Corporate Treasury Management | Best Practices and Benefits (2024)

Bill Sarda, Digital Transformation

Maximizing your company’s bottom line

Corporate treasury management best practices

Benefits of automated cash forecasting

Role of a corporate treasury leader for successful management?

FAQs

In 2023, the foremost tip about treasury management could be to ‘not underestimate them anymore’. In today’s competitive business environment, it’s more important than ever to optimize your treasury strategy and ensure your company has the cash it needs to succeed.

Your treasury team plays a vital role in the success of the organization. To increase the productivity and efficiency of your team, it is important to enhance your company’s treasury strategy.

Let’s first begin with the basics to understand what is corporate treasury management and why it is important.

What is corporate treasury management?

Treasury management is all about managing the company’s financial affairs, which includes obtaining funds from diverse sources, currency management, cash flow, and numerous corporate finance strategies and procedures. The end goal of treasury management is to optimize short-to-medium-term liquidity and help CFOs make good financial decisions involving their most important assets.

If we talk about the corporate treasury management function, it isn’t limited to just managing the working capital, this department also has to focus on different kinds of risks, like changes in currency value, interest rates, and internal issues. The role of the corporate treasury team also includes ensuring that the strategy they are using is robust, scalable, and able to support bottom-line growth.

Why is treasury management important?

Treasury management ensures that a company always has the cash it needs to keep going. The goal of any profitable company is to achieve bottom-line growth and treasury management services help to do this through the maximization of cash liquidity. And that can be achieved through implementing a tried, tested, and quality corporate treasury strategy that helps cash flow management services.

You can also track your company’s inflows/outflows, cash on hand, and closing balance on a daily, weekly, 13-week, or monthly basis with this Excel-based cash flow forecasting template.

For successful business growth, building an effective corporate treasury strategy is essential. Let’s learn about six tried & tested best practices a company must follow.

1. Preparing for risks proactively:

   A company inherits various risks like operational risk, commodity risk, liquidity risk, interest rate risk, foreign exchange risk, etc. Proactive risk management of a company can help analyze and further reduce the gaps that can expose the company to vital risks like theft, inefficiencies, and other cash management challenges. Learn about five steps how to effectively manage treasury risks.

2. Keeping a record:

   Corporate treasury requires handling tons of documents. These documents must be filed in the correct order and a copy of the same should be stored on the company’s server available only to the treasury team.

3. Accurate cash flow forecasting:

   Cash flow forecasting is vital to drive decisions regarding funding, capital expenditure, and investments. An accurate forecast can help figure out future cash positions, prevent cash shortages, and provide the ability to earn returns on any cash surpluses. Advanced cash flow forecasting solutions leverage AI and self-service modules with connectivity to ERPs and banks, intuitive spreadsheet UI, variance and scenario analysis, and providing easy collaboration & reporting.

4. Streamlining reporting process:

   The performance of a company is assessed through an efficient financial management service. A treasury module connected with ERP or a dedicated treasury management solution provides accurate reporting needed to make executive decisions.

5. Centralizing treasury management:

   Centralized treasury management solutions work better as they follow the bottom-up approach from an entity level and rolled up to global forecasts. This enables granular cash flow visibility, informed decision-making, and minimizes errors. Centralization facilitates a consolidated and more accurate view of the cash flow and risk scenarios of an organization’s global operations, helping finance leaders drive better decisions based on overall performance rather than limiting them to specific a geography.

6. Adopting automation and AI:

   Automation reduces manual work and allows teams to concentrate on strategic tasks. AI allows better data storage and management, which can then deliver important insights for other elements of the organization like financial planning or supply chain management. It helps by minimizing operational risk and reducing complexity.

Cash forecasting automation eliminates manual work and allows treasurers to focus on more high-value tasks with:

• Better visibility over cash
• Effective and timely decision-making
• Reduction of cost in business
• Improved risk management

As your company grows, ensure that you can provide continuous training for your team on new treasury management strategies and the latest software. Treasury teams need to be abreast with new technologies to stay ahead of the curve and ensure enhanced productivity and decision-making efficiency. Cash flow training is vital for companies to monitor their liquidity at multiple durations, improve their cash flow, and generate long-term profits.

Schedule a 30-min demo to learn how implementing the best corporate treasury management services can set up your company for future strategic growth.

How do you effectively manage corporate treasury?

In this blog, the chapter corporate treasury management best practices talks about six best practices you can follow to effectively maange corporate treasury.

What is the primary goal of corporate treasury?

The primary goal of corporate treasury management involves managing various risks such as changes in currency value, interest rates, and internal issues, as well as ensuring that strategies are robust and scalable to support company growth.

What are the seven functions of corporate treasury?

Corporate treasury uses these seven functions to achieve their short-to-medium term financial goals:

1. Accounts payable management
2. Working capital management
3. Fund-raising
4. Cash forecasting
5. Payout strategies
6. Financial risk management