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5 ways treasury management can help your business stay healthy

By Cody McAlester | June 2, 2020

Stethoscope on a calculator

States are easing lockdown orders and federal stimulus funds are flowing through the economy, but many U.S. businesses are still in rough shape. The lasting impact of the economic shutdown required to fight the coronavirus pandemic will linger for some time.

Tammy Foy of BOK Financial’s treasury management team suggests five healthy options for businesses of all sizes—even after the crisis abates.

1. Good circulation is the key to good health.

In today’s environment, companies should look to optimize working capital to efficiently and effectively manage receivables and payables.

Reducing the cash conversion cycle by optimizing the day’s sales and payables outstanding should be front of mind for every treasury department to ensure proper cash flow for the business.

To speed up receivables, Foy suggests solutions that will help you accelerate collections, such as remote deposit capture, lockbox, ACH and merchant services. With payables, businesses should consider virtual corporate cards, which can allow for early payment discounts with vendors while extending the time for payment to the card provider.

Alternative customer collection options like early settlement discounts and factoring are other ways to help speed up the cash cycle.

For businesses strapped for cash today, a more effective option might be streamlined processing through automation. Straight through processing based on electronic invoicing, collecting, application and reconciliation will reduce the lag time on cash receivables. But it also has the added benefit of reducing human error and freeing up employee resources in your treasury department.

Additionally, interactive lockbox features enable immediate deposits for check collections received outside of the lockbox with the ability to make real-time corrections to any items with errors.

One easy move: Reduce and consolidate your bank accounts—and with fewer banks—to reduce costs and provide better visibility and help make cash flow easier to manage.

2. Paperless shouldn’t just describe the toiletry aisle.

Going green isn’t the only reason to go paperless. Making the transition from paper to electronic-based operations is essential to support remote operations, create workflow efficiencies and reduce the risk of fraud.

Advancements in technology have revolutionized receivables tools, such as remote deposit capture, remote lockbox scanning and electronic business invoicing. And payables tools aren’t far behind. Virtual corporate cards, online bill payment and outsourced payables are all tools available through most financial institutions today.

“More advanced options like electronic signatures, and digital sharing and storage of documents have given businesses with these technologies the resiliency to weather three, six, nine months of work-from-home operations,” said Foy.

3. Stay hydrated.

Minding your fluid levels is good physical advice, but it’s also good fiscal advice. Managing capital liquidity is essential during an economic downturn. Modern businesses have adopted treasury features like real-time daily cash position and cash flow forecasting. This provides increased visibility and allows treasury teams to optimize their companies’ balance sheets during times of economic duress.

While liquidity is important for immediate expenses, businesses should also be aware of additional risks in today’s economic environment.

“With interest rates back to Great Recession levels, businesses should review and maximize interest and earnings credit rate options where possible,” said Foy. “If your business is international, hedging foreign currency risks during a volatile economic cycle is critical as well.”

4. Minimize exposure.

Account fraud and phishing attacks are nothing new, but malicious cyber actors are attempting to take advantage of public concerns about COVID-19.

Fraudsters are impersonating health organizations, such as the World Health Organization and the Centers for Disease Control and Prevention, to lure victims into clicking on links or attachments and providing sensitive information. Many of these scams use fear-based language such as “outbreak in your area,” “updated list of new cases,” or “safety measures” to prompt victims to react quickly.

Other scams include prompts to entice bogus online purchases, such as vaccines or supplies, investment opportunities and charitable donations. Now is a great time to review and identify gaps in your organization’s risk management protocols and to add fraud protection tools like positive pay check matching authorization.

And to further curb the risk that fraud poses to your business, explore cyber insurance benefits with your financial institution.

5. Consult an expert.

As in the medical field, it’s best to consult the experts when things are “less than healthy” in financial matters, too. When the waters get murky, most organizations turn to their treasury department for advice.

Because treasurers interact with all areas of the company, they often have the most comprehensive view of your company. But who can your treasury team turn to for advice? Answer: Their financial institution.

“BOK Financial is focused on providing the advice and support to help treasurers strategically lead their organization during an economic downturn,” Foy said. “Having an experienced banking partner in your corner who provides this ongoing support makes navigating times like these a little more comfortable.”