For many organizations, the question they’re asking themselves is not whether to implement a treasury management system (TMS); it’s what the right level of system is for them and how to use it effectively. The thinking has shifted from simply “more is better” to asking, what do we need to operate well?

At an AFP Member Meet-Up, Tracey Knight and Tim Schultz, Co-founders and Principal Consultants of Real Treasury, drew on their decades of experience across implementations, vendor platforms and advisory work to examine how the TMS landscape has grown more sophisticated — and more fragmented — pushing treasury teams to rethink their TMS strategy.

The Core TMS Segments

While the marketplace continues to expand, most TMSs still fall into three categories, which are differentiated by the level of complexity they can handle.

Cash Tools

At the foundational level, cash tools are designed to answer one critical question: Where is the cash? These systems focus on core capabilities such as bank connectivity, global cash visibility and cash forecasting. For organizations with relatively straightforward structures, it’s enough.

“Most of them target simple treasuries, ones that have just a couple of entities and a couple of currencies,” said Knight.

But simple doesn’t mean static. Because newer cash tools are built on more modern architectures, they can implement innovations faster than systems built before the cloud became standard. Some cash tools are investing heavily in forecasting, while others are becoming AI-native and embedding AI in every function.

The segment is becoming a viable, long-term solution for organizations prioritizing clarity and speed over a wide range of functionality.

TMS-Lite

The next segment is known as TMS-Lite. These systems retain all the capabilities of cash tools while also including additional modules for debt, investments and foreign exchange.

They also consolidate the initiation and management of payments. Instead of logging into multiple bank portals — with different interfaces, workflows and authentication requirements — treasury teams can manage payments through a single system. This reduces operational friction and creates consistency across processes.

That consistency extends beyond user experience. Payment data from other modules, such as debt or investments, can automatically flow into the payments module, reducing manual entry and minimizing errors.

Behind the scenes, payments can be transmitted in several ways:

• Host-to-host file transfers to bank back-end systems
• SWIFT messages for international payments
• APIs for real-time or one-off transactions

“APIs can literally send even one at a time as you’re entering and approving payments in real time,” said Knight. This kind of flexibility is increasingly valuable as organizations seek to move faster and reduce their reliance on batch processes.

While a TMS-Lite doesn’t have the depth or flexibility of a full treasury and risk management system (TRMS), for many organizations, it provides enough capability to support core operations without introducing unnecessary complexity.

Treasury and Risk Management System (TRMS)

For organizations operating across multiple geographies, currencies and financial instruments, a TRMS offers the most comprehensive solution. These are platforms that go beyond cash management and payments to support the full lifecycle of treasury and risk activities.

“They can capture the deal, do the accounting related to the deal and value the deal,” said Knight. And they often perform these tasks alongside advanced capabilities such as hedge accounting, in-house banking, multilateral netting and intercompany lending.

But it comes with a tradeoff. Many TRMS platforms were built before the cloud became standard, which can affect usability and flexibility. That said, vendors are actively investing in modernization, particularly in areas like AI and analytics.

At the most basic level, AI is being used to improve efficiency by categorizing transactions, enhancing cash forecasts and helping users navigate large datasets. The more advanced implementations are moving toward decision support and automation.

Some systems allow users to query their data within the platform, while others are beginning to offer recommendations — or even execute actions — based on user input.

“You can query the database directly through their application instead of uploading your data into another tool, such as ChatGPT, so there’s some convenience in that,” said Schultz.

Determining What Level of TMS You Need

With so many options available, the biggest challenge for treasury teams is choosing the right one for their needs. For organizations already using a TRMS, declining value is a common concern.

But the root cause is not always the system itself. “To maintain and continue to get full value from a system, you’ve got to know how to use it and use it well,” said Knight.

In many cases, the issue is operational:

• Key staff leave, taking system knowledge with them.
• Training is limited to day-to-day tasks, not deeper functionality.
• New features go unused.

Over time, teams may revert to spreadsheets — not because the system can’t meet their needs, but because they no longer know how to make it do so.

Other organizations overbuy, implementing systems with capabilities they never fully use. “Just focus on the things you need right now,” said Knight. “If your list of prioritized requirements is things that cash tools can do, then that’s what you ought to find.”

The key is alignment. A system should match current needs and realistic near-term goals — not an idealized future.

Integration Is the Hidden Driver of Value

Regardless of the system you choose, integration plays a central role in delivering value, particularly for forecasting and decision-making. By connecting TMS platforms with ERP systems, treasury teams can incorporate richer data into their forecasts.

For example, through integration, payment timing can be based not just on due dates but on actual customer behavior. “If you're invoicing the same kind of companies over and over again, you can use their history to see if they pay on the due date,” said Knight. “Do they pay early? Do they pay late? Now, let's forecast it on the right day. That integration with the ERP is key to all of the segments.”

Organizations with an existing enterprise resource planning (ERP) system may find that the treasury module within their ERP integrates better than a standalone TMS. But that doesn’t automatically make it the better choice. Standalone systems may offer more specialized functionality, better user experiences or faster innovation cycles.

The key is to evaluate both options using the same criteria. Rightsizing your technology investment is all about maximizing fit. Your requirements, not your assumptions, should drive the decision.