Updated: 06/07/22
Treasury managers are always on the lookout for ways to protect the business from unforeseen events that could jeopardise the company's financial stability, while at the same time taking controlled risks that allow the business to grow economically.
For this reason, we present to you the keys to cash control The aim is to achieve the efficient and effective management of a company's financial resources.
Prepare for risks proactively
The simple day-to-day running of a company already puts it at risk, as it is in constant exchange with the external environment and is prone to be impacted by a situation that may or may not be external to it. For this reason, treasury control must take these risks into account and organise itself around those that are considered most relevant.
A correct treasury risk management policy assumes that there are vital and unavoidable risks such as operational mishaps, raw material shortages, loss of liquidity, rising interest rates on loans and so on. Each risk must be considered and decisions must be made about the most efficient way to prepare for them.
Register everything
While you may assume that everything that happens in an organisation is recorded, in the real world this is not the case. Treasury, however, cannot afford not to keep a record of all financial transactions that affect the company.
A good treasury management has at its disposal an innumerable amount of documents that must be properly archived and stored for consultation if necessary. Similarly, a backup is mandatory in order to minimise the risk of losing information.
Centralise to make better decisions
Even if the business has multiple trading activities, being able to centralise information in a single treasury department, and not giving in to the temptation to decentralise that activity, makes a considerable difference to the efficiency of business management.
When all financial information is centralised in a single department, it becomes much easier to understand the true financial reality of the company, allowing better decision-making on key aspects of the business to ensure its long-term continuity. Having a global vision of the business is much more efficient in this case than analysing each part of the company separately.
Mindfulness in cash flow
Nothing puts a company's financial situation more at risk than the loss or incorrect forecasting of cash flow. This is why it is mandatory that the cash management put all your efforts into accurate cash flow forecasting, a vital activity to keep the business afloat.
If done well, this accurate forecasting will help the company to avoid cash shortages and at the same time make decisions that will help it to make better use of surpluses that could generate a profit.
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