What is Treasury Management? Understanding its benefits, functions and more

Small business owners have a lot of tasks on their plates on a daily basis, making it difficult to give treasury management the correct amount of attention. But this important element of operation can’t be overlooked just because time is scarce.

The more financial tools a business owner has at their disposal, the more efficiently they can tackle all treasury management tasks.

Learn everything you need to know about treasury management and how Bank Midwest can help your organization flourish in this article.

What Is Treasury Management?

Before jumping into how to manage your treasury in the most effective way, it’s vital you fully understand what this term means.

Treasury management is the number of financial processes and responsibilities of a business that help to optimize cash flow, liquidity and funding. A sturdy treasury management plan can help businesses determine their working capital requirements and establish a method to secure adequate funding. This plan is also part of an organization’s risk management strategy to keep finances from dipping too low.

Treasury Management vs Cash Management

You may have also heard the term cash management and been confused with how it aligns with treasury management. These two terms are actually used interchangeably to refer to the various fiscal responsibilities of a commercial operation.

Treasury Management Blog Illustration dollars and graph

A Treasury Manager’s Role

While not every organization will have a designated person to run financial operations, some businesses have a treasury manager to help manage cash coming in and out of the doors. The typical job of a treasury manager includes:

  • Minimizing financial risk: Knowing what vulnerabilities your organization may be open to is a huge part of keeping your employees and business assets safe. A treasury manager will make decisions that minimize risks and reduce potential problems. According to Deloitte, risk management is considered the most critical mandate assigned to treasury managers.
  • Liquidity management: Treasurers also keep an eye on your business’s financial obligations to ensure the cash entering and exiting your doors meets your required payment amounts.
  • Forecasting cash flow: To keep your organization successfully moving forward, a treasury manager predicts the financial status of your business over a specific period of time.
  • Trade finance: Most companies trade with third parties. It’s their job to make less risky deals and keep practices safe.
  • Corporate finance: Treasurers enable company growth by making decisions informed by relevant financial data. By analyzing insights, they can allocate funds where the most value will be delivered.
  • Organizing payments: Lastly, leaders in the treasury department are responsible for creating and tracking a payment process.

What Are the Available Types of Treasury Management Services?

Enhance treasury management practices by using tools that save time and improve operations, leaving small business owners with more time to accomplish other important tasks.

Here are the treasury management services available through Bank Midwest:

Cash Management

Cash management gives you more control over managing your cash with flexible features like the ability to process ACH transactions, debits and credits, payroll and wires. Small businesses can complete payroll faster and with fewer expenses with direct deposit. Pay your employees directly online, which saves you time and money in the long run.

Cash management allows you the freedom to move your money where you need it, no matter what. This not only lets your customers pay you automatically, but it enables you to pay vendors and federal taxes as well.

With Bank Midwest Cash Management services, you get:

  • Instant notifications and alerts from your computer or web-enabled device.
  • Automatic scheduling and business day cut-off times to manage your funds.
  • Protection from unauthorized account access with dual control authorization.
  • Dedicated help from our team of business specialists.

Online Deposit

If your small business handles a large volume of checks, our online deposit capabilities will come in handy. Use a check scanning software that allows you to upload them to a secure website location to process transitions quickly, efficiently and safely.

Our online deposit services help you:

  • Reduce errors that can arise with manual check processing.
  • Save digital images of the check so you can safely destroy the paper copies and keep online version for your records.
  • Reduce financial risk by always having funds available through quick check deposits.

Web Payments and Merchant Cards

Web payments and merchant card services ensure your organization can accept various forms of consumer payments. After all, customers rarely pay with physical checks (as opposed to business vendors, who may be more apt to use checks), instead relying on debit cards, credit cards and digital wallets.

Web payments can help your business improve its e-commerce strategy. As more customers flock to online buying, your site will need to be fully equipped to accept digital payments. Web payments from Bank Midwest can:

  • Streamline the online checkout process for customers.

Business Credit Cards

A small business may struggle to sustain itself running entirely on a cash budget. Credit has a central place in capital planning, and many businesses leverage credit cards in regular operations, whether to buy inventory, make spot purchases or plug short-term cash flow gaps.

In your search for a suitable business credit card, you should focus on:

  • Interest rates.
  • Credit limits.
  • Daily limits.
  • Annual fees.
  • Cashback rates.

Bank Midwest offers a wide selection of Visa business credit cards to choose from, delivering free online expense reporting, zero fees for additional employee cards and 24/7/365 cardmember services.

Sweep Accounts

Some business owners may be unfamiliar with sweep accounts, which can be a major advantage for companies.

It works like this:

  • A business owner decides a minimum range for their primary operating account.
  • At the end of the day, any funds over that minimum are swept into a separate account.
  • There, the money can earn interest, be invested in stock or a money market account or be used to pay down an existing credit line.
  • If the operating account is under the minimum, funds are automatically swept back in.

A sweep account it’s a way for owners to automate what would otherwise be a tangle of time-consuming transfers, giving them full opportunity to capitalize on short-term investments.

Simple Account Transfers

Any way to make account transfers more efficient can return valuable time and labor resources to small business owners. Traditionally, to complete an account transfer, you must visit a branch and write out deposit slips for each transfer.

However, with cutting-edge cash management solutions from Bank Midwest, you can significantly simplify the transfer process. Initiate a transfer online if the accounts involved are with the same bank as your principal business checking account; plus, you can complete ACH transactions quicker without painstakingly tracking full numbers and routing information.

Fraud Prevention

You don’t want to mess around when it comes to your money, so be sure your business has ample fraud prevention tools it can use to protect its finances.

Bank Midwest understands the importance of robust fraud prevention, providing you with defensive measures like:

  • Positive pay: Match presented checks to previously authorized checks to quickly verify authenticity.
  • Stop pay: Cancel payment on any number of suspicious checks at once.
  • Multi-factor authentication: Require multiple log-in steps, including username, password and registered token or security question.
  • Dual control: Bank Midwest offers dual control for all ACH and wire transactions as an added security precaution.
  • Permission-based access: Decide exactly what data privileges each employee with access to banking services has.

Benefits of Treasury Management

Treasury management can help your organization’s cash flow by using funds appropriately and ensuring that short-term obligations are met. It’s also a big part of risk management as it carefully manages a company’s vulnerabilities and exposures to foreign exchange and interest rate risks. When an organization has more money and less risk, it is more profitable overall.

Treasury management solutions can give business owners or treasury managers more control over their company’s money by increasing efficiency and cost savings. These resources also provide more detailed information and data to help decision-makers make better choices about allocating resources.

Infographic outlining Treasury Management features

Ready To Take Your Treasury Management to the Next Level?

Bank Midwest has numerous treasury management products and services that can help your business manage financial tasks more effectively and efficiently than ever before. Contact us today.

Post updated. Originally published February 2021.

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