Before getting fully into the description of the Role and functions of a person in charge of treasury, it is convenient to remember and describe, first of all, what treasury is. Broadly speaking, treasury refers to the management and daily operation of all functions related to money management, that is, payment management, collection and bank management. Depending on the size and type of the company, treasury management may only include basic collection and payment tasks, while, if the company is very large and complex, the functions may cover different actions such as negotiating and closing financing contracts for debt, contract risk hedging tools for interest rates or exchange rates, among others.

The concept of Treasury comes from Latin. Contrary to most of the fashionable financial concepts used on a daily basis, the word treasury is not of Anglo-Saxon origin. One of the first known definitions was created by the French academy, dating from 1835. “A trésorier” or Treasurer, is the person in charge of managing the finances of a company or an association. The Treasury also referred to the public building where they administered and managed public funds or finances.

The function or role of the person in charge of treasury has evolved a lot over time. As we saw earlier, the treasury person was primarily the person in charge of managing the finances of an organization or public finances. Over time, this concept has changed quite a bit. Today, the concept of treasury or the role and expectations of the treasury function have become very specialized, and the requirements are much more technical.

The general function of management and administration of finances now falls on the chief financial officer, chief financial officer, or “Chief Financial Officer” (CFO for its acronym in English). As we said, therefore, the treasury function today has a much more technical and specific function. It includes the relationship with the management of money inflows and outflows, as well as the identification, negotiation and contracting of sources of financing, the identification of investment sources for surplus cash, etc. In many cases, in small and medium-sized companies, it is very possible that the treasury role is exercised by the same person who is in charge of the financial department in general. However, as we said, the more technical position appears in larger companies with a higher level of complexity and sophistication. To acquire an important role in treasury management in a large company, many years of experience are required, and very technical knowledge of financial modelling, knowledge of capital markets (bond issues, IPOs), knowledge of bank financing, and Knowledge of hedging instruments, among other knowledge.

Previously, we have already subtly discussed some of the knowledge required by a person in charge of the treasury, and we have also briefly mentioned some of the tasks that they perform. Next, we will proceed to get into more detail about the day-to-day of the people in charge of the treasury and the main functions they perform.

• Payment and collection management

The person in charge of the treasury and his team are in charge of supervising the daily status of payments and receipts that the company has. This ranges from accounts payable tasks such as receipt of invoices and their due follow-up until payment execution, to accounts receivable tasks in which they are responsible for generating customer billing and supervising and monitoring the collection of such bills.

• Bank Management

One of the most common tasks is the selection of bank providers to open their accounts, and the maintenance of the relationship for subsequent services that the company may demand related to treasury management.

• Management of financing sources

Related to the management of banks and banking relationships, the management of financing sources is one of the most important today. Having access to different means of financing and sources of liquidity can be one of the keys that prevents a business from disappearing. Liquidity is the most important piece that a company has to control and, therefore, having absolute control of the cash and having access to different sources of liquidity that the treasurer can use when needed, is key. Any error or delay in important payments such as taxes, payroll, or some key supplier of the company, can result in a downward spiral of the company since it can give symptoms that it is in a difficult situation.

• Management of interest rate and exchange rate hedges

This function is one of the most sophisticated, and is generally carried out by highly experienced treasury people. This function is also typical of larger companies, which have large volumes of bank debt on their balance sheets or which also have a large impact from international suppliers or customers and, therefore, have volatility risks in the evolution of interest rates. or exchange rates between currencies to which the company is exposed.

The main problems that the financial management staff of companies and those in charge of treasury have are shared today by almost all companies. The main pain points are the same. Below, we highlight the most common problems they face:

• Access to multiple banks and bank accounts

This is one of the most common problems. As a general rule, and except in the smallest companies, companies usually have a relationship with several banking institutions and, therefore, have several bank accounts in different banks. This is a big problem since, first of all, the user will have multiple user credentials to enter each bank, which is always a problem. On the other hand, at the end of each month the user will have to enter each of the banks, and download the account movements, one by one, each one in its own independent format, to reconcile expenses, and to export of said movements to the accounting ERP. For medium and large companies, this is a headache.

• Manual invoice entry process

In this area, too, the problems are widespread. The common process is for companies to have a generic email address for the finance department, where invoices are received. Subsequently, they are opened one by one and transcribed manually in an Excel file or in the accounting ERP. A completely manual, inefficient and error-ridden process that is a headache for accounting people.

• Inefficient approval management process

The invoice approval process is also currently a tedious process. In most companies, even those in which there is an accounting ERP involved, the approval processes are done manually via email. In other words, the accounting person will prepare an email every week or several weeks with a summary table of all the invoices to be approved with their corresponding details and will attach a folder with all the invoices to be approved. Even in many companies this still happens in a more manual way, that is, on paper. Invoices are printed, the date of receipt is stamped, and they are approved manually.

• Bill Pay disconnected

Another of today’s problems is the problem of disconnected banking. In other words, the only way to connect an ERP with a bank is by exporting an XML file. This file is later uploaded to the bank to make the payment. That is, generate a remittance file for the bank. Again, a procedure that a few decades ago might have made sense, but currently doesn’t.

In addition, in many banks, generating remittances is a big problem, since later it is difficult to generate details of the payments of said remittance, and when reconciling supposes it can also be a problem. What makes many companies choose to make transfers manually, which means re-entering the data of an invoice at the bank one by one, which means a terrible loss of productivity.

• Lack of visibility and cash forecasts

Today, there is no banking or ERP platform that gives you real-time visibility of a company’s cash position. The mentioned systems generally do not offer this type of analysis or reporting, and if they do, they are minimal or very basic and do not have real-time data. If you want to have such services, nowadays these are only up to the big companies. Since they cost large amounts of money per month and are only available to large companies willing to pay a high sum for them. This is because making bank connections was previously very expensive, and for this reason, only large companies could manage to have software of this type. However, times are changing, and access to treasury management systems is being democratized.

• Dependency on bank relations

Today, the world of treasury is closely linked to relations with banks. Companies open accounts with each other to have access to different lines of credit and services with each of them. But all these processes are also very tedious. In addition, all kinds of products a little beyond the bank account must be ordered by phone, and after several interactions. In other words, they are processes that take weeks or even months, until the bank staff has made a decision or reviewed or asked you to sign certain information. Opening bank accounts can take weeks, requesting loans or lines of credit months, requesting invoice financing the same, making treasury investments can also take weeks, and many steps.

Snab is a pioneering platform in Europe that automates and digitizes treasury management. Not only does it allow you to have real-time visibility of the status of your banks, and future payments and collections, but it also provides you with real-time reports and future forecasts of the company’s cash status. Snab gives you control and visibility over treasury that hasn’t existed until today, since there are no specific treasury platforms that perform the tasks that Snab allows to do.