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Would you like to know how you could better manage your business’s treasury?
Discover what treasury management is, why it is so important and what are the keys to keeping good control of the money that comes in and goes out of the company.
With effective management, you will improve profitability, avoid situations of low liquidity and be able to make decisions with greater peace of mind.
What is treasury management?
Treasury is like the financial heart of the business: it drives, regulates and distributes the “blood” that makes the company run: money. It is the system that ensures that things continue to function normally, such as paying wages and salaries, placing orders, paying taxes or investing in machinery or new facilities.
Treasury management refers to the set of actions whose aim is to control and optimise the inflow and outflow of money. In other words, knowing when you will collect payment, when you will have to pay, and ensuring that there are always resources available to meet obligations to suppliers or other creditors.
Even profitable companies can have problems if they don’t manage their treasury well. A single imbalance can jeopardise all day-to-day operations. That’s why having liquidity is as essential as having revenue.
Why is treasury management so important?
Many businesses close down not due to lack of profits, but rather due to lack of liquidity. And having invoices pending collection from customers does not pay the wages or the office rent.
Good treasury management allows you to:
Avoid unforeseen low availability of funds or situations beyond the operation of the business.
Better plan investments, knowing when you will have the funds to make them.
Have more negotiating power with suppliers, with financial institutions and with customers.
And, above all, make decisions with more confidence and without emergencies.
The main objectives are:
- Guarantee liquidity. Have enough money available to meet immediate obligations.
- Optimise surpluses. Invest excess liquidity with short-term deposits or money market funds.
- Minimise financial costs. Anticipate imbalances to access the best financing.
- Take advantage of banking products and services. Long-term loans, credit facilities, trade discount, reverse factoring or guarantees can provide a breathing space and flexibility to adapt to your collection and payment cycle.
Ultimately, controlling treasury means controlling the pulse of the business: it allows you to have complete peace of mind and move forward on a secure footing.
Keys to correctly managing treasury
Manage your treasury well is not just checking numbers: it is looking beyond, anticipating and making strategic decisions. Here are the main keys to doing it successfully:
- Forecast collections and payments. Have a clear calendar with the expected dates of recurring payments and expected collections to detect periods with a risk of imbalance.
- Daily monitoring the treasury position. Start each day knowing how much money you have in your account and what movements are planned.
- Regular bank reconciliation. Check that bank transactions match internal records to detect pending collections, duplicate receipts or unforeseen expenses.
- Digitalisation and automation. Using management software that connects with the bank, generates automatic reports and helps simulate scenarios. It cuts down on human errors and makes it easier to display information.
- Knowledge of banking products and services. Having a clear vision of the financial options offered by entities allows you to better plan your liquidity and avoid more expensive emergency solutions.
- Interest rate hedging. Products that protect you against rate increases while providing stability and predictability in the cost of loans.
- Sureties and other guarantees. The bank is responsible in the event of non-payment and this provides security in transactions with third parties or in public tenders.
- Good relationship with financial entities. Smooth communication facilitates access to timely liquidity solutions and better advice tailored to your business.
What if I don’t have a treasury department?
Many small businesses or freelance professionals do not have a specific finance department, but that does not mean they cannot manage it well. With a little order, simple tools and the willingness to review information regularly, a lot can be achieved.
Start by:
Establishing a treasury plan. Planning ahead for expected collections and payments in the short and medium term helps to anticipate imbalances, detect specific financing needs or identify surpluses to invest. Review and readjust the plan according to actual activity.
Use online banking and management applications. Many banks offer notification services, balance alerts, and tools to show incoming and outgoing money flows.
The key is not to leave the treasury to mere intuition. Paying attention to cash flow, having a small safety cushion, and anticipating spending peaks can make the difference between growing or getting stuck.
Treasury as a strategic tool
As we said before, treasury goes beyond numerical aspects. It is the strategic tool that allows you to manage, react and grow with confidence. Having a clear vision of your liquidity gives you peace of mind, the ability to react and a basis for growing your project.
At Creand we support you with personalised solutions, digital tools and expert advice so that you always have financial control of your business. Talk to your trusted manager to transform your treasury into an opportunity.
