In the dynamic world of finance, the treasury function serves as the cornerstone of stability amidst perpetual change. Treasury has evolved into a strategic function that plays a pivotal role in ensuring financial stability, managing risk, and driving growth. Therefore, it is essential to continuously evaluate the treasury function's ability to support the organisation in a constantly changing market landscape.
ESG Strategy
- Policy
- KPIs
- Reporting
Cash
- Bank account management
- Forecasting
- Payments
- In-house banks
- Intercompany netting
Risk Management
- Foreign exchange risk
- Interest rate risk
- Credit risk
- Commodity price risk
Corporate Finance
- Debt management
- Trade finance
People
- Number of staff
- Shared service centre (SSC)
- Skills and Training
- Understanding of role and accountability
Technology
- Automation
- Bank connectivity
- Treasury technology
Performance Insights
- Liquidity ratio
- Cash forecast accuracy
- Cash conversion cycle
- Credit risk exposure
- Interest cover ratio
Governance
- Strategy
- Policies
- Controls
- Business continuity plan
- Review committees
- Segregation of duties
Financial Reporting
- General financial reporting
- Hedge accounting
- Valuation
Are you confident your treasury function is sufficiently robust?
Drawing from our extensive experience collaborating with international treasury teams, we have identified the key areas that create resilience in our current unpredictable financial landscape. By embracing continuous improvement opportunities, you can obtain invaluable insights essential for assessing your current position and provide value to the business.
Effective cash and liquidity management is the key focus of treasury, in particular given the current high interest rate environment, to ensure all available cash is invested appropriately and borrowing costs are minimised. This involves managing cash inflows and outflows efficiently and strategically investing excess cash to generate returns while maintaining sufficient liquidity to meet short-term obligations.
Robust market risk management is required to navigate the ever-changing market landscape with confidence, minimising exposure to volatile market fluctuations. By implementing methods to quantify and evaluate risk exposures, maintaining up-to-date hedging policies, and identifying optimal hedging instruments, you can effectively mitigate relevant financial risks.
Enhancing operational efficiency is a pivotal objective for treasury departments, automating repetitive tasks such as bank reconciliations, intercompany reconciliations, foreign currency exposure netting, and management reporting. Treasurers can then redirect their focus towards strategic and value-adding activities, such as optimising productivity and assuming the role of a strategic business partner in supporting organisation-wide initiatives.
Cash flow forecasting is paramount, especially in volatile market conditions. A well-developed forecasting framework enables treasury teams to simulate various market scenarios, aiding in the formulation of risk mitigation strategies and ensuring adequate liquidity to navigate market uncertainties effectively.
ESG is of growing importance for treasury to ensure regulatory compliance and long-term sustainability by aligning financial strategies to broader societal expectations.
Payment security, fraud prevention, robust internal controls and adherence to regulations such as the upcoming ISO 20022 are essential safeguards that protect your business from financial losses and legal repercussions.
Why act now?
How KPMG can help
KPMG's Corporate Treasury Services team is ready to support your journey towards a robust Treasury function. Our Treasury diagnostic service offers insights into your Treasury function, analysing it against leading practices, identifying areas for improvement, and providing a clear roadmap for change. This is a crucial first step in building a resilient, high-performing Treasury department that can add significant value to your organisation.
For more information on our Treasury diagnostic service, get in touch with our team.
