5 ways to enhance your company’s treasury strategies

one are the days when a company treasurer's job mainly involved managing working capital.

While capital management is still a vital part of a typical treasurer's role, today's treasurers must also often be skillful investors, fundraisers, forecasters, risk-management specialists, financial IT managers, communicators and executive team members. Whew!

If a treasurer's list of roles seems like many hats for a single person to wear, you are correct. That is why it is important for company treasurers―and those who act as treasurers within smaller companies―to surround themselves with the right people, processes and policies to ensure that their vital work goes well. The following are five ways to enhance your company's treasury strategies.

#1: Improve your cash flow forecasting. Analyze your cash forecasts and cash requirements against a variety of possible negative scenarios, to be sure that you're prepared accordingly. Assess the adequacy and rigor of your information sources, particularly if you have offices in multiple locations or overseas. Use a robust treasury management system to help warn you against potential liquidity gaps and identify optimal funding options.

#2: Prepare for all possible risks. Identify and mitigate against as many risks as possible. Whether your risks are around liquidity, credit, currency or interest rates, the better you understand your company's exposure to such risks, the better you'll be prepared for them, if and when they occur. Consider too how changes in your business or business strategy might alter any of your various risk exposures. A quality treasury risk protection plan is regularly reviewed and updated.

#3: Institute strong governance practices. One of your greatest treasury risks is internal: Inadequate operational policies and controls can lead to a loss of company value or even mismanagement and fraud. Ensure that all vital money-related functions are properly overseen and segregated, to avoid any possibility for error or wrongdoing. Additionally, regularly test your daily treasury practices, unannounced, under a variety of "worst-case" scenarios, such as a hypothetical daylong power failure. Such tests will quickly reveal any hidden operational weaknesses.

#4: Exercise quality leadership. Whether providing financial reports to other senior management team members or overseeing your team's operations, strive for leadership excellence in all of your roles. The more engaged, motivated and collaborative your team is under normal working situations, the better they'll be able to work under inevitable crisis situations which periodically arise. Your success depends on your team's quality.

#5: Build on your external professional relationships. Just as you rely on your internal team for treasury success, so too do you also need quality relationships with external professionals such as bankers, lawyers, tax and accounting advisors and auditors. Be as transparent as possible with your external partners to help them provide you with the best possible service. Besides engaging in regular formal reviews with these professionals, also seek to personally engage them. The better these professionals understand the nuances of your business―and you―the better they will be able to assist.

Operating a high-performing treasury function is challenging, and increasingly so as modern-day financial risks and demands accelerate. California Bank & Trust offers a range of treasury management tools designed to streamline accounts payable and receivable while keeping fraud at bay.