Whether it's funding daily operations, acquisitions, reducing debt or investing, the core objective of the corporate treasury function is to make the best use of incoming cash. This involves assiduous analyzing and managing of collections, payments and concentration structures.
For companies that operate globally, centralized, cash concentration is even more crucial to ensure the efficient transferring of cash among operating units, bank accounts, and funneling funds into master accounts to ensure maximum monetary productivity. Treasurers who have a solid concentration strategy find that they enjoy reduced idle cash balances, reduced costs, improved banking relationships and enhanced ROI.
The first step is to know what the objective is and what needs improving. To ensure that funds are effectively mobilized and directed, treasury professionals must take a comprehensive approach to their concentration strategy which requires a thorough examination and understanding of the company’s infrastructure. This includes visibility and accessibility to the AP and AR processes, the Legal and Tax structures and M&A activity. Further, the appropriate quality and quantity of banks and bank accounts are essential to achieving optimum efficiency of any cash concentration system.
Technology is a key element in the development of synergistic treasury and cash management which is why bank technology has been driven by demand for enhanced functionality in the execution and reporting of transactions. Treasurers have made hefty investments in treasury management systems with flexible banking platforms that provide holistic solutions that will integrate seamlessly with their ERP systems providing straight-through processing and enhanced data and analytics.
Many companies have responded to the financial crisis by across-the-board cuts without considering the long-term impact of these cuts. We have found that as restrictions continue to grow on money and internal resources, our clients are looking for projects that require limited capital outlay and offer quick efficiency paybacks. Some clients are looking to us to take over the entire process. Others have a very specific project that they want integrated to enhance their current system. Whether the project is designing a cash forecasting model, implementing a global cash management network, automating payments or managing short-term investments, the first point of order is to gather all the critical players at the onset and map out a comprehensive strategy that addresses everyone's needs and concerns.
Though treasury workstations and other treasury management systems can cost $1 million or more, it is quite possible to implement a system for as little as $25,000 or even less depending on what is required. Price is not the key. Expertise and automation are. We've found with our clients that those who electronify 60% or more of their payables and receivables cut their processing costs (checks, invoices, postage, manpower, etc,) by 50% or more. In addition, treasury departments that have implemented commercial cards or single-user accounts into the A/P transaction flow have experienced much better controls, improved reconciliation and attractive financial returns.
It is important to engage a knowledgeable treasury consulting company like TreasuryMasters that can provide practical, realistic solutions that meet their client's unique requirements. Next, choose a bank that will partner with their client by providing products that automate the operations. Banks that offer a treasury workstation as an augmentation to their online portal can be more cost effective. At the end of the day, now more than ever, companies need to leverage the experience of extraneous professionals that will add value by adopting enhancements to cut costs, improve working capital and provide access to off balance sheet liquidity
For companies that operate globally, centralized, cash concentration is even more crucial to ensure the efficient transferring of cash among operating units, bank accounts, and funneling funds into master accounts to ensure maximum monetary productivity. Treasurers who have a solid concentration strategy find that they enjoy reduced idle cash balances, reduced costs, improved banking relationships and enhanced ROI.
The first step is to know what the objective is and what needs improving. To ensure that funds are effectively mobilized and directed, treasury professionals must take a comprehensive approach to their concentration strategy which requires a thorough examination and understanding of the company’s infrastructure. This includes visibility and accessibility to the AP and AR processes, the Legal and Tax structures and M&A activity. Further, the appropriate quality and quantity of banks and bank accounts are essential to achieving optimum efficiency of any cash concentration system.
Technology is a key element in the development of synergistic treasury and cash management which is why bank technology has been driven by demand for enhanced functionality in the execution and reporting of transactions. Treasurers have made hefty investments in treasury management systems with flexible banking platforms that provide holistic solutions that will integrate seamlessly with their ERP systems providing straight-through processing and enhanced data and analytics.
Many companies have responded to the financial crisis by across-the-board cuts without considering the long-term impact of these cuts. We have found that as restrictions continue to grow on money and internal resources, our clients are looking for projects that require limited capital outlay and offer quick efficiency paybacks. Some clients are looking to us to take over the entire process. Others have a very specific project that they want integrated to enhance their current system. Whether the project is designing a cash forecasting model, implementing a global cash management network, automating payments or managing short-term investments, the first point of order is to gather all the critical players at the onset and map out a comprehensive strategy that addresses everyone's needs and concerns.
Though treasury workstations and other treasury management systems can cost $1 million or more, it is quite possible to implement a system for as little as $25,000 or even less depending on what is required. Price is not the key. Expertise and automation are. We've found with our clients that those who electronify 60% or more of their payables and receivables cut their processing costs (checks, invoices, postage, manpower, etc,) by 50% or more. In addition, treasury departments that have implemented commercial cards or single-user accounts into the A/P transaction flow have experienced much better controls, improved reconciliation and attractive financial returns.
It is important to engage a knowledgeable treasury consulting company like TreasuryMasters that can provide practical, realistic solutions that meet their client's unique requirements. Next, choose a bank that will partner with their client by providing products that automate the operations. Banks that offer a treasury workstation as an augmentation to their online portal can be more cost effective. At the end of the day, now more than ever, companies need to leverage the experience of extraneous professionals that will add value by adopting enhancements to cut costs, improve working capital and provide access to off balance sheet liquidity
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