The Hidden Costs of Not Having a Treasurer: A Risky Oversight
In the realm of corporate finance, the treasury function is often viewed as a cost center, primarily because the salaries of treasurers and treasury teams represent a direct expense on the company’s financial statements. Unlike profit-generating departments, a treasury does not directly contribute to the company’s bottom line. However, this perspective overlooks a crucial aspect: the hidden costs and risks associated with not having a dedicated treasurer or treasury team. Neglecting these critical financial functions can lead to significant financial instability and missed opportunities, ultimately costing the company far more than the salaries of a competent treasury team. The Role of a Treasurer A treasurer’s role is multifaceted, encompassing cash management, risk management (particularly foreign exchange and interest rate risks), debt capital market activities, and cash flow forecasting. Each of these functions is vital to the financial health and stability of a company. 1. Cash Management: Effective cash management ensures that a company has sufficient liquidity to meet its obligations and capitalize on investment opportunities. Without a dedicated treasurer, companies may face inefficient cash utilization, higher borrowing costs, and even liquidity crises. 2. Risk Management: Managing foreign exchange (FX) and interest rate risks is crucial for companies engaged in international trade or those with significant debt. A treasurer identifies and mitigates these risks, protecting the company from volatile market conditions. Without this expertise, companies are exposed to unpredictable financial swings that can erode profits and destabilize operations. 3. Debt Capital Markets: Accessing and managing debt is a complex task that requires expertise in financial instruments and market conditions. Treasurers negotiate favorable terms, manage interest expenses, and ensure compliance with covenants. Without this, companies might incur higher costs of capital and face difficulties in funding growth initiatives. 4. Cash Flow Forecasting: Accurate cash flow forecasting enables better financial planning and decision-making. A treasurer uses sophisticated models to predict future cash flows, helping the company to anticipate and prepare for financial needs. Without this foresight, companies might experience cash shortages or miss out on investment opportunities due to poor planning. The Costs of Not Having a Treasurer 1. Increased Financial Risks Without a dedicated treasury function, companies are vulnerable to financial risks such as currency fluctuations and interest rate changes. These risks can lead to unexpected losses, impacting profitability and shareholder value. 2. Higher Borrowing Costs Inefficient cash management and lack of expertise in debt markets can result in higher borrowing costs. Companies may face unfavorable loan terms and higher interest rates, increasing their cost of capital and reducing profitability. 3. Liquidity Crises Poor cash management can lead to liquidity shortages, where a company cannot meet its short-term obligations. This can result in missed payments, damaged supplier relationships, and even insolvency in severe cases. 4. Missed Investment Opportunities:** Without accurate cash flow forecasting and effective capital allocation, companies might miss out on strategic investment opportunities. This can hinder growth and competitive positioning in the market. 5. Operational Inefficiencies: A lack of focus on cash management can lead to operational inefficiencies, such as excess cash sitting idle or insufficient funds for critical operations. This misallocation of resources can affect overall business performance. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professional, Patrick Kunz, who is also Treasury masterminds board member Patrick Kunz, CEO and Founder of Pecunia BV Treasury and Finance, Comments Treasury Departments are (should) always be costs centers. That doesn’t mean they can add to the bottom line of a company. Not via extra profit but definitely by costs savings. A great treasurer has minimised bank (transactions) costs, has the FX exposure hedged at minimal costs and optimised his cash (investments). Therefore a treasurer is often a positive business case to a company Even for smaller companies a fractional or part-time treasurer or treasurer-as-a-service can add value at limited costs. In a majority of my assignment I realised at least some costs savings, in several of mine if realised costs savings that could have bought a small treasury team! Conclusion While the cost of maintaining a treasury team is apparent on the surface, the hidden costs of not having one can be far more detrimental. Companies without a dedicated treasurer or treasury function expose themselves to significant financial risks, higher borrowing costs, potential liquidity crises, and missed growth opportunities. Investing in a skilled treasury team is not just about managing costs; it is about safeguarding the company’s financial stability and ensuring long-term success. In the complex and dynamic world of corporate finance, the value of a treasurer is immeasurable, and their role is indispensable. 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 to get more information. Notice: JavaScript is required for this content.
Franklin
The Different Types of Treasury Support: Comparing Interim, Fractional, and Consultancy Roles
This article is written by Pecunia Treasury and Finance. In the evolving landscape of corporate finance, companies often need specialized financial leadership but may not require or cannot afford full-time executives. This is where roles like interim treasurer, fractional treasurer, and treasury consultant come into play. Each brings a unique set of skills and functions tailored to the needs of the organization. Let’s explore the differences between these roles and how they can benefit businesses. Interim Treasurer An interim treasurer is a temporary executive brought in to manage a company’s treasury functions during a transitional period. This role is often critical during times of significant change, such as a leadership gap, restructuring, mergers, or acquisitions. Key Responsibilities of an Interim Treasurer When to Hire an Interim Treasurer for Treasury support Advantages of an Interim Treasurer for Treasury Support Fractional Treasurer A fractional treasurer is a part-time executive who provides ongoing treasury management services to one or multiple companies. This role is ideal for smaller businesses that need expert financial management but do not require a full-time treasurer. Key Responsibilities of a Fractional Treasurer for Treasury Support When to Hire a Fractional Treasurer for Treasury Support Advantages of a Fractional Treasurer for Treasury Support Treasury Consultant A treasury consultant is an external advisor who provides specialized expertise on a project basis. This role focuses on specific challenges or opportunities within the treasury function, offering solutions and strategic insights. Key Responsibilities of a Treasury Consultant for Treasury Support When to Hire a Treasury Consultant for Treasury Support Advantages of a Treasury Consultant for Treasury Support Choosing the Right Solution The choice between an interim treasurer, a fractional treasurer, and a treasury consultant depends on the specific needs and circumstances of the business. Also Read
Should You Ignore FX Forecasts?
In our recent webinar, we delved into the often-debated topic of the accuracy of FX forecasts. The discussion was illuminating, providing a mix of critical analysis and practical advice for businesses navigating the complex world of foreign exchange. Here are the key takeaways from the session. The Reliability of FX Forecasts One of the central themes of the webinar was the inherent limitations of FX forecasts: Harry Mills, Director @ Oku Markets: “Banks spend a lot of money and effort in producing predictions for future FX rates: my argument is that they’re just simply following the spot rate.” Forecast data from banks, economists, and analysts surveyed by Bloomberg show how period-end exchange rate forecasts can change over time; with the main driver on the forecast being the underlying spot price at the measurement time. The following images show how the Q1 and Q2 forecasts for GBPUSD changed over time, mostly following the spot price. And here we can see all available future forecast periods that seem to reflect movements in the spot rate, more than anything else: The Practical Use of FX Forecasts Paul Plewman, Chief Operating Officer @ Currency Transfer: “If it’s titillation and just casual interest in what the bankers are putting out there then of course read it, enjoy it, and have a laugh at them at the end of the quarter…but if you’re trying to price your business based on the future forecasts that the banks are pumping out then a word to the wise.” This advice is crucial for businesses: while FX forecasts can be interesting, they should not be the sole basis for critical financial decisions. An Alternative Approach: Focusing on Volatility A more effective approach to using bank FX forecasts, is to model and price volatility and consider the likely trading range for a given currency pair across a time period. Harry Mills, Director @ Oku Markets: “Model volatility instead: think about volatility instead of a directional move.” By focusing on volatility, businesses can better prepare for a range of potential scenarios, rather than relying on often inaccurate directional forecasts. This proactive approach can help mitigate risks and enhance financial stability. Aligning FX Management with Business Goals A key takeaway from the webinar was the importance of aligning FX management strategies with broader business goals: Paul Plewman, Chief Operating Officer @ Currency Transfer: “What are your goals? It doesn’t matter where the forecast may or may not be. What are your business goals and does the current market condition drive into that and deliver to that?” This perspective emphasises the need for a strategic alignment between FX management and overall business objectives. Understanding and prioritising business goals can help in making informed decisions that support long-term success. The Necessity of a Hedging Policy Harry Mills, Director @ Oku Markets: “Every business should have one, it doesn’t need to be War and Peace, and could very well simply be a single page with: how much, how far, how often, whom, and then why..” A robust hedging policy provides a framework for managing currency risk, ensuring that businesses are prepared for market fluctuations. It doesn’t need to be overly complex, but it should clearly outline the key aspects of the hedging strategy. 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 to get more information. Notice: JavaScript is required for this content.
Harry
Exploring FX Derivatives: Forwards vs Futures
This article is written by Kantox In a previous blog, we discussed the differences between currency forwards and currency options. We argued that automation technology is tilting the debate in favour of currency forwards. Today we tackle the more subtle, yet important differences between a forward contract vs a future contract. As companies look to manage foreign exchange risk, they naturally turn their attention to FX derivatives instruments like forward contract, future contract and options. There are, of course, other possibilities. For example, when several business units operate under the same corporate roof, companies can attempt to manage risk in a more ‘natural’ way by netting out exposures without using FX derivatives. Surveys show that derivatives and netting are the two strategies of choice for risk managers. According to a recent Euro Finance survey, 62% of treasurers favour using FX derivatives. Still, this raises the question: what type of FX derivatives should companies use? Forward vs future: so similar, yet so different What are the main similarities? Scientists inform us that humans and chimpanzees share about 98.8% of their DNA. The same could be said for a forward contract and future contract. Both are contracts that specify the amount of the currency to be exchanged, the exchange rate, the delivery date or value date, and settlement conditions.I n both cases, one party agrees to buy a currency at an agreed-upon date in the future from a second party, while the second party agrees to sell and deliver it at precisely that date. The exchange rate that features in both contracts is freely determined in currency markets. That describes the ‘shared DNA’ between currency forwards and currency futures — and it’s quite a lot. But what about the differences? The humans/chimpanzee analogy still works: similarities may be numerous, but the differences are quite substantial as well. Explaining the key differences As mentioned above, futures contracts are contracts for buying and selling a currency against another at a predetermined date in the future. The first difference to note is the institutional organisation of currency markets and its double structure.While currency futures are exchange-based or centrally organised, currency forwards are, just like FX spot markets, decentralised or OTC-based (OTC stands for ‘Over-the-counter’). In centrally organised markets, a company known as an exchange sets the rules that participants have to follow. By far the largest futures exchange is located in the U.S. city of Chicago: the CME Group. There, currency futures are traded alongside a wide range of other financial and commodity derivatives including interest rate futures, stock index futures and many commodity futures. One key aspect of the centralised organisation of futures markets is that the exchange acts as a buyer to every seller and as a seller to every buyer. The central position of the exchange, acting as a clearinghouse, virtually eliminates credit risk for participants. This stands in contrast with a decentralised or OTC setup, where buyers and sellers perform mutual credit checks. In return for the virtual elimination of credit risk, a centralised exchange establishes a number of rules that set currency futures markets sharply apart from the deregulated and decentralised currency forwards markets. The most important rules set by exchanges are the following: Forward contractFuture contractInstitutional organisationOTC, or ‘Over-the-Counter’, i.e., decentralisedExchange-based, i.e., rules are centrally determinedContract sizeNegotiated between the partiesStandardisedDelivery dateNegotiated between the partiesStandardisedSettlement At value datePositions are marked-to-market on a daily basisDelivery procedureCurrencies are exchanged at expiration (except for NDFs)Positions are cash-settled (only 1%/1.5% take delivery)Counterparty riskYesNo (the exchange acts as buyer and seller) Choosing the best derivative: forward or future contract? How do the above-mentioned differences between a forward contract vs a future contract influence the choice of corporate treasurers as they manage FX risk? Surely the most meaningful differences are related to cash management issues. Let us see this point in more detail. To ensure the integrity of futures markets, futures exchanges require participants to make a good faith deposit known as initial margin every time a trade is initiated. It is not a downpayment. In addition, positions are closed out every day and reopened at the start of trading on the following day. While gains are added to the account, losses diminish the cash balance. The minimum amount that must be maintained at any given time in the account is called the maintenance margin. If a participant’s funds drop below the maintenance margin level, a margin call requires them to add more funds immediately to bring the account back up to the initial margin level. Note that these margin requirements are different for different types of trades (hedging, speculation, etc.) And it’s not over yet. For each currency futures contract, the exchange can unilaterally decide to alter the size of the initial and maintenance margin, depending on market volatility considerations, It is not difficult to see where that complexity leads to: currency futures create potentially costly cashflow effects that are hard to predict. This cannot be good news for corporate treasurers seeking to manage currency risk, especially at a time when: New trends concerning currency managers: Currency automation When comparing currency forwards and currency futures, cash flow-related issues top the list of concerns of risk managers, tilting the balance in favour of the former. Advances in Currency Management Automation may be inclining that balance even further.Why? Consider the following additional advantages stemming from automated FX solutions using forward contracts: Conclusion: speculation and risk management Currency futures represent an attractive tool for speculators seeking to make leveraged bets on exchange rates. In fact, the original aim of futures exchanges was to increase market liquidity and broaden the number of participants by bringing in speculators into relatively illiquid commodity markets. But market liquidity is not really a concern for FX risk managers. The sheer size of the OTC FX markets, at about $7.5 trillion a day, makes that clear. When comparing currency forwards and currency options, operational complexity, and traceability-related issues. From this perspective, the impulse created by automated solutions may further strengthen the position of currency forwards as the FX derivatives instrument of choice for currency risk managers. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or…
HedgeGo Safety Margin – A proposal that makes the difference
This article is written by HedgeGo What’s going on and what will go on Let’s come to the point quickly. Times are going to change and it will not stay for a short hello. There is a sustainable shift in fundamentals that will have a big impact on the markets in general and the FX markets in particular. If we first look at the inflation, trends are already manifesting evidently. This is not just a regional phenomenon, as inflation rates go up sharply in all major countries and currency zones, additional inflation is fired up by increasing price expectations. Nothing “massive” has happened yet, but you already can see that long-term loans are getting more expensive. Even more important for the FX market is, that higher volatility of interest rates will cause higher costs of securing it. How to address the situation Still, there are companies that believe that long term opportunities will outweigh hard hits in certain years. There is bad news for them. It is time to reconsider strategy, as actively managing FX risk can become a real game changer in international treasury. So, what can be done to take on the volatile nature of the future? Industry had an alternative to a “non-hedging” approach, the well-known 80%-hedging standard. For most of the companies using this way to hedge exposures, it became a part of Treasury DNA. However, still relying on rigid structures might become a problem in the coming years. What we need is a flexible way of dealing with threats, building safety margins with occurring opportunities while being financially well-equipped for hard hits. Introducing the idea of safety margins Treasury in international environments is all about managing risks but also using trend-supported opportunities. That’s why we came up with our “HedgeGo Safety Margin” system. 22 years of intensive consulting to international companies made us realize, that opportunities must be used to build up reserves for bad times. If you dig as deep as we do, trends become more reliable factors to improve financial results. Our internal consulting files showed a clear superiority of our “HedgeGo Safety Margin” approach over non-hedging or 80-hedging approaches. Ask for our fact sheets here. How does the HedgeGo Safety Margin work We defined the HedgeGo Safety Margin as: The yearly surplus (in %) gained for your financial result by using HedgeGo compared to ordinary hedging or “no-hedging” approaches. Being experts for the FX market for over 20 years, we established a data set up that allows us to dig deeper and understand sooner which trends are going to be established. We aim to deliver suggestions for an improved financial result by beating non-hedging or 80%-hedging performances. Including the first weeks 0f 2022, we succeeded in doing so, making our clients enjoy a 7% safety margin p.a. to comparable hedging strategies. How does the HedgeGo Safety Margin work in practice? Our internal system creates 4-6 order suggestions per year for one currency pair. For costs, that means good news, as we don’t follow daily technical approaches rather than building an understanding for trends. 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 to get more information. Notice: JavaScript is required for this content.
PSD3: The main changes to come for your business
This article is written by Trustpair The first Payment Services Directives (PSD and PSD2) have impacted our businesses. We have to go through stronger security measures to complete online payment transactions. While it has been successful in reducing fraud, the European Commission is now working on PSD3 to bring forth more regulations. Keep reading to learn the details! Do you have any questions, need any guidelines, or require any help in Treasury management? Treasurymasterminds is an online community of Treasurers who can provide you with the assistance you need in anything Treasury management. You can start a discussion on the forum to get the help you need. Don’t know how to start a discussion? Learn how to start a discussion on the forum. What is PSD3? PSD3 stands for Payment Service Directive — the third version of it. It’s a set of rules and requirements for payment services in Europe regulating how banks, payment institutions, and third-party providers process payments and financial data. PSD is the regulation that supported the development of Open Banking services. Its goals are to: PSD3 is still in its early stages and the directive is being worked on by the European Commission. While organizations have to start preparing for it, PSD2 is still the regulation to follow for now. Also Read PSD3 vs PSD2: what are the key differences? PSD2 and PSD3 share the same goals of creating more secure standards online for money services to: In the same way that PSD2 offered an improvement over the original PSD rules and requirements, PSD3 will be the natural evolution of PSD2. It’s not that PSD2 hasn’t been successful: regulatory institutions have declared it has enhanced security, fostered innovation, and helped develop Open Banking. But there is always room for improvement, which is why the European Commission is currently working on PSD3. The main goal of PSD3 is to harmonize even further the payment market across the EU and the EAA, reducing the space for national variation. To achieve this, the original PSD2 regulation will be split into two distinct elements: The creation of PSR means the scope of PSD3 will be far greater than the second iteration of the Payment Service Directive. The European Commission believes this will help stay up to date with the financial and payment landscape. PSD3: how will it impact payments? As the first and second versions of the Payment Service Directive did, PSD3 is forecasted to give a little shake to the payment industry — in Europe, but also to organizations worldwide that do business with European entities. While all the regulatory requirements haven’t been finalized yet, one thing is sure: PSD3 will impact the financial market (banks PSPs and fintech companies) and its consumers on the operational and legal sides. Organizations will need to create (or upgrade) new systems to comply with the new rules. Here are some of the expected requirements of PSD3: PSD3: what is the calendar? The third PSD PSR texts are currently under review by the European Parliament and European Council. While we don’t yet know the exact timeline, we know that: The European Banking Authority (EBA) also recently published an opinion which identifies new types and patterns of payment fraud, with solution proposals. This will without a doubt inform the shaping of PSD3. The good news is: you don’t have to wait until then to make your payments more secure. Trustpair is an anti-fraud software that completely eradicates the risk of third-party fraud in your business. Our solution provides ongoing account validation, checking your suppliers’ data in real time. This way, you always know who you’re paying, regardless of where your suppliers are located in the world. According to our latest survey, 96% of US businesses were targeted by at least one fraud attempt in 2023. Using Trustpair means knowing you won’t fall victim to CEO fraud or vendor fraud. Plus, we help you stay compliant with international regulations — and when the time comes, that will include PSD3 too! PSD3 is the new iteration of the Payment Services Directive PSD in the EU. It will replace PSD2 around 2026, aiming to increase customer protection, level playing field between banks and third party service providers, and foster innovation across Europe. 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 to get more information. Notice: JavaScript is required for this content.
Stripe and Coinbase Integrate Crypto Services
Coinbase and Stripe have recently announced a partnership to promote the global adoption of cryptocurrencies. This collaboration aims to enhance the financial infrastructure by making crypto transactions faster and more affordable. Read more about the partnership in Coinbase + Stripe team up to expand global adoption of crypto Key Points of the Partnership: 1. Integration of Technologies 2. Global Reach and Accessibility 3. Benefits to Users and Businesses 4. Market Impact 5. Background Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professionals, Alex Ilkun and Patrick Kunz, who are also Treasury masterminds board member Q: Do you see the partnership between Coinbase and Stripe to facilitate the increased demand for crypto payment in Corporate Treasury? If consumers are using crypto payments more should companies look to adopt it more? Alex Ilkun provided several insightful comments regarding the recent partnership between Coinbase and Stripe, focusing on the global adoption of cryptocurrencies. His views are captured below: 1. Benefits to Users and Businesses:I don’t quite see the speed of payments to typically be an issue in the corporate world, save for, possibly, M&A transactions, but it would be quite a niche and an infrequent use case for most companies. What could be a use case for corporates is the ability to make payments without being subject to cut-off times. However, it would require a significant penetration for that to happen since the parties will need to send and receive the funds, and I have doubts that penetration will occur. 2. Background and Concerns:My biggest concern about cryptocurrency usage by corporates is their seemingly widespread malicious use. Due to the anonymity it offers, cryptocurrency is enabling black market participation and sanction circumvention. The ease with which significant amounts can be transferred is not comparable with the logistics associated with suitcases of cash. As a corporate, it is a reputational matter to be involved in this structure. Blockchain technology boasts the ability to trace all the history of transactions, allowing you to see each unit of cryptocurrency travel between wallets. It’s easy to imagine a situation where a wallet is exposed to be criminal, making all the currency units that traveled through it tainted. Could a corporate that used one of those currency units be exposed to claims of engaging in criminal activity regardless of how remote? I’d claim yes as it would make a great story that would go viral. Now imagine a criminal network on purpose engaging with reputable companies to establish their wallet numbers? That would make a perfect recipe for a new era of digital crime. 3. Final Argument Against Cryptocurrency Use:My final argument against the use of cryptocurrency is that the currency should be a REASONABLE store of value. There are cryptocurrencies that are pegged to fiat, but it automatically reduces the range of currencies that can be used. Corporate Treasury will not hold significant amounts of funds in crypto as their value will change significantly in reporting currency. Therefore, at worst fiat will need to be exchanged to crypto for each sizeable settlement which is hardly efficient.” Patrick Kunz, CEO and Founder of Pecunia BV Treasury and Finance, Comments I would like to see Crypto as a payment type, not looking at it from an investment class perspective, so the risk is like just another foreign currency. The crypto can be used to send payments around quickly but there are some issues: (1) The transactions costs are not always clear up front. For some crypto your transaction costs are a factor on time and speed of the transaction (2) The transaction speed is not known up front (3) At the receiving end the crypto still bears price risk (i.e. like it is a foreign currency). (4) The anonymity of the receiver wallet could make it difficult to make sure there is no fraud involved. This doesn’t mean corporates shouldn’t look into it. To convert all their payments to crypto payments just for speed or transaction costs doesn’t make sense; we just have good alternatives for it. However, on the acceptance side I think corporates should not ignore it. If their market/customers would like to buy your goods with crypto a company should consider it. Stripe does offer the (immediate) exchange into fiat currency so quickly eliminating the price risk of crypto. A slight issue may incur if you have to do refunds in the same currency and buy back the crypto, but in a way this is also the case with FX risk. With the help of the PSP the hurdle to accept crypto as a payment type has decreased, using crypto also for pay outs and payments is another hurdle to take. Conclusion Overall, this collaboration between Coinbase and Stripe is a strategic move to leverage their respective strengths and drive the mainstream adoption of cryptocurrencies, making digital finance more inclusive and efficient for users worldwide. Recommended Reading 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 manage Notice: JavaScript is required for this content.
The Do’s and Don’ts of Payment Runs
This article is written by HedgeFlows Managing accounts payable is a critical component of financial operations for businesses. Efficiently handling numerous invoices and payments can be a daunting task, but with the right process it becomes streamlined and automated. This article delves into the world of payment runs, shedding light on its benefits, best practices, and potential pitfalls to avoid. Five Practices for Optimal Payment Runs Five Payment Runs Mistakes to Avoid After a Payment Runs is Made Following a payment run, there is typically a reconciliation step where payments are recorded in the accounting system and reconciled against the bills that have been settled. Modern accounting systems and payment automation software can automatically reconcile payments and invoices. It is common practice to send remittance notes or emails to notify a recipient when their payment is being processed. This provides details regarding the bills or other payables that the payment encompasses. This practice is optional but fosters stronger relationships with suppliers and mitigates the risk of miscommunication down the line. 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 to get more information. Notice: JavaScript is required for this content.
The Chain: Building resilient financial networks
This article is written by Cobase Fleetwood Mac’s “The Chain” is a powerful anthem about strength and connection, qualities that are just as essential in the world of financial operations. In this blog post, we’ll use the song as a metaphor to explore the importance of interconnected financial systems and the robust, reliable links needed to construct a well-integrated financial infrastructure. We’ll discuss how to ensure seamless connectivity and resilience, enabling your business to withstand economic fluctuations and thrive in a competitive landscape. The foundation of interconnected financial systems Interconnected financial systems form the backbone of any successful business. Like the links of a chain, each part of the financial system must work together seamlessly to support overall business functions—from accounting and procurement to sales and customer service. A well-integrated system ensures that information flows freely between departments, fostering better decision-making and improving efficiency. According to a report by Deloitte, companies with integrated financial systems see a 20% improvement in decision-making speed and accuracy due to enhanced data flow between departments. Strategies for building a resilient financial network Emphasizing connectivity and resilience Connectivity and resilience are key to maintaining a strong financial network. Just as “The Chain” emphasizes the unbreakable bond among its members, your financial network should be designed to withstand pressures both from within and outside the organization. Regular reviews and updates of your systems and processes can help maintain this strength over time. Regular system reviews and updates are essential, as reported by PwC, which notes that ongoing system maintenance can reduce system failure risks by up to 40%. Conclusion: the unbreakable link By viewing your financial operations through the lens of Fleetwood Mac’s “The Chain,” you can appreciate the critical role of connectivity and resilience in achieving business success. Building and maintaining a resilient financial network requires commitment to integration, standardization, and collaboration. With these elements firmly in place, your financial operations can act as a powerful, unbreakable chain driving your business forward. 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 to get more information. Notice: JavaScript is required for this content.