How to Build Financial Resilience For Your Business

November 8, 2023

In an economic climate like today, resilient treasury management is more important than ever to businesses. Adhering to treasury management best practices refers to a business appropriately managing its cash flow, income, and expenses. Specifically, resilient treasury management means planning for a rainy day, having up-to-the-second data, and monitoring external financial threats to your supply chain.

Treasury and risk management are critical to ensuring your business survives. However, while businesses are experts in their specific domains, they may sometimes face challenges when it comes to acquiring the required skills or technology to ensure they manage their treasury in the most resilient manner possible. Fortunately, with advice from professionals and personalized financial services, you can appropriately integrate treasury management best practices and concentrate on operating your business.

The Importance Of Corporate Treasury Management

Corporate treasury management is ultimately responsible for your company’s financial health and well-being. Its functions are multi-faceted. On the one hand, your business must monitor cash flow, ensure that expenses are curtailed, and engage in appropriate practices to maximize revenue. However, that’s not all: Corporate treasury management also means monitoring external conditions, protecting supply chains, and protecting a business against economic downturns and shocks.

Simply put, every business needs appropriate corporate treasury management to survive.

Need more proof of the importance of this function? Consider this: Cash management may save your business. Appropriate cash management increases a company’s resiliency and mitigates initial shocks while also being 21% more likely to keep a business operating in the first place.

What Are the Best Practices For Treasury Management?

The name “treasury risk management” may imply that all you have to do is monitor your cash flow. The truth is much more comprehensive than that. You must properly manage all risk factors and use the appropriate best practices to comprehensively address potential challenges. Some best practices for treasury management include:

• Become more efficient at managing finances: Treasury management is about finding operational efficiencies and saving money along the way. Are you using the latest technology? Finding appropriate financial partners? Consolidating bank accounts whenever possible? Educating business units about internal and external financial threats?
• Monitoring external conditions: Your business has to monitor supply chain problems and prep alternate sources of critical goods. You must also ensure that you adequately monitor investments and accounts to protect against external downturns or shocks that may damage your business.
• Managing potential external risks: Businesses must prepare for many potential risk factors. These include financial risks, supply chain risks, and operational risks. Your business must develop a comprehensive understanding of these risks, how they may hurt your business, and how you can best mitigate any of them. Of course, even the best risk management can’t eliminate all negative outcomes, and you must be ready for any related external management.
• Preparing for the future: A business’ leadership is always only temporary. As such, your business must prepare for the future by designing a robust business transition plan to ensure your business will survive, even without your leadership. Specifically, your business should examine when a transition will take place and how a transition will be managed in the event of the untimely loss of a key business leader.

The Importance of Finding A Commercial Banking Partner

As you can likely surmise, resilient treasury management is not something most businesses instinctively understand. The multi-faceted area requires deep experience across a series of financial knowledge points. To that end, your challenge isn’t just to learn these areas independently: It is often more efficient to find a commercial banking partner proficient in treasury and risk management. Such a partner should fully comprehend the above best practices and be able to implement customized resilient treasury best practices into your business model. This may mean that you need a partner who understands:

• How to maximize revenue collection and advise your business on accessing the right technology.
• What are your disbursement and payable needs, and how can you increase the efficiency and effectiveness of this area?
• How to protect your liquidity and ensure adequate cash flow to meet any possible emergency.
• How to access a vast array of additional financial services.

Final Thoughts

Achieving resilient treasury management is about more than just cash management or appropriately integrating risk management philosophies: It is a comprehensive effort designed to help your business resist shocks and survive business downturns. With appropriate assistance, you can ensure that your business incorporates treasury management best practices and is ready to operate in any business climate.