Basic HTML Version
40
How Ministries of Foreign Affairs are Improving Financial Management Practices
The need for sound financial management
practices and policies
In order to address these challenges, MFAs have
an invaluable opportunity to learn from the best
financial management practices developed in
the private sector proven successful by central
governments. A Ministry’s central finance
group can gain critical efficiencies by moving
to a model that embraces centralization,
optimization, standardization, automation
and control. Working with a trusted advisor,
such as Citi Foreign Missions Banking, MFAs
can take advantage of the bank’s government
experience, domestic and cross-border
transaction expertise, and leading online cash
management technologies and tools to meet
the unique global demands of public sector
organizations. Citi recognizes that to achieve
these goals is hard. It requires difficult
business process change, a certain level of
investment, and is time consuming. We can
provide a roadmap to gradually implement
key improvements in a reasoned way,
building success.
Centralized cash management drives treasury
efficiency and reduces risk
By centralizing cash management, and
rationalizing banking partners and accounts,
MFAs can reduce the large number of accounts
that must be managed around the world at
the post level, putting control in the hands
of a single entity as opposed to hundreds of
embassies. Global procurement of banking
services ensures cost efficiency when it comes
to fees, implementation and interest rates, and
assures consistent service level agreements.
With a high reliance on cross-border payments,
MFAs can benefit from predictable (contractual)
bulk FX rates offered upfront that yield cost
savings compared to ‘street FX rates’ that
can be very volatile over a budget cycle.
Ministries can reduce compliance cost and
risk associated with meeting the many
global demands associated with anti-money
laundering, terrorism financing and
anti-bribery/corruption prevention.
A further benefit of centralization is the ability
to keep local account balances to a minimum
without risking funding shortfalls, and in turn
enabling finance to maximize returns on overall
balances. The use of Shared Service Centers
(SSC) can deliver economies of scale, and
electronic payments reduce operational and
fraud risk while enhancing reconciliations
and auditability.
Achieving visibility leads to more consistent
decision making
When MFAs adopt a centralized treasury
management platform, such as Citi’s
TreasuryVision
®
, they gain critical visibility
into their accounts and practices. This enables
central finance groups to know where every
dollar comes from and where every dollar goes
in a timely and accurate manner. It also allows
for better management of risks related to funds
movements, account balances and FX positions
across a multitude of currencies, financial
institutions and countries.
The use of a treasury management platform,
such as TreasuryVision, offers MFAs important
reporting capabilities that allow central finance
to view cash positions at global, regional and
local levels; by currency; and on a daily, weekly,
monthly, quarterly or annual basis. Having
vision into cash accounts is vital for monitoring
a Ministry’s most vulnerable asset — cash.
This type of visibility is especially important
for scrutinizing currencies or countries that
are at risk, providing finance teams with the
information needed to make quicker, smarter
decisions in order to meet the ongoing financial
needs of overseas posts and to minimize
potential losses due to political, economic or
other market forces.
A centralized treasury management platform
can allow MFAs to reduce the number of overall
financial decision makers, thus achieving
greater control and more consistent decisions
on approvals for internal payments, travel
of Foreign Service officers, relocations, and
purchases from vendors. In centralizing
procurement decisions, MFAs can lower
the cost of doing business, allowing them
to do more with less, and achieving much
needed efficiency.