Managing risk with effective treasury policies and technology

Global treasury policies - image of connected continents
Tom Gavaghan
October 5, 2016

How do effective treasury policies protect organizations? Kyriba and Actualize Consulting teamed up to explore key factors that impact the success of an organization in Leveraging Technology to Support your Treasury Policies, an educational webinar designed to provide a deeper understanding of treasury policy best practices. Jamie Christel, Treasury Advisor at Kyriba, and Martha Grant, Senior Consultant at Actualize, discussed a range of opportunities for treasury to improve its outcomes and processes with technology enabled policies. 

Corporate Treasurers today find themselves in a world of ever-increasing risk and uncertainty. This uncertainty is driven by new regulations, geographical expansion, and other types of business complexity. As a result, it has become essential for Treasurers to lead the charge in maintaining thoughtful, up-to-date policies for the various functions their teams perform. 

Technology can be leveraged to better manage, maintain and adhere to formally documented Treasury policies.  A system can help centralize and maintain sensitive information with robust security controls, standardize global workflows, and help Treasury become a strategic partner within the organization.  

Playback recording: Leveraging technology to support your treasury policies

The term policy is generic and requires a clear definition for this blog. When we talk about a Treasury policy, we mean a formal, high-level document that lays out the strategy, risk tolerance, accountability and ownership, and partner relationship management for a particular Treasury function or task. 

Risk Tolerance: This will depend on the industry you are in, the dynamic and vision of your company leadership, and a variety of other factors. Understanding the tolerance or appetite for risk should be required for employees across business units, but it is absolutely essential for Treasury employees, who are performing functions that directly impact the financial security of a company. 

Ownership: Individual roles and responsibilities must be spelled out in a policy, along with the level of authority various individuals are allowed to have, and any requirements for dual authorizations or approval. 

Partnerships: Treasury must inevitably interact with various other teams or departments within a company, such as Accounting for general ledger posting, other business units for cash forecasting, etc. These relationships, and the ownership of any cross-functional tasks, should be captured in treasury policies as well.

Additional reading: How treasury technology supports business continuity planning

Below are some of the core policies we find are most important for Treasurers to maintain. The order or degree of importance will depend on the industry, type, and size of company: 

1.       Bank Account Administration

2.       Debt Management

3.       Payments

4.       Short-term Investments

5.       Counterparty Risk Management

6.       Foreign Exchange

7.       Business Continuity 

8.       Disaster Recovery 

9.       Treasury Technology 

10.   Intercompany Activity

11.   In-house Banking 

Security: Technology can enhance application and data security in a number of ways.  From multiple firewalls to encrypting data in transit and at rest, a system can protect against fraud and access by unauthorized users.  Defining different user rights and access profiles can also guarantee that separation of duties and other policy driven protections are being followed by different partners within the organization.

Standardized Workflows: Creating a single standardized global technology workflow can help ensure that internal controls and external regulations are being adhered to from a policy perspective.  A system is able to document different treasury workflows and represent a clear and complete global process for the entire organization from bank account administration, end-to-end payment processing, or trading policies. 

Strategic Partner: Leveraging technology to streamline processes, automate reporting and reduce manual tasks can help increase productivity and allow your Treasury to become more of a strategic partner within the organization. Increased efficiencies can lead to more time spent on meaningful analysis for capital allocations structures, risk management insight, supplier or customer finance programs, or new or better business intelligence. 

In summary, the opportunity for Treasury teams to protect their organization with formal, high-level policies is not a matter of if but when, given current market conditions. Identifying what is most strategic to your business will help prioritize where to start your policy review. Ultimately, your organization will benefit from technology that can manage, maintain and adhere to formally documented Treasury policies by centralizing and maintaining sensitive information with robust security controls, standardize global workflows. 

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