The Importance of Reviewing Your Treasury Management Solution at Year-End

At the end of the year, you are likely juggling a lot — finalizing orders, managing schedules, and, of course, preparing for the coming year. Amid all the hustle, take a step back and look at how your financial systems are supporting your business’s goals. This includes your treasury management solution: the software or tools that help you manage your company’s cash, optimize payments and make smart, data-driven financial decisions.

Learn why year-end is the perfect time to review your treasury management system, and how doing so can help you strengthen your business’s financial health in the year ahead.

1. Forecast Cash Flow Accurately

To help your businesses stay financially healthy, your treasury management solution should have accurate cash flow forecasting. It can help you predict the inflow and outflow of cash over a specific period. A strong system can help automate this process by pulling data directly from your accounting systems, invoicing and bank accounts. This real-time integration gives you up-to-date forecasts so you can adjust. For example, if sales are predicted to slow down in a certain quarter, or if you anticipate higher-than-usual expenses, you can plan to ensure that you have enough cash to cover these fluctuations.

Scenario planning, such as delayed customer payments and market conditions, is another important function of your treasury management solution. This ability to forecast using multiple scenarios helps you stay ahead of potential issues so you can take action — like adjusting payment terms with suppliers or securing a short-term loan.

2. Identify Inefficiencies and Streamline Processes

As your business grows, so does the complexity of managing your finances. Streamlining treasury management functions through automation can help save time and improve the accuracy of financial records. At year-end, review how your treasury management solution handled these tasks. Ask yourself: Did your system automate tasks like bank reconciliation or payments? Did it consolidate data from multiple accounts into a single, easy-to-read report? A service that automates routine tasks can save hours each week and reduce the risk of errors.

3. Improve Risk Management Practices

Your small business is exposed to a range of financial risks, from unexpected cash flow shortages to fluctuating interest rates. Look at how well your treasury management solution has helped you throughout the year. A robust system can provide powerful tools to manage these risks by tracking market conditions, such as interest rate changes. It can also help monitor your cash flow, ensuring that you have enough to cover unexpected expenses.

Another key aspect of improving risk management is preventing fraud and ensuring that your financial systems are secure. A system with built-in fraud detection and security features, such as multi-factor authentication and transaction monitoring, can help protect your business. Tools like Positive Pay can be used to verify checks: preventing fraudsters from cashing altered or counterfeit checks. Review your treasury management security protocols to make sure they align with the latest best practices and regulatory requirements. And look for features that allow real-time alerts and automated notifications when suspicious transactions are detected.

4. Ensure Compliance with Tax Requirements

Staying compliant with tax laws and regulations is essential not only for avoiding fines and penalties but also for maintaining a strong reputation and financial health for your small business. As regulations evolve, assess whether your treasury management system is keeping up with the latest tax and regulatory requirements. It should help you generate tax reports that are in line with current regulations as well as track required information like sales tax and payroll tax. This is especially important because tax laws can change from year to year or even within different jurisdictions if your business operates in multiple locations.

Also, a treasury management solution can help streamline the process of maintaining proper records for audits: providing easy access to transaction history, bank statements and other essential documents to help with year-end tax planning. You’ll be less likely to forget necessary tax filings or payments, which can be a common issue during busy periods.

5. Plan for Growth

Your financial needs will become more complex as your small business expands. Evaluate whether your current treasury management solution can scale with your company. It should be able to handle more data and multiple bank accounts without a decrease in performance.

Think about the flexibility of your system. As you explore new opportunities, whether through expanding locations or offering more financial products, your treasury management solution should be able to integrate with other financial systems or third-party payment platforms. This ensures a seamless flow of financial data across all your operations, saving you time and reducing the risk of errors. 

6. Review Costs and Return on Investment

Look at your expenses to determine if your treasury management service continues to be cost-effective for your business. Consider both direct costs, like subscription fees or maintenance charges, and any indirect costs, such as the time spent on training and setup. Compare these costs with the efficiencies and time savings your treasury management solution has delivered. For example, if it has automated bank reconciliation or invoice processing, this could have saved you significant labor costs, which may offset the subscription fees.

Also, measure the return on investment (ROI). A good treasury management solution should reduce operational costs and provide value through improved decision-making and better cash management. If the system has provided better visibility into your financial position or allowed you to negotiate better terms with vendors or lenders, then it is likely providing a strong ROI. However, if it’s underperforming or not fully aligned with your needs, you may want to explore alternatives.

If your current treasury management solution isn’t helping your business, take steps to implement a new service. Your local community bank can give you advice on what works well with their systems to help you streamline your treasury management process. Reach out to our Treasury Management team today to support your small business.

Taking the time now to review your treasury processes can help save you time, reduce risks and set your business up for success in the year ahead.