Corporate Treasuries need both SWIFT and TMS

The global financial crisis has brought the importance of complete and efficient cash management processes to the fore with the continued liquidity crisis enhancing the focus on cash visibility and usage.  Resulting from this, corporate interest in SWIFT has accelerated.

In Europe and North America, corporate institutions are showing heightened levels of interest in SWIFT membership, which represents one way in which corporate treasuries can improve their connectivity with banks, and hence enhance the quality of their visibility of the cash balances of their bank accounts, in a timely, reliable and accurate manner.

Corporates that traditionally looked at SWIFT saw the benefits of secure and robust bank communications, however found it hard to construct a reliable cost/benefit analysis that would justify the relevant expense and effort and so the bridge between the corporate world and SWIFT world has often been spanned by third parties.

The key business areas in which corporate treasurers generally evaluate SWIFT based solutions are the retrieval of bank balance and transaction information, the secure management and monitoring of payments, and deal confirmation process management.

These information flows alone however do not offer a complete treasury management solution.

Corporate treasuries that have successfully integrated SWIFT into their operations have consistently implemented or redeployed their Treasury Management System (TMS) as a control hub, to ensure that SWIFT connectivity is properly and effectively managed.  Functioning as a control hub, the TMS schedules and controls all the information transfers with SWIFT. 

Without a TMS control hub, treasury would have to find alternative means of scheduling, formatting, translating, controlling and securing all SWIFT communications.  In practice, the TMS assumes responsibility for performing a number of key functions, whose failure can lead to significant financial loss, for example as a consequence of a large payment missing the currency cut-off time.

The full integration of TMS and SWIFT, whether direct or indirect, provides a secure and proven route for implementing best practice STP treasury workflows.  When integrated effectively with a TMS, the resultant service allows them to concentrate on efficient cash and risk management operations.  SWIFT integration therefore helps corporates to minimise the use of precious credit lines, and to optimise interest income/expense; these are invaluable benefits in the wake of the financial crisis.