Treasury Management System: Cloud-Based vs On-Premise System

Introduction

Navigating enterprise treasury management depends on one key decision: Which solution best aligns with your organization’s strategic goals and current operational needs? Choosing between an on-premise and a cloud-based treasury management system (TMS) can be challenging, as both promise to enhance your financial operations.

On-premise systems offer strong control and customization, ideal for organizations with stringent security needs. Meanwhile, cloud-based TMS provides flexibility, scalability, and real-time access, essential in today’s fast-paced environment. The choice ultimately depends on your organization’s unique needs and strategic goals. 

In this blog, we’ll compare cloud-based and on-premise TMS to help you find the best fit for your organization.

What is an On-Premise Treasury Management System? 

An on-premise treasury management system (TMS) is a software solution installed and operated directly on a company’s own servers and infrastructure, typically within the organization’s physical premises or data centers. With an on-premise TMS, the company is responsible for purchasing, installing, configuring, and maintaining the hardware and software required to run the system. This approach gives the organization complete control over the TMS and its data, but it also requires significant upfront investment in hardware, software licenses, and IT resources for ongoing maintenance and support.

Benefits of an On-Premise Treasury Management System

An on-premise TMS offers several benefits that can be particularly beneficial for certain organizations. Here are some of the key benefits:

• 
  

  Enhanced security and control

  
  

With an on-premise TMS, the organization has full control over its data and system environment. This level of control allows for tailored security measures that meet specific industry regulations and internal policies. Sensitive financial data remains within the company’s infrastructure, reducing the risk of external breaches.

• 
  

  Customization and integration

  
  

On-premise solutions offer extensive customization capabilities. Organizations can tailor the TMS to fit their specific processes, workflows, and reporting needs. Additionally, integration with existing legacy systems is often more straightforward, as the TMS can be customized to align with other on-premise applications and databases.

• 
  

  Long-term cost efficiency

  
  

While the initial investment in an on-premise TMS may be higher, organizations with the necessary IT resources may find that long-term costs are lower compared to ongoing subscription fees for cloud-based services. Over time, the absence of recurring fees can make on-premise solutions more cost-effective.

• 
  

  Performance and reliability 

  
  

On-premise TMS can offer superior performance because the system is hosted locally, minimizing latency issues that might arise with cloud-based solutions. This is particularly important for organizations with high transaction volumes or complex, real-time financial operations.

What is a Cloud-Based Treasury Management System? 

A cloud-based treasury management system is a software solution hosted on remote servers and accessed via the Internet. Unlike on-premise systems, which are installed locally on an organization’s own servers, cloud-based TMS is provided and managed by a third-party vendor, typically through a subscription model. 

This means that the system and data are stored in the cloud, and users can access the TMS from anywhere with an internet connection. Cloud-based TMS solutions are often favored by organizations looking for a cost-effective, agile, and up-to-date system that can adapt to their evolving treasury management needs.

Benefits of a Cloud-Based Treasury Management System

A cloud-based TMS offers several significant benefits that make it an attractive option for organizations of all sizes. Here are some of the key benefits:

• 
  

  Scalability and flexibility

  
  

Cloud-based TMS solutions are highly scalable, allowing organizations to easily expand or reduce their usage as needed. Whether it’s adding new users, integrating additional functionalities, or handling increased transaction volumes, cloud systems can adapt quickly without the need for extensive hardware upgrades or complex configurations.

• 
  

  Reduced IT burden 

  
  

Since the cloud provider handles the infrastructure, maintenance, and support, the organization’s IT team can focus on strategic initiatives rather than day-to-day management of the TMS. This reduces the overall IT burden and can lead to cost savings in terms of staffing and resources. In fact, solutions such as HighRadius cloud-based Treasury and Risk suite are designed for minimal IT involvement. With seamless plug-and-play integration into ERPs using real-time APIs and Hex (SFTP) connectors, along with pre-built modules and industry-specific best practices, customers can deploy HighRadius remotely with ease, reducing all IT dependencies.

• 
  

  Ease of access and collaboration

  
  

Because the system is hosted in the cloud, it can be accessed from anywhere with an internet connection. This facilitates remote work, supports global operations, and enhances collaboration among teams spread across different locations. It also ensures that treasury teams can access critical financial data in real-time, no matter where they are.

• 
  

  Accurate forecasting 

  
  

Cloud-based TMS solutions provide advanced analytics and real-time data access, which significantly enhance forecasting accuracy. By leveraging algorithms and data visualization tools, organizations can better predict cash flows, manage liquidity, and anticipate financial needs. With HighRadius Treasury solutions, businesses can leverage advanced AI/ML algorithms and real-time data analysis to accurately predict future cash flows, achieving up to 95% forecasting accuracy. This improved forecasting capability allows for more informed decision-making and better financial planning. 

• 
  

  Seamless integration

  
  

Cloud-based TMS solutions often feature seamless integration capabilities with existing enterprise resource planning (ERP) systems and other financial systems. Utilizing real-time APIs and Hex (SFTP) connectors, these systems can effortlessly synchronize data across various platforms, ensuring consistency and accuracy. HighRadius Treasury solution allows users to integrate with multiple banks, ERPs, and financial systems, which reduces manual data entry errors and provides a unified view of financial information. This enables more efficient treasury operations and better alignment with overall business objectives.

• 
  

  Intercompany operations

  
  

Managing intercompany transactions and reconciliations can be complex, especially for multinational organizations. Cloud-based TMS facilitates smooth intercompany operations by providing centralized control and visibility over transactions between different subsidiaries or business units. HighRadius Treasury solution allows users to forecast cash into any category or entity on a daily, weekly, and monthly basis. It also supports automated bank reconciliation, which simplifies cash management and reduces the risk of errors.

Comparison: On-Premise TMS Vs. Cloud-Based TMS

Some of the key differences between on-premise TMS and cloud-based TMS are:

On-Premise TMS	Cloud-Based TMS
Installed locally on the organization’s servers.	Hosted remotely and accessed via the internet.
Higher upfront costs for hardware, software licenses, and installation. Ongoing maintenance costs.	Typically lower initial costs with a subscription model. No hardware costs, but ongoing subscription fees.
Limited scalability; requires additional hardware and IT resources for expansion.	Easily scalable; adjustments can be made quickly to accommodate growth.
Requires manual updates and maintenance performed by in-house IT staff.	Automatic updates and maintenance are handled by the cloud provider.
High IT resource requirements for management, maintenance, and troubleshooting.	Reduced IT burden; cloud provider manages infrastructure and support.
May involve complex integrations with existing systems.	Seamless integration with ERP systems using real-time APIs and Hex (SFTP) connectors.

Why Are Cloud-Based Treasury Management Solutions Better Than Others?

Cloud-based treasury solutions often stand out as superior to other options due to several key advantages:

• 
  

  Accelerated returns on investment

  
  

Cloud-based treasury management systems offer faster returns on investment by eliminating the costs of manual updates and upgrades. Unlike traditional systems that require periodic, often costly, maintenance and enhancements, cloud-based solutions are continuously updated and maintained by the vendor. This ensures you always benefit from the latest features and improvements without incurring additional expenses. In fact, businesses that leverage cloud-based TMS solutions, such as HighRadius Treasury and Risk Suite benefit from HighRadius Speed to Value methodology that guarantees swift implementation and ROI realization within 3 to 6 months, setting an industry benchmark. 

• 
  

  Future-ready solution

  
  

A cloud-based TMS offers exceptional flexibility and scalability. It supports simultaneous access for numerous users and adapts seamlessly to an organization’s evolving needs. For instance, if a major company acquires a new business, the cloud solution can easily handle the increased volume of bank data. This adaptability allows organizations to swiftly respond to various scenarios and stay ahead in a dynamic market.

• 
  

  More time for strategic tasks

  
  

A cloud-based TMS frees up analysts from time-consuming manual data gathering and modeling. With accurate, real-time data at their fingertips, they can focus on crucial tasks like liquidity planning and strategic decision-making. This enhanced efficiency empowers treasurers to make well-informed investment and debt decisions, driving better financial outcomes and supporting strategic initiatives.

• 
  

  Enhanced security

  
  

Cloud-based providers invest heavily in advanced security measures, including data encryption, regular security audits, and compliance with industry standards. While security is managed externally, these measures often exceed the capabilities of typical in-house IT departments, providing robust protection for sensitive financial data. In fact, solutions like HighRadius prioritize data security and privacy, adhering to stringent industry standards such as GDPR, ISO, PCI DSS, HIPAA, and SOC. HighRadius Treasury Management solutions employ robust encryption protocols and role-based access controls to safeguard your sensitive financial data, ensuring the utmost confidentiality and compliance with regulatory requirements.

How does HighRadius Stand Out as the Leading Cloud-Based Treasury Management Solution?

HighRadius overcomes the challenges of traditional TMS by offering a cloud-based solution that lowers implementation and maintenance costs. The platform is designed with user-friendly interfaces that minimize the need for specialized training, making it accessible even for small businesses. Additionally, HighRadius also offers customizable features that allow businesses to tailor the software to their specific needs, providing greater flexibility compared to the rigid structures of traditional TMS.

On a broader note, HighRadius cloud-based Treasury Risk Management Software streamlines and automates treasury operations, including cash forecasting, cash management, and treasury payments. We have empowered the world’s leading companies, like Danone, HNTB, Harris, and Konica Minolta, to optimize their cash forecasting accuracy, make decisions faster with real-time bank data, and reduce bank fees.

Our Cash Forecasting Solution leverages advanced technologies such as artificial intelligence (AI) and machine learning (ML) and integrates with banks and ERPs to get AR/AP data, improve ML prediction rates, and enable treasurers to achieve accurate, real-time cash forecasting. Businesses can forecast cash into any category or entity on a daily, weekly, and monthly basis with up to 95% accuracy, perform scenario analysis, and variance analysis, and compare actuals vs. forecasted cash. 

Our Cash Management Solution automates the reconciliation process between bank statements and internal financial records, reducing manual effort and errors and increasing cash management productivity by 70%. With our treasury and risk solutions, treasury professionals gain instant, personalized insight into their daily cash positions with unparalleled global visibility. 

FAQs

1) What does TMS stand for in treasury?

TMS, short for Treasury Management System, is a comprehensive software suite designed to streamline financial operations, manage cash flow, mitigate risk, and optimize treasury functions within organizations, ensuring efficient and effective management of funds and financial assets.

2) What is TMS payment?

TMS payment is the functionality within TMS that facilitates various payment processes, including electronic fund transfers, wire transfers, payment approvals, reconciliation, and reporting, providing organizations with a centralized and automated platform for managing their payment workflows and financial transactions.

3) How much does a TMS software cost?

The cost of a TMS varies significantly depending on the complexity of features, scalability, implementation requirements, vendor pricing model, and customization needs. Generally, TMS software costs can range from $10,000 – $1M, including upfront licenses, subscription fees, implementation costs, and ongoing maintenance expenses.

4) What is the difference between on-premise and cloud-based TMS?

On-premise TMS is installed locally on company servers, offering high control and customization but with higher upfront costs and maintenance responsibilities. Cloud-based TMS is hosted remotely, providing scalability, lower initial costs, and automatic updates, with access from anywhere via the internet.

5) What is the ultimate goal of treasury management?

The ultimate goal of treasury management is to optimize a company’s financial resources by managing cash flow, liquidity, investments, and risk. This ensures sufficient funds for operations, maximizes returns, and minimizes financial risks, supporting overall business objectives.

6) What is a treasury platform?

A treasury platform is a software solution designed to manage and streamline an organization’s financial operations. It integrates cash flow management, liquidity planning, risk assessment, and financial reporting into a unified system, enhancing efficiency and decision-making in treasury functions.

7) What is cloud treasury management?

Cloud treasury management uses internet-based platforms to manage and optimize financial operations, including cash flow, liquidity, and risk. It offers real-time data access, scalability, and automatic updates, streamlining treasury functions and enhancing decision-making.