Top Five KYC Data Points Your Bank Needs
This article is a contribution from one of our content partners, Avollone No matter the bank or its region, when they are collecting KYC information, there are always specific pieces of data that they will want to see. And if you are prepared with this knowledge, then your response and its processing can be that much faster and easier. Why are banks so keen on KYC requirements? Banks and financial institutions around the world are all subject to the many and variousstrict and comprehensive legal requirements –to collect KYC information to make sure that criminals do not misuse the financial system for money laundering and other financial crime related activities. Banks want to protect their reputation at all costs. History has shown that being involved in money laundering has a detrimental effect on a bank’s reputation. Most banks and bankers are decent people and do not want to be part of laundering money that comes from terrible crimes such as extortion, drug trafficking, illegal arms trading and human trafficking. So what are the 5 basic data points that banks collect as part of KYC? 1. IDENTIFICATION The bank needs to be sure they are conducting business with the right counterparty, just like you as a person identify yourself with a passport or a national identity card. The bank will ask the company for all the information needed to make that identification. This is often the easy part of the process, since it is mostly about documenting the company’s incorporation. The banks typically don’t pull the information themselves from the public register, since they want companies to deliver the latest, most up-to-date information and confirm its validity themselves. 2. BUSINESS MODEL AND PURPOSE OF THE RELATIONSHIP An essential part of KYC is understanding a customer’s business model. It helps banks to understand the risk of your business model and assess if the use of their products and services is valid. Banks are obligated to assess all customers’ risks and adjust their own risk setup according to the customer risk. This is to ensure banks are using the needed resources to identify potential money laundering and terrorist financing risks. Often companies do not use enough time to explain their business model to the banks. However, you are the most reliable source of a clear and correct description of your business model. With a little effort, you will avoid many ongoing questions from the bank regarding your use of the bank’s services and products. 3. OWNERSHIP AND CONTROL There is an increasing (regulatory) request for transparency when it comes to the ownership and control structure of companies. The goal is that Ultimate Beneficial Owners (the individuals who actually own or control the company, UBOs) should not hide behind complex company structures and shell companies. It can be difficult for companies to have complete oversight of owners and voting rights, since they also have to consider indirect ownership and control. But they should always have an updated ownership and control structure illustration. Banks will often ask for an illustration to visualize and better understand the structure. Once this is in place comes another cumbersome part of the process, which is collecting relevant information and documentation from the various Company Officers, being the UBOs from the ownership and control structure, along with the board and executive members of the company. If you’re located in the EU, you are required to proactively share information about changes in your Beneficial Owners. You are also legally responsible for the correctness of the information you share with the banks. Unfortunately, many companies do not have updated ownership and control information ready. This can be a delaying factor when it comes to the KYC process. 4. INTENDED USE Banks are required to understand the customer’s use of their products and services and need to make sure that it aligns with the company’s business model. In addition to that requirement, they must monitor their business to make sure that the customer is using the products as expected. This is to identify unusual use of the products, such as transactions that are not according to expected behavior. To perform this monitoring, banks need relevant information that can be used to monitor deviations from the expected behavior. If you do not deliver realistic information about your intended use of the bank’s products, you will experience that banks often come back and ask specific questions about transactions. They do that since they did not expect these transactions and need to understand the reason for them. When companies do not give realistic information about their expectations, that makes future cooperation more time-consuming for both parties. The better information you deliver regarding your business model and your expected use of the bank, the fewer follow-up questions you will receive. 5. TAX INFORMATION As a part of the KYC process, you are often asked to deliver tax information. The request is mainly related to FATCA (US tax regulation) and CRS (EU’s Common Reporting Standard) and ensures that banks can share relevant tax information across countries In summary Banks aren’t asking for KYC information to annoy you or waste your time, although it can often feel that way. But armed with this insight, you can be prepared and have all the right pieces of information systematically organized, so you can quickly provide complete and correct information to the bank. With this, you’ll avoid unneeded interactions and save time for everyone – most importantly, yourself. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
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Target balancing optimized with a cash management system
This article is written by Nomentia Making every cent count Idle cash is costly, and target balancing offers a powerful solution to keep funds active and optimized. It’s no surprise that global companies are investing in cash management systems to enhance target balancing and to make global cash management smoother and more effective. By automating fund transfers to maintain optimal cash levels across accounts, target balancing minimizes unnecessary borrowing and maximizes liquidity where it’s needed most. But how exactly does target balancing work in corporate treasury? What essential functions should a cash management system have to support this strategy effectively? And what best practices can help your team make the most of target balancing? From real-time tracking to streamlined reconciliation, this article breaks down the core features of cash management systems that support target balancing and shows how they help reduce costs, boost efficiency, and ensure every dollar is working toward business growth. No more idle cash—let’s make every cent count. Meet Jouni Kirjola Jouni Kirjola is the Head of Solutions and Presales at Nomentia, bringing nearly 20 years of expertise to the role. Specializing in payments, cash forecasting, in-house banking, and reconciliation, his extensive experience and deep knowledge of financial solutions make him a key expert in delivering tailored solutions. Making global cash management effective Imagine a multinational technology firm with subsidiaries in North America, Europe, and Asia. The company has been experiencing inefficiencies in its cash management process. Each regional subsidiary maintains separate bank accounts to handle local operations, but cash flow requirements vary significantly across regions. For example, the European subsidiary often has excess cash due to slower product cycles, while the North American subsidiary faces frequent cash shortages due to high operational expenses. This discrepancy leads to idle cash sitting in European accounts while the North American subsidiary needs to borrow short-term funds to cover its daily expenses, incurring unnecessary interest costs. The company’s treasury department struggles to manage these imbalances manually, and reconciliation across multiple accounts becomes a time-consuming task. “In a complex, decentralized operation, target balancing becomes even more crucial. It gives treasury teams real-time control over cash positions across multiple jurisdictions.” – Jouni Kirjola, Head of Solutions & Presales To streamline cash management and reduce costs, the company decides to implement target balancing using a cash management system. The system allows the company to set target balances for each subsidiary’s account based on anticipated cash flows, operational needs, and historical patterns. For example, the European subsidiary’s target balance is set higher to account for slower cash cycles, while the North American subsidiary has a lower target balance to match its higher liquidity needs. By integrating the CMS with its bank accounts and ERP system, the company is able to automate fund transfers across its subsidiaries. Excess cash in the European accounts is automatically swept into a central treasury account, while the North American account is topped up when needed. How does target balancing work in corporate treasury? In corporate treasury, target balancing is a cash management strategy used to maintain specific balances in bank accounts based on anticipated cash flow needs. The objective of target balancing is to ensure that funds are available where and when they are needed while minimizing idle cash across accounts. By setting a “target” amount for each account, companies can strategically allocate resources within their banking structures to optimize liquidity, reduce interest costs, and simplify cash flow management. Target balancing mechanisms Target balancing involves establishing a predefined cash balance (target) for each account, which aligns with a company’s projected cash flow requirements. This target can be fixed or adjusted dynamically, depending on operational needs and market conditions. If an account exceeds its target, excess funds can be moved to a central account, while accounts that fall short of their targets can be topped up from a central pool. This balancing process typically occurs at the end of each business day and is often automated through treasury management systems. “A key advantage of target balancing is its ability to reduce the need for costly external borrowing. If funds are already in-house and properly allocated, borrowing costs can drop significantly.” – Jouni Kirjola, Head of Solutions & Presales Target balancing is especially useful for businesses with decentralized operations or those operating in multiple jurisdictions, where cash needs vary significantly across entities. It allows corporations to optimize liquidity without the need for constant manual transfers. Types of target balancing Comparing target balancing with other cash pooling techniques Compared to zero-balancing and notional pooling, target balancing offers distinct advantages and limitations. Optimal use cases for target balancing Target balancing is particularly effective for companies with complex multinational structures or operations that experience fluctuating cash needs. For example, our example multinational corporation with subsidiaries operating in different time zones and regulatory environments might use target balancing to ensure that each subsidiary has sufficient cash for local obligations without relying on central funds constantly. Additionally, businesses with seasonal cash flow patterns, such as retailers with peak seasons, can benefit from dynamic target balancing to meet shifting operational demands. Role of a cash management system in target balancing A cash management system, or a CMS, plays a pivotal role in supporting target balancing for corporate treasury functions by providing automated tools to manage intercompany and inter-account transfers, monitor real-time balances, and forecast cash needs. Target balancing requires a sophisticated CMS that can seamlessly integrate with enterprise resource planning (ERP) systems and banks to provide efficient, accurate, and real-time oversight of cash positions. “Target balancing is about precision. With the right technology, you can automate the process of moving funds across accounts, maintaining balance with minimal human intervention.” – Jouni Kirjola, Head of Solutions & Presales. Core functions of a cash management system for target balancing The primary functions of a CMS that supports target balancing include automated transfers, real-time balance tracking, and cash flow forecasting. These tools work together to ensure that accounts are maintained at optimal levels according to the target balance criteria. Automation in…
5 Do’s and Don’ts When Hedging for the First Time
This article is written by HedgeFlows For finance executives, managing foreign exchange (FX) risk is critical to protecting your business from the unpredictability of currency movements. Yet, hedging—especially for the first time—comes with challenges. Successful hedging requires a well-thought-out strategy tailored to your company’s specific needs, risk tolerance, and exposure to currency fluctuations. While some mistakes are common for first-timers, so are proven best practices that can set the foundation for effective FX risk management. Below, we’ll break down five things you should NOT do when hedging for the first time and five things you SHOULD do to maximise your chances of success. 5 Things Not to Do When Starting to Hedge 1. Basing Decisions on the Current Rate Level Instead of Your Risks It’s tempting to make hedging decisions based on favourable exchange rates. However, this approach often leads to reactive strategies that don’t address the underlying risk. For example, if your business has limited risk due to natural hedges in your operations (e.g., revenues and expenses in the same currency), over-hedging to “lock in a good rate” could be unnecessary and costly. Instead, focus on identifying your actual FX risks and hedging to mitigate those exposures, regardless of market conditions. 2. Justifying Hedging with a Market View Hedging is about reducing risk, not about predicting where the market is heading. If your decision to hedge is based solely on your expectations for currency movements, you’re speculating, not hedging. For instance, if you think the GBP/USD rate is going to depreciate and choose to hedge simply because of that belief, you could leave your business exposed should the rate move in the opposite direction. Keep your hedging strategy disciplined and avoid making speculative bets. 3. Not Comparing Hedging Costs to Potential FX Risks Hedging comes with costs, from transaction fees to opportunity costs. Many first-timers overlook these costs or fail to weigh them against the potential financial impact of FX risks on their business. For example, paying a high premium for an option that provides minimal protection may not be worth it. Always calculate and compare costs relative to the potential risks and decide if the hedge is worth implementing. Conversely, don’t let hedging costs sway away from considering hedging – it is all about comparing these costs to how much currencies could move. For example, hedging many G10 currencies for several months costs a fraction of a percent and can protect from currency swings that can potentially exceed several percent. 4. Hedging Too Much or Too Little Finding the right balance is crucial. Hedging too much can expose your business to unnecessary costs, while hedging too little leaves your business vulnerable to currency swings. A common mistake is attempting to hedge every single transaction. Instead, focus on your key exposures – such as large contracts or regular currency flows—and use those as a starting point for your hedging programme. 5. Forgetting About Your Hedges Hedging isn’t a set-it-and-forget-it approach. Forgetting to monitor and manage your hedges can lead to mismatched coverage or missed opportunities to optimise your strategy. For instance, if your cashflows change or if market conditions shift significantly, your existing hedges may no longer align with your financial goals. Keep an eye on your portfolio and adjust as needed. 5 Things to Do When Starting to Hedge 1. Set Clear and Quantifiable Hedging Objectives Start by identifying what you’re trying to achieve with your hedging programme. Are you looking to stabilise cash flows, preserve margins, or protect against large currency swings? Defining clear and measurable objectives ensures your hedging strategy stays aligned with your business goals. For example, a good objective might be to “hedge 70% of our projected USD revenues for the next 12 months to ensure no more than a 5% deviation from budget.” 2. Periodically Review Hedging Needs Markets are dynamic, and so is your business. Changes in operations, sales projections, or market conditions may require updates to your hedging programme. Establish a regular schedule – monthly or quarterly – to review your forecasted cashflows and FX exposures. This review process allows you to identify additional risk areas, fine-tune coverage, and ensure your strategy remains effective over time. 3. Compare Prices from Two or More Providers Don’t settle for the first quote you receive. Different hedging providers – banks, brokers, or fintech firms – offer varying rates and products. Comparing pricing and terms ensures you’re getting the best deal. For example, shop around to find competitive pricing on forward contracts or options while ensuring the provider offers robust support and execution capabilities. Remember that lower fees shouldn’t come at the expense of service quality. 4. Align Hedges with Projected Cashflows Effective hedging matches the size, timing, and currency of your hedges with your anticipated cashflows. When your exposures and hedges are synchronised, you can better protect your bottom line without creating unnecessary risks. For example, if you expect a €500,000 payment in six months, a six-month forward contract for the same amount would hedge that exposure effectively. Misaligned hedges, however, could result in over-coverage or liquidity challenges. 5. Gradually Ramp Up Hedging While Fine-Tuning the Process Avoid implementing your entire hedging programme in one go. Start small with limited coverage, evaluate the results, and refine your strategy before scaling up further. This phased approach allows you to identify what works, learn from mistakes, and ensure your process runs smoothly. For example, you might begin by hedging 20% of your monthly exposures and increase gradually as you grow confident in your strategy. Take the First Step Towards Effective Hedging Hedging for the first time requires a careful balance of strategy, discipline, and flexibility. By avoiding common mistakes and applying proven best practices, you can build an FX risk management programme that stabilises your cashflows and protects your business from currency volatility. Remember, hedging is not a one-size-fits-all solution. Each organisation has unique needs, and your strategy should reflect your business’s specific goals and risks. If you’re ready to explore how effective hedging can transform your financial operations,…
The Evolution of Treasury: How Has the Role Changed in Recent Years?
The treasury function is rapidly transforming. Treasury Masterminds recently surveyed treasury professionals to uncover how their roles have evolved over the past five years. With over 100 respondents, the results highlight significant shifts in treasury priorities: Connecting the Dots: Identifying Broader Trends These findings complement last week’s poll, which highlighted financial strategy and forecasting as critical skills, closely followed by cash management and risk management proficiency. Interestingly, technology was viewed as a crucial but supportive enabler rather than a primary skill. Taken together, the results from both polls clearly illustrate an ongoing shift in the treasury landscape: technology and automation are rapidly becoming indispensable, enabling treasurers to dedicate greater focus to strategic and analytical tasks. A significant trend emerges: as technology handles routine transactional activities, treasury professionals have more capacity to engage strategically within their organizations. This reinforces the strategic significance of treasury and underscores the importance for treasury professionals to maintain robust risk management skills, financial forecasting abilities, and strong leadership and communication skills. Tech Skills of Treasurers: Essential but Enabling Although technology was identified primarily as an enabling tool rather than the primary skill set, proficiency in technology remains essential. Treasurers today must be comfortable using treasury management systems (TMS), ERP integrations, data analytics tools, and increasingly sophisticated automation technologies such as artificial intelligence (AI) and machine learning (ML). These skills allow treasurers to leverage data effectively, ensure accuracy in forecasting, manage risks proactively, and support strategic decision-making. Therefore, while not the highest-ranked individual skill, technology competency is integral to the modern treasurer’s effectiveness and efficiency. Overall, both polls underscore that treasury professionals today require a balanced, multifaceted skill set. Treasurers are becoming increasingly integral strategic advisors within their organizations, supported by powerful technological tools that enhance operational efficiency. Does this resonate with your own experience in treasury? We invite you to join the discussion and share your perspective! Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Cash Forecasting: Your Blueprint for Liquidity Performance
This article is a contribution from our content partner, Kyriba In today’s fast-paced financial environment, accurate cash forecasting serves as a blueprint for organizations aiming to maximize liquidity performance, reduce risk, and make strategic decisions with confidence. As financial teams navigate increasingly complex markets, political instabilities, and protectionist policies, predicting cash flows with precision is crucial for maintaining financial security, optimizing working capital, and supporting long-term business growth. In the context of global economic challenges such as tariffs, trade wars, and supply chain disruptions, robust cash forecasting empowers financial leaders to manage elevated costs, alleviate squeezed profit margins, and mitigate cash flow inconsistencies. This comprehensive guide offers an in-depth exploration of cash forecasting, emphasizing its critical role in treasury management and highlighting advanced strategies and technologies to achieve forecasting excellence and optimal liquidity performance. We will explore the challenges organizations face in achieving cash forecast accuracy and outline strategies to enhance these critical financial processes. By leveraging these insights, finance leaders can ensure their organizations remain agile and resilient in an ever-evolving economic landscape. Understanding Cash Forecasting Amidst the challenges posed by supply chain disruptions, regulatory shifts, and tariff uncertainties, cash forecasting equips organizations with the ability to anticipate and plan for financial needs. It is a critical process for maintaining financial stability, supporting strategic planning, and ensuring that an organization can meet its financial obligations. Cash forecasting has evolved from manual spreadsheets to sophisticated AI-driven models to address the dynamic needs of modern businesses. This evolution reflects the increasing complexity and speed of business operations, requiring more advanced and accurate forecasting tools. Understanding the fundamental components of cash forecasting is essential for effective financial management. These key concepts include various forecasting methods, the strategic application of time horizons, and the integration of critical data inputs. Together, they form the foundation of a robust forecasting strategy, enabling organizations to anticipate financial needs, adapt to market changes, and make informed decisions that drive long-term success. Forecasting Methods Time Horizons Data Inputs By integrating these forecasting methods, time horizons, and data inputs, organizations can achieve a comprehensive view of their financial future, enabling them to make informed strategic decisions and maintain robust cash management practices. Benefits of Accurate Cash Forecasting Recent financial market fluctuations demonstrate the critical role of accurate cash forecasting in maintaining liquidity and strategic agility. Companies with precise cash forecasting can adjust their investment and financing strategies quickly, avoiding liquidity shortfalls and capitalizing on favorable market conditions. This agility allows financial leaders to maintain operational stability and pursue strategic opportunities even amidst economic uncertainty. The benefits of accurate cash forecasting enhance an organization’s ability to manage cash and liquidity effectively, while also supporting strategic financial planning and risk management. By leveraging these capabilities, businesses can achieve greater financial stability and strategic agility. Enhanced Cash Visibility and Liquidity Management Cenveo Unwraps $490K inValue with 93% Cash Forecast Accuracy By adopting Kyriba’s Liquidity Performance Platform, Cenveo achieved a remarkable 93% improvement in cash forecast accuracy and a 90% increase in productivity, unlocking $490K in value in less than three months. This transformation enabled on-demand liquidity visibility and streamlined cash management processes, saving significant operational hours monthly. This comprehensive transformation not only improved operational efficiency but also paved the way for evaluating new financial opportunities, such as a potential $17.7 million cash flow benefit from supply chain financing and an estimated $1 million from business interruption claims. Improved Financial Planning and Risk Mitigation Varsity Brands Wins with100% Cash Visibility and 90% Cash Forecast Accuracy By integrating Kyriba’s advanced cash forecasting tools, Varsity Brands achieved forecasting accuracy exceeding 90% and gained 100% cash visibility. The transition to Kyriba enabled Varsity Brands to efficiently reconcile bank transactions, optimize cash positioning, and enhance overall financial strategy. This improvement not only streamlined their financial operations but also empowered the finance team to make data-driven decisions with confidence. By achieving such high levels of accuracy and visibility, Varsity Brands is poised sustained growth and operational efficiency, demonstrating the critical role of precise cash management in driving business success. Qualitative Benefits: Strategic and Operational Advantages Bray International Opens the Valve to97% Productivity and 100% Cash Visibility By adopting Kyriba, Bray International achieved remarkable results, including 100% cash visibility and a 97% improvement in productivity. This transformation not only provided comprehensive insights into cash positions but also significantly reduced the time and effort required for financial management tasks. Bray International standardized forecasting processes and improved the accuracy of cash management, leading to substantial operational efficiencies. This strategic shift allowed the company to optimize liquidity performance and support better decision-making across its global operations. By leveraging advanced treasury management technology, Bray International has positioned itself for continued growth and operational excellence, demonstrating the critical role of comprehensive cash visibility and efficient treasury operations in driving business success. Quantitative Benefits: Financial Optimization and Growth Potential The Challenges of Cash Forecasting In the current economic landscape, cash forecasting has become increasingly challenging. The complexities of global events—geopolitical tensions, trade wars, and economic shocks—highlight the need for resilient cash forecasting processes. Addressing cash forecasting challenges requires a combination of advanced technology, strategic planning, and effective resource management to create a resilient cash forecasting process that can adapt to both internal and external pressures. Internal Challenges Data Accuracy: Ensuring the accuracy of financial data is crucial for reliable cash forecasting. Errors in data can lead to incorrect forecasts, which may result in poor financial decisions and unexpected cash shortages or surpluses. Integration Issues: Organizations often face difficulties in integrating data from multiple sources, such as ERP systems, bank statements, and other financial tools. Disparate systems and data silos can complicate the consolidation process, making it challenging to achieve a comprehensive view of cash positions. Resource Constraints: Limited resources, including time, personnel, and technology, can hinder the effectiveness of cash forecasting. Many organizations struggle to allocate sufficient resources to develop and maintain robust forecasting processes, often relying on manual methods that are time-consuming and error-prone. External Challenges Market Volatility: Fluctuations in market conditions can significantly impact cash flow predictions. Factors such as currency exchange rates, interest rates, and commodity prices can change rapidly, introducing uncertainty…
10 Ways to Optimise Your Cash forecasting
This article is written by Embat In the business world, effective financial management is critical to the success and sustainability of any organisation. An essential part of this management is cash forecasting, a process that allows companies to forecast their future cash flows. In this article, we will explore 10 effective ways to optimise your cash forecasting, ensuring more accurate and reliable financial planning. What is cash forecasting? Cash forecasts are a kind of financial roadmap that companies use to anticipate how much liquidity they will have in the future. These projections include estimates of how much money will come into the company (cash inflows) and how much will go out (cash outflows) in a given period, such as a month, a quarter, or a year. In conducting these cash forecasts, it is crucial to consider both accounts receivable and accounts payable, focusing on those with specific due dates. In addition, it is important to include all planned cash outflows, such as payroll, tax, and National Insurance payments. Other cash inflows, such as bank loans or grants, should also be considered. These forecasts allow business leaders to understand how much money is expected to flow in and out of the company in a future period. This information is not only essential to ensure that sufficient cash is available to cover day-to-day operations but also to plan investments, manage debt, and prevent liquidity problems. How to optimise your cash forecasting? 10 tips As with all other business and financial considerations, cash forecasting is generally a complex process, as it is influenced by many variables. Fortunately, there are a few tips that any treasurer can apply now to optimise their cash forecasting. Here are the 10 most important ones. 1. Analyse historical data The first step to optimising your projections is to carefully analyse your company’s historical and financial data. This retrospective review provides patterns and trends that are critical to formulating accurate projections. Using advanced analytical tools and statistical techniques, such as regression analysis and predictive modelling, reveals valuable insights that might otherwise go unnoticed by management. 2. Manage your receivables and payables efficiently Accounts receivable and accounts payable are the two most important elements of accurate cash forecasting. In essence, they are the trade debts that our company owes to suppliers and that our customers owe us for deferred payment of invoices. Nevertheless, they are not always adequately reported, and this can have a negative impact. If invoices do not arrive on due dates, it becomes unclear when the invoice amount will be received. In addition, it is important that invoices are clear and error-free and that it is not too late for an invoice to be acted upon. Follow up regularly on outstanding payments to avoid future problems. 3. Collaborate across departments Cash forecasting is not just a task for the finance department. It requires active collaboration between all agents and workers within the company. For example, the sales team provides information on market trends and revenue expectations, while the purchasing department may have data on future expenses and the tax team may provide relevant information on upcoming tax assessments. This cross-departmental communication ensures that all relevant variables are considered within these forecasts. It also ensures that they are always up to date. 4. Adequately monitor market conditions Market conditions can change rapidly, significantly affecting cash forecasting. A change in interest rates makes debt more expensive, while a tax increase reduces sales. Staying on top of key economic indicators, such as interest rates, inflation rates, and market movements, is critical. Adjusting your projections based on these indicators can help anticipate and mitigate the impacts of market changes on the financial health of your business. 5. Efficient inventory management Efficient inventory management plays a key role in optimising a company’s treasury. A well-managed inventory ensures that capital is not unnecessarily tied up in stock while also preventing shortages that could lead to lost sales. To optimise this important aspect of business performance, it is important to understand the demand patterns for your products and services, including seasonal variability. This allows you to anticipate when you will need more or less stock and resources, thus optimising purchasing and production. 6. Continuous employee training Continuous training and development of the finance team is essential to maintain and improve efficiency and accuracy in the management of corporate finances. A well-trained team is better equipped to meet financial challenges, adapt to market changes, and effectively use new technologies and methods. Training can range from basic accounting and finance concepts to sophisticated use of a treasury solution and financial risk analysis. Investing in professional training programmes and specific workshops, as well as access to online courses and conferences, can provide staff with the skills and knowledge necessary to effectively manage the company’s finances. 7. Efficient working capital management Effective working capital management is an important aspect of improving cash forecasting, as it focuses on optimising the management of cash, inventories, receivables, and payables. By managing these components efficiently, a company can ensure adequate liquidity and greater financial stability, resulting in better cash forecasts. The objective is to maintain a balance that allows the company to have enough cash available to meet its daily operations, such as payroll or tax payments, but without tying up too much capital in non-productive assets. 8. Tax planning Efficient tax planning is essential to optimise a company’s cash forecasting. Tax planning involves understanding and implementing tax strategies that help minimise the tax burden in a legal manner while ensuring compliance with all tax obligations. By taking advantage of available deductions, exemptions, and tax credits, a company can significantly reduce its tax liability, which in turn frees up more capital to reinvest in the business or to hold as a cash reserve. In addition, knowing in advance what the next settlement will be reduces uncertainty around cash projections. 9. Automating payments Implementing automated payment systems significantly reduces the possibility of human error, which can arise from manual data entry or the tracking of multiple installments. This can lead to problems such as duplicate payments, late payments resulting…
Treasury Contrarian View: Are Treasurers Too Conservative with Cash?
In uncertain times, treasurers often lean toward holding more cash as a buffer against risk. Liquidity is king, right? But here’s the contrarian view: Are treasurers holding too much cash and missing opportunities to drive value through smarter investments? Is conservative cash management a strength—or a missed opportunity? The Case for Holding Excess Cash The Case for Putting Cash to Work Finding the Balance: Smart Liquidity Management Rather than extremes, the future lies in a balanced approach: Let’s Discuss We’ll be sharing views from treasury leaders, tech providers, and institutional investors—join the discussion and let us know your take! COMMENTS Lorena Pérez Sandroni, Treasury Masterminds board member, comments: Cash is king, and treasurers often face significant pressure during uncertain times. Balancing this pressure to meet the expectations of stakeholders, investors, and CFOs, while ensuring we hold enough cash to cover operational needs without holding too much, can sometimes feel like a martial art. In my opinion, we should not be overly conservative. We must monitor the minimum cash balance and short-term needs, as well as extraordinary events, to challenge established targets. I prefer to do this at least quarterly, considering that our analysts will closely review and monitor the short-term needs (at least 8 weeks) to identify any extraordinary requirements. In the ideal world of Treasury, we would seek cash pool structures and products that enhance our efficiency in holding cash. We would negotiate the remuneration of our excess cash and remain continuously curious about market developments to improve and drive value from our idle cash. However, different approaches are necessary depending on whether you are a Regional Treasurer or managing Corporate accounts. In the latter case, it is crucial to help the company understand the benefits of cash centralization, In-House Banking (IHB) when possible, and any cash management products that coordinate cash where and when it is needed. As well as how by centralizing our cash we can also improve Risk management , for example in the cases where your company operates in emerging and high risk countries. Smart liquidity management isn’t just about maximizing returns. Treasurers sometimes need to prioritize strategic initiatives over immediate financial gains, such as reallocating cash to support global operations or business strategies. Being flexible and understanding the impact and importance of cash centralization is the most visible way treasurers contribute directly to business initiatives. Control, monitoring, evaluation, and control again! Whether you are in a sophisticated and automated Treasury environment or dealing with thousands of Excel tabs and dozens of currency pairs, you must know your minimum cash requirements to manage properly and make the right proposals for Smart Liquidity Management with an holistic view. Patrick Kunz, Treasury Masterminds founder and board member, comments: Treasurers: Guardians of Cash – But Don’t Stop There As treasurers, we’re the guardians of cash – and we’re good at it. But once the guarding is done, that’s not the end of the line. Too often, cash just sits idle in a bank account. And, I hate to say it, frequently earning 0% interest. Let’s not even dive into the counterparty risk of leaving large balances at a bank – a risk often overlooked but very real. (Remember Credit Suisse? Gone in days. Lehman? Weeks.) So, fellow treasurers, it’s our duty not just to protect cash, but to put it to work. That means finding the balance between maximizing return without significantly increasing risk. Easier said than done – I know. It depends heavily on your company’s cash position, volatility of cash flows, and, of course, the current interest rate curve. For years, there wasn’t much point locking away cash for longer periods. But today, interest rates shift faster than US tariffs – so keep a close eye on them. And yes, that means your investment policy and strategy should be reviewed at least annually. I still see too many clients leaving money on the table – and that’s a shame. Your cash can do more. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
What are Multi-Bank Platforms
This article is a contribution from our content partner, Just Introduction to Multi-Bank Platforms Multi-Dealer platforms are a great example of how technology continues to improve markets. These electronic platforms are non-exchange financial trading venues which enable trade matching between counterparties, offering pricing from a selection of investment banks. After the introduction of electronic broking systems in the inter-bank market, some Foreign Exchange vendors created electronic trading systems for their customers to transact with them electronically. Initially, these systems, known as “single dealer platforms” (SDP), were provided by large Foreign Exchange trading banks as a means for broker clients to deal directly with the bank. The decreased profitability of the interbank market, alongside growing demand for foreign exchange services from a range of clients, led to the development of new software. Notably, client demand for more diverse pricing led to the development of MDPs such as FXall and 360-T. These platforms quickly rose in popularity with the prevalence of algorithmic-based trading further flourishing in this new diverse landscape allowing algos to take advantage of a wide range of pricing inputs and liquidity sources. Whilst the majority of agency trading takes places on these multi-bank platforms, some liquidity providers do still use single-dealer platforms such as Barclays’ platform BARX. Many banks prefer for their clients to use SDPs firstly due to the obvious reason that there is no competition from other providers but also because it helps them to develop more relationship-based pricing as they increase their understanding of specific client needs and finally because the platform provides a good opportunity for the bank to upsell and cross-sell its clients to various other services and products. In a clear move intended to retain clients as well as attract new clients, who might otherwise have opted for the diverse pricing of the MDPs Barclays has recently introduced GATOR, an add on it to its renowned single dealer platform BARX, which uses a hybrid execution model combining external liquidity with Barclays own liquidity and thus combines the benefits of both SDP and MDP models. Improving Best Execution The prevalence of algorithmic trading has also been employed by brokers and liquidity providers to help achieve best execution with, for example, the advent of “Smart Order Routing” (SOR) which benefits both the liquidity providers (sell-side) and the liquidity takers (buy-side). Sell side SOR helps firms choose between execution venues to achieve the best possible price and minimise fees whilst buy side SOR seeks to minimise execution costs and offset market impact by managing multiple execution venues. The BARX Dynamic Router is an example of SOR which looks to route orders to venues with the greatest likelihood of filling the order so as to minimise information leakage. Better Trade Cost Analysis Algorithms are also being increasingly employed to achieve best execution by real money players too who might, for example, need to use a time or volume-weighted approach to filter a large order into the market whilst minimizing market impact. Technological advances in electronic trading are also helping traders monitor their trade costs with MDP platforms providing increasing means of monitoring trade cost analysis which seeks to identify the cost of any delay in execution, the cost of demanding liquidity, opportunity cost and also performance against a specified benchmark. Better Reporting & Analytics Platforms such as 360T distinguish themselves by their enhanced reporting and analytics which offer a highly granular breakdown of trade capture metrics measured against industry benchmarks. The benefits to clients are plentiful: 360Ts FX platform (360TGTX) offers over 500 pricing streams offering clients unique differentiated liquidity which can be specially customised for individual client needs. Clients also benefit from ultra-low latency matching technology with 360T providing rea-time tick data at 67 seconds allowing for ultimate price transparency. More Effective Transaction Cost Analysis This better level of price transparency is what makes platform such as FXall so popular with corporate users. Clients are able to undertake much more efficient transaction cost analysis. Through optimising trade execution, users can better evaluate the cost and effectiveness of their execution strategies to make better pre-trade decisions such as liquidity provider selection. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
The Modern Treasurer: A Strategically Skilled Financial Leader
Treasury professionals must possess a diverse set of competencies. Treasury Masterminds recently conducted a poll among nearly 100 treasury professionals, exploring the question: “What do you think is the most important skill for a treasurer to have?” The findings offer valuable insights into the treasury function’s evolving demands and highlight the multifaceted nature of the treasurer’s role. A Strategic Shift The most prominent skill identified was Financial Strategy & Forecasting (30%). This underscores a significant shift towards strategic involvement within treasury. Treasurers are no longer confined to transaction-oriented tasks; instead, they’re increasingly expected to contribute strategically, advising the business on growth opportunities, financial health, and sustainable success. Core Foundations Remain Essential Close behind, Cash Management Expertise (27%) was rated highly. Despite the strategic evolution, efficient liquidity management remains fundamental. Without robust cash management skills, strategic initiatives may falter due to financial instability. Treasurers continue to play an essential role in securing operational liquidity, which remains a crucial pillar for business continuity and success. Navigating Uncertainty through Risk Management With Risk Management Proficiency (20%) closely following, the poll results indicate the importance of proactively identifying, assessing, and mitigating risks. Today’s treasurers must handle financial market volatility, operational risks, and unforeseen economic challenges. Effective risk management has become indispensable in securing the company’s financial health and strategic goals. Leadership and Communication: A Critical Soft Skill The importance of Leadership & Communication (18%) emphasizes that technical treasury skills alone are insufficient. Effective treasurers are increasingly called upon to lead teams, communicate complex financial insights to various stakeholders, and influence strategic decisions across the organization. Strong leadership and communication skills enhance a treasurer’s ability to ensure alignment across departments and effectively execute strategic plans. Technology: Essential Enabler, Not Primary Skill Interestingly, Technology Adeptness (5%) ranked lower in priority. This doesn’t minimize technology’s importance; rather, it positions technology as a crucial enabler rather than a standalone essential skill. Technological advancements allow treasurers to perform tasks more efficiently, enabling them to focus their expertise on strategic, cash management, and risk management activities. Conclusion: A Multifaceted Approach for Success The poll results reinforce that treasurers need a balanced skill set to thrive. While strategic insight increasingly defines the treasury role, mastery of cash and risk management remains vital, supported by robust leadership and communication abilities. Technology, while integral, serves primarily as an enabler, enhancing efficiency and allowing treasurers to amplify their strategic impact. Today’s successful treasurers combine financial acumen with strategic foresight, robust risk management, clear communication, and technological literacy, positioning themselves as indispensable strategic partners within their organizations. What do you think—does this match your experience? Share your insights in the comments below! Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.