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Citi Perspectives for the Public Sector |
2014
21
The bottom line is that administrative
shortcomings and less-than-adequate risk
management systems eat up capital that could
be directed to lending or investment activities.
Enter best practices. Treasurers and finance
managers looking to find efficiencies and
revamp processes can tap a wealth of
information and expertise from their global
banking partners. Citi, for example, brings to
the table a veritable world of insight into the
best practices of well-run public and private
sector treasuries alike, plus vast experience
mapping out paths to potential improvement
based on them.
Cornerstones of improvement
Generally speaking, model treasuries are
built on the cornerstones of optimization,
standardization, automation and control:
• Optimization of cash management practices
commonly begins with the rationalization
of bank partners and bank accounts.
Streamlining banking relationships and
reducing the pure volume of accounts that
must be managed can drive down transaction
fees, minimize foreign currency exposures,
simplify the consolidation of cash balances,
and ease liquidity management. The best-run
global treasuries tend to work with a single
core banking partner, while still maintaining
local banking relations, as necessary, for
petty cash, payroll and specific collection
accounts, for instance.
• Standardization allows core funds
management functions to be performed and
monitored centrally. Payments, for example,
are often centralized via an in-house bank,
or shared service centers are put in place to
help reduce the risks of errors and fraud and
enhance reconciliations and auditability.
• Automation extricates personnel from
repetitive manual tasks so that they can
focus on core treasury management
activities, and also can free up financial
resources that can be invested in operations
and/or used to support lending activities.
Reconciliations, for example, can be
automated via the standardization of
transaction information exchanged with
banks. Even investment transactions can be
automated, potentially eliminating the need
to manually invest operational balances.
• Control of transactions, funds and risks
depends on timely and accurate data. Card
programs, such as prepaid, travel and
procurement card programs, are commonly
used to control and monitor expenses
and also help ensure compliance with
expense policies. On the banking side, direct
interfaces between Enterprise Resource
Planning systems and bank systems provide
cash managers with real-time account and
transaction information to better manage
and monitor their positions. Tools that
aggregate data and provide visibility into
account balances, currency and transaction
data, and also financing obligations aid
decision making, cash flow forecasting and
risk management.
Technology, information and experience
provide the critical levers for streamlining
and harmonizing treasury activities and
reducing administrative costs. Institutions
pursuing more efficient and cost-effective
cash management practices, no matter at
what stage of their journey, will find that many
opportunities and solutions can be unlocked by
working with their banking providers.
■
Technology,
information
and experience
provide the
critical levers
for streamlining
and harmonizing
treasury
activities and
reducing
administrative
costs.