SUMMARY
Why does your business merit a treasury management relationship review with your bank?
With the profound changes following the COVID-19 global pandemic, treasury managers entrusted with handling an enterprise's holdings, managing liquidity, and mitigating its operational, financial and reputational risk have adapted their approach.
Maintaining operational continuity in varying work environments is continuing to put pressures on treasury managers. The shift to a new working model has left some businesses struggling to find ways to connect with their banks. This change makes the need for robust banking services to support treasury management functions more critical than ever.
For many businesses, COVID-19 restrictions brought about a surprising realization of how manual most of their accounting team’s daily processes are.
What is a treasury management relationship review?
One way to calm operating anxieties and improve the level of service you receive is by seeking a timely relationship review with your bank. In our experience, this helps ensure your treasury team is getting the exceptional banking services needed to continually improve operations.
A relationship review is a collaborative conversation between the treasury team and bank partner to review treasury goals and services provided. The treasury team typically provides updates on strategic objectives and business changes. Your bank partner should share any changes in banking or government policies, as well as any new innovations or changes in treasury management solutions on offer, and in development.
How often should you review?
As a best practice, we recommend scheduling a relationship review annually or around one of the events below:
- a significant change in your business, such as a migration to a new enterprise resource planning (ERP) or accounting system
- a change in key treasury personnel
- a major global event, such as the COVID-19 pandemic, which demonstrably changed daily procedures
How to prepare for your relationship review
Preparing for a review is also a great way to check in with your accounting team to discover pain points and get them ready for future growth and changes to the business. Before getting into the nitty-gritty of the subject matter, planning for a review may be just as important as the review itself. Perhaps it’s worth scheduling a review with a few weeks lead-time to give both your team and bank enough time to prepare thoroughly.
An hour and a half-long meeting will generally suffice for an open discussion and questions without feeling rushed. Involve key treasury personnel who participate in daily operations. Your bank will typically include your relationship manager, treasury management specialist and client service officer in the meeting. Other product partners, such as a foreign exchange specialist, may join as appropriate.
In the weeks leading up to the review, ask your staff to note any tasks that are time consuming as well as any challenges with the bank’s online platform or other treasury management services. Finally, forward relevant topics to your bank prior to your meeting to ensure they are included on the agenda. The review itself can be a simple high-level overview of your account structure and services attached to those accounts, or a very detailed strategy session to identify inefficient processes with recommendations for added efficiencies. Topics may include:
- Account Rationalization: Defend the use of each account and consider consolidating accounts or linking them in a Zero Balance Account structure to create less manual transfers.
- Bank Services: Review your monthly Account Analysis statement to ensure you are using the products and services you are paying for.
- Entitlements Review: Ensure your account signers and online banking platform users are current and that user entitlements, such as wire limits and approval flows, are still appropriate.
- Fraud Protection: Confirm you are using the most current fraud protection solutions and ask your bank partner for industry best practices. This is also an appropriate time to reiterate your internal controls and any proposed changes to your team.
- Accounts Receivable: Determine if your growth warrants new collection methods, such as switching to a Lockbox, accepting credit cards or digital payments. Automating your receivables process can save time, improve collection timing and eliminate posting delays to reduce Days Sales Outstanding and the overall Cash Conversion Cycle.
- Accounts Payable: Optimize your payables management and extend Days Payables Outstanding by asking about the latest advances in electronic and automated payments. Reduce expensive and time-intensive check issuance, which continues to be the number one source of fraud.
- Investment/Liquidity: Review, or create, your Investment Policy and ensure it reflects changes that may have occurred in your business. Consider making your excess cash work for you with investment accounts or shifting funds to your operating account to cover bank fees with your Earnings Credit.
- Bank Scorecards: If you use the services of multiple banks, reviews can help you measure how your bank providers compare in terms of products, service and pricing.
- Goals and Growth: Update Key Performance Indicators and determine if your growth is outpacing your staff or internal technology. Prepare your team and your bank for an upcoming acquisition or a new revenue stream, vendor or ERP/operating system.
- Service Related Items: Use this opportunity with key bank personnel to address any outstanding service related items, issues or areas of success/frustration. The banking team will appreciate this open dialogue as they work to provide a best in class service experience.
Overall, reviews are a unique opportunity to share, learn and elevate your team to a better work experience. Your banking team wants to do all they can to help you get there, so be candid, ask questions and be open to hearing best practices used by your peers.
Please contact your Private Banker if you would like to schedule a Treasury Management Relationship Review.
