Treasury’s operations have become more significant demonstrating the mounting complexities of business strategies. Today companies are pressurised by shareholders and regulators for augmenting transparency and financial performance. Meeting these expectations is difficult for many companies with current system in place.
Finvisage operates in Treasury Management System (TMS) industry which has become a great investment space from the last few years. According to 2018 AFP Treasury Management System Survey, more than 63% of european companies use TMS than compared to 40% in North America and 60% in Asia-Pacific. More than 71% of companies using TMS witnessed improved cash visibility, which substantiates automated processes and in turn time effective decision making. However, companies with turnover less than $1B are less likely to involve TMS in their treasury operations because the benefits aren’t worth the subscription fees and other related costs. 74% of companies with revenues less than $250 million do not have a TMS in place, while only 16% of the larger organizations (with annual revenue of at least $10 billion) do not use such a system. This reflects the fact that there is an array of companies left untapped, mostly SMEs, which leaves us with a market opportunity to cease.
Companies operating in TMS industry are thriving and commit a revenue growth of more than 40%; this supports the prolonged high growth phase of the industry. One of the key financial drivers is high Gross Profit Margins as the cost of building and updating the product is comparatively low. High growth and Gross Profit Margins aggregates to higher ROI figures.
- Kyriba, one of the market leaders, has surpassed annual revenue of $110M in 2018 with an anticipated 40% growth. Last year, they signed more than 229 enterprise clients including Hitachi High-Tech, Informa, Eastman Chemical and Peloton.
- Demand for TreasuryXpress’s TMS grew by 83% across the Americas, EMEA and MENA region.
- GTreasury, an early pioneer in the TMS industry, experienced a record-breaking y-o-y revenue growth of 64% serving more than 750 mid-cap and large-cap organisations across 31 industries.
- In FY19, Anaplan’s revenue rose 43% to $240.6M, driven by 45% growth in subscription revenue. They also reported rising gross profit margins from 57% in FY16 to 72% in FY19.
Firms usually engage in inorganic growth to tap new markets but in TMS industry we witnessed merger and acquisitions in similar market. Companies bidding on M&A activities, expect to boost their market share and exploit the growth potential of the industry, illustrating the fact that the market has enormous potential with companies underpinning their infrastructure to cater to rising demand.
- Trading Infrastructure and Automation provider Ion Group acquired Wall Street Systems, a global provider of treasury solutions, in 2011 at an undisclosed bid.
- Wall Street Systems acquired 6 companies since 2006, including IT2 Treasury Solutions, Treasura and City Financials which were rapidly increasing their reach in the industry.
Funding and investment in these companies has increased at an exponential rate due to attractive margins and returns, market opportunities and soaring investor confidence.
- Kyriba expanded their investment band with successive funding rounds. In 2018, they received a whopping $160M by Bridgepoint in their 11th funding round compared to their 2001 Series A funding worth $10.3M.
- GTreasury has focused solely on the treasury management industry and each year it invests 50% of revenue into new product development. GTreasury remains dedicated to leveraging the latest and most significant technologies as well as integrating client feedback when appropriate.
- Adaptive Insights secured 9 funding rounds since it’s inception in 2003. Their series A funding amounted to $4.6M in 2003. As the company progressed investment value increased and their last investment transaction, Series G, secured $75M. Rising investments in TMS industry warrants the attractive business opportunities.
Finvisage has the capability to automate whole treasury operations with a wide range of products. We have an opportunity in terms of pricing our product and establishing a market space. Since we are targeting SMEs, estimated to be a staggering 95% of the total industrial units in India, we have a wider market space and given the fact that our industry operates on high gross profit margins we can cater SMEs at lower prices still earning profits. Our objective is to amplify our presence over the SMEs which in turn will magnify profits in the long term.