Question

Over the last 20-30 years, Treasury Departments have reduced significantly the number of full time employees working solely on Treasury issues. What changes has allowed Treasury to process more data, provide more and better analysis and improve the Treasury process?

Answer 1

Answer:-

Changes needed to improve the treasury process :-

1.Centralize The Treasury Functions Globally

Many companies did centralize treasury functions at headquarters, supported by a few part-time treasury and finance professionals in developing markets. But most treasuries retain too many decentralized components, and few are as centralized in developing markets as they are in developed ones.

The ideal model would centralize policy setting, decision making, and execution—though not necessarily personnel. Consolidating the treasury function under the global treasurer can help by giving managers an aggregate view of their cash flow and risk positions—a view they need to optimize debt and investment portfolios and to minimize taxes and financial risk. Moreover, the operating model and infrastructure that connect a company’s various activities, portfolios, and risks ensure that even regional treasury groups have the quickness and rigor needed to make the most of activities in volatile markets

        2.Strengthen governance

Strengthening treasury governance requires a thorough review of policies and processes for core activities, followed by testing to ensure that they work well in practice and by comprehensive training.

         3.By Enhancing Treasury management system

It can be done by improving the spreadsheet programs and by integration because if there is no integration than we continue to encounter treasurers whose management system includes as many distinct spreadsheets, often reflecting different systems used by businesses in different geographies.

           4. Increasing the accuracy of cash flow forecasting

A company’s treasury function should aggressively analyze cash flow forecasts and different cash scenarios, consult with the company’s businesses in all global regions on how they might best utilize cash economically, run currency “what if” scenarios, and provide a multinational company with better intelligence for the use of cash. Liquidity forecasts, measuring liquid assets and credit sources to predict whether a company will be able to pay its debts and obligations, can help it manage cash by testing stress scenarios for differing market conditions. Cash flow forecasting is a structured and iterative process that requires treasurers to seek input from the field and various business locations.

5. Manage Working Capital In developing Markets

Current Assets Minus current liabilities is the working capital that company uses in day to day operations

it requires spending lot of time with business units in their various regions to understand how they pay suppliers and figure out customer behaviour .