Bright green background with green asterix with the copy Treasury Management on it.

A Quick Guide To Treasury Management for CFOs

In businesses of all sizes, across all industries, Chief Financial Officers (CFOs) have an enormous amount of responsibility. They navigate intricate financial information, and make decisions that shape the future of their organizations for better or for worse. 

Employing sound treasury management practices, in our opinion, are crucial for CFOs to integrate into their overall financial strategy. In this quick guide to treasury management, we’ll explain what it is, how it can support organizational strength and growth, and make a CFO’s job a bit easier.

Treasury Management Basics

At its core, treasury management encompasses the oversight and optimization of an organization’s liquidity, cash flow, risk management, and financial investments. It involves a range of activities, including:

  • Cash Management: Efficiently managing cash inflows and outflows to ensure liquidity while maximizing returns on excess funds.
  • Risk Management: Identifying, assessing, and mitigating financial risks, such as market, credit, and operational risks, to safeguard the organization’s financial health.
  • Engagement with Capital Markets: Monitoring and taking advantage of capital market activities to secure funding at favorable terms.
  • Making Financial Investments: Strategically allocating financial resources into investments that generate optimal returns while aligning with the organization’s risk appetite and overall goals or values.
  • Building Banking Relationships: Cultivating and maintaining relationships with banking partners to access banking services, credit facilities, and financial expertise.

If that sounds like a lot of work, you’re right. But it’s vital work for maintaining and growing an organization’s financial health. Fortunately, there are tools and financial service partners like Ampersand that can take on some of those tasks and help lighten the workload for busy CFOs. (More on that later in this post!)

Benefits of Prioritizing Treasury Management

Implementing treasury management best practices at your organization has a host of benefits to consider. One major benefit is that it can help ensure your company’s deposits are fully insured by the FDIC or NCUA, which can offer another layer of financial security to firms and give peace of mind to CFOs — and their counterparts in the C-Suite. 

A few more benefits of integrating treasury management into your company include:

  • Enhanced Liquidity and Cash Flow Management: Effective treasury management helps ensure that the organization maintains sufficient liquidity to meet its short-term obligations while also optimizing cash flow to fuel growth.
  • Risk Mitigation: By proactively identifying and mitigating financial risks, CFOs can help shield the organization from potential threats, enhancing its stability and resilience in the face of market volatilities or economic downturns.
  • Optimized Financial Performance: Strategic allocation of financial resources and wise investment decisions can drive higher returns on investments, which in turn can boost the organization’s financial performance and positively impact shareholder value.
  • Cost Optimization: Streamlining banking operations and negotiating favorable terms with financial institutions can lead to cost savings and improved operational efficiency.
  • Compliance and Governance: Treasury management practices can help ensure adherence to regulatory requirements and governance standards, safeguard the organization’s reputation, and potentially mitigate legal risks.

Tips for Integrating Treasury Management into a Financial Strategy

Understanding the importance of treasury management practices is one thing. Seamlessly integrating them into the organization, however, can be easier said than done.

The first step is building a solid foundation within the organization. That involves developing your company’s treasury management policies and practices that align with its:

  • Overall strategic goals
  • Risk tolerances
  • Financial priorities

For example, if your organization is committed to working with financial partners that align with certain social causes, be certain to document what those are. If your company needs to realize a specific rate of return, make it clear in your policies and practices document. To avoid any surprises or hiccups, we strongly recommend collaboration among finance, treasury, operations, and other leaders in key departments. The more buy-in and alignment you can get from your counterparts, the simpler decision making will be later in the process.

To save time and headaches, consider investing in treasury management systems (TMS) and financial technologies (FinTech). This can automate routine tasks, enhance data analytics, and deliver real-time insights into cash positions and market trends.

You’ll also want to conduct periodic risk assessments to identify emerging risks and vulnerabilities. Where they’re needed, implement risk mitigation measures to protect the organization’s financial interests. Along with your periodic risk assessments, make time to regularly — daily or weekly at least — monitor important performance metrics, market changes, and regulatory updates. Your diligence will help you take advantage of opportunities and avoid being blindsided by risks.

The Easiest Path to Integrating Treasury Management Practices

CFOs who don’t have the bandwidth to manage everything discussed in this post so far have another option: let treasury management professionals handle it. 

Relying on a reputable outside partner to handle some of the intricacies of treasury management is the simplest way to implement the practice. At Ampersand, we work with our clients to gain a deep understanding of their goals and requirements for a deposit partner. Then, we leverage our decades of experience and our proprietary technology to place deposits within our trusted Ampersand bank network, continuously monitor our clients’ funds, and make adjustments that align with their goals when needed. 

If you’re not able to handle some or all of the heavy lifting involved in sound treasury management practices, we strongly believe working with a partner — even if you don’t choose us — is a better choice than not implementing any treasury management practices at all.

Learn how Ampersand can help your organization seamlessly integrate treasury management best practices. Contact Ampersand to get started.