blg_footer2Effective Treasury Management

June 25th, 2015

Rapid shift of economic activity and constant turbulence in the forex markets have inspired many CFOs to strengthen their treasury divisions. These turbulent times demand real-time decision making capability; the impact of delay in decision making is amplified when treasurers are unable to forecast cash flow accurately and hence land up over-borrowing or under-borrowing or hedge to protect the company from currency, interest rate and commodity risks.

Some organizations haveimplemented treasury management software solution to tackle this problem but they are not well equipped to fully leverage the tool for their advantage. Hence the question arises, Is it sufficient to install a Treasury Management Solution to ensure effective Treasury Management?

No! Treasury Management Solution, howsoever robust, cannot work efficiently in isolation; it requires ample support from organization’s functions &processes.

IBSFINtech’s treasury experts’ highlight key focus areas in an organization which require enhancements to facilitate efficient global treasury function:

  1. Nurture Centralization

A centralized treasury performs better than a “siloed” system by avoiding duplication of activities as well as responsibilities. It allows for centralization of policies, enables informed decision making and supports errorless execution.

Centralization facilitates a consolidated view of organization’s global operations’ cash flows and risk scenarios, thereby supporting treasury managers to take decisions based on the overall performance and not limit the same to a specific region’s treasury performance.

  1. Empower Governance

The Treasury division of an organization is involved in dealing with large amount of money, which makes it prone to fraud or mismanagement in absence of strict norms and governance policies. Diligent monitoring of such risks within the organization can be a perennial pain point for CFOs & Treasurers.

Hence, it becomes imperative to empower Treasury governance by ensuring detailed review of company policies and close monitoring of core processes. In addition to establishing a thorough Treasury governance system in place, it is essential to continuously test the governance processes to ensure the system is efficient in identifying violations, if any in Treasury management.

  1. Enhance Transparencyof Cash Flows& Working Capital

Effective treasury management demands transparency of cash flows &working capital across the organization. This transparency facilitates due diligence &timely insights into cash flow variances and liquidity gapshence enabling informed treasury decisions.

An organization’s policies play a critical role in enabling transparency of cash flows and should be taken seriously.

  1. Improvise Technology – Treasury Management System

Technology has transformed Treasury & Risk Management over the last few years and has led to development of integrated treasury management solutions which also integrate with ERP modules as well as back-end data generation systems in the organization. The technology landscape in treasury management is now expanding to cloud, hence enabling treasury to transform from CAPEX to OPEX model.

Ultimately, if technology is available, treasurer should leverage the same for enhancing organization’s treasury management. A robust and technically efficient treasury management system facilitates quick access to act-on information, real-time decision making, and supports an aggregated view of market risks for the complete organization.


Speak to IBSFINtech’s Treasury experts and find effective solutions to Treasury Management!