank communication software is used, treasurers can generate a bank file that ensures Ebics-encrypted forwarding of the data.