Got a troubled treasury department?

• Author: Carmody, Daniel J.
• Position: TREASURY

It's never been more important than now to be aware of all issues that could negatively impact treasury and cash operations. To gain a comprehensive understanding of an organization's current treasury challenges, many treasurers and others are conducting detailed treasury reviews.

These reviews document and benchmark current treasury processes, internal controls, disaster recovery, bank relationships, technologies and personal workload allocation, among other things. When best practices are not incorporated, into each treasury review area, it could indicate a troubled treasury department.

Inefficient Treasury Process

Many treasury departments overly rely on treasury staff for routine daily processes. Though this may work for small-to mid-size organizations, once complexity is interjected into the cash-management process, consider treasury-process reengineering or treasury-automation solutions.

To determine whether a treasury department has inefficient operations, start by documenting all processes in a narrative and flowchart format. All processes should be considered, including bank polling, cash reconciliation, cash positioning and electronic fund-transfer process.

Completing a thorough process documentation will provide a detailed understanding of resources required to complete each. And documenting each process in a flowchart format allows firms to determine, at a summary level, the complexity of each process.

Once all process documentation is completed, critically review each one to determine if it is truly efficient. When reviewing the treasury process documentation, consider these questions:

* How can we streamline this process?

* Is this process secure?

* Is there technology in the marketplace that can assist us in this process?

* What are the risks if we do not enhance this process?

Assuming that there's at least one process that can be enhanced, consider work-flow modification or process-automation technology.

Work-flow modification is typically the fastest and least expensive method for implementing treasury best practices. The goal is to implement more streamlined and secure procedures while utilizing in-house technologies and resources. Changes can be as simple as emailing a document instead of faxing; or as complicated as migrating an entire process from one department to another.

Treasury-technology automation relies on either bank-or third-party software--such as treasury workstations--to enhance treasury operations. Both...