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Tips for Improving Your Treasury Strategy


Enhancing your company’s treasury strategy is important. Today, treasury plays a vital role within your organization—it is no longer the case that treasury management involves simply managing working capital—and treasurers need to ensure that the treasury strategy they are using is robust and efficient.

While you may have the perfect treasurer on board who is a skilled investor, great at risk management, and a great communicator, without the right treasury strategy he or she will struggle to deliver the best possible results. There are many things you can do to ensure that this is not the case, though.

What is Treasury Management?

Treasury management is defined as the process that concerns the managing of cash, investments, and any other financial asset that a company has. The end goal of treasury management is to optimize short-to-medium term liquidity and help directors make good financial decisions involving their most important assets.

Additionally, treasury management plays a vital role when it comes to communicating with lenders for financing. Treasury management helps to provide all of the information that lenders and financial institutions need.

It is no good putting lots of time and effort into treasury management if you do not have a suitable treasury strategy in place, though. Treasury managers need to be equipped with the right tools and information so that they can apply their skills and make optimized decisions.

3 Tips for Improving Your Treasury Strategy

Here are 5 tips that you can use to improve your company’s strategy.

1. Have good cash flow forecasting

You need to be analyzing your cash flow forecasts and cash requirements and thinking about them in the context of negative scenarios. Doing this helps to instill faith and confidence that you are properly prepared for anything that may happen. Do this by assessing your information sources—are they right? Rigorous? Adequete?—especially if you operate across multiple locations or jurisdictions.

All this can be done by using the right tools—treasury management systems can do much of the work for you and warn you when something isn’t quite right.

2. Forecast and prepare for risks

A good treasury strategy will take into account and prepare for possible risks and negative scenarios that could be on the horizon. Identifying and mitigating against these, whether your risks are related to credit, liquidity, or otherwise, helps you to better understand your company’s exposure to them. By doing this, you will be a lot better prepared for and will be able to weather them if they hit.

Also, consider how changes in your business plan or your plans for the future could change the risks you are exposed to.

3. Ensure your governance practices are strong

One of the biggest risks to your treasury isn’t external, but internal! If you aren’t implementing, enforcing, and properly managing operational controls and policies then your company can lose money through delinquency, mistakes, and even fraud. All your financial-related company functions should be managed and overseen properly by somebody who is qualified to do so and kept separate from other elements of your business.

In addition, regularly test out your company’s treasury practices. This regular testing is what makes a good treasury strategy a great one.

Why is Treasury Management Important?

Well, why is money important?

The end-goal of any company, at least a for-profit company, is to make as much money as possible. It is treasury management that helps to do this through the driving of value creation through the maximization of cash liquidity.

This is achieved through enforcing a tried, tested, and quality treasury strategy that helps cash flow management and short-to-medium term financing. By ensuring that a company always has the cash it needs, treasury management alongside a good treasury strategy keeps your organization running with the money it needs to do day-to-day business.

These are just three of many tips that are available out there on the internet.

We always recommend using robust treasury management tools alongside your treasury strategy for maximum benefit. These tools help to automate many of the mundane processes and deliver point-in-time results, alerts, and information. Not only that, they also help to extract maximum benefit from the people tasked with managing your treasury.

Javi Fondevila
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