How to Balance Treasury Management Risk, Cash, and Investments
October 10, 2024
Successfully managing your business finances is a delicate balancing act of several important responsibilities. This effort may involve determining daily cash flow needs, mitigating financial risks, and making investments that support your long-term needs – all done with strategy, planning, and security.
At Texas Gulf Bank, our Treasury Management team excels at helping businesses navigate these complex financial processes. We offer expert guidance on Treasury Management risk, managing liquid assets, and supporting business investments.
Discover some of the common risk factors your business should consider, the importance of having a customized Treasury Management plan, and the Treasury Management tools we offer our clients. Also, learn how you may be able to protect your business, optimize cash flow, and plan for immediate and future financial goals.
Understanding Common Treasury Management Risk Factors
In Treasury Management, we often see businesses face several key financial risks that could result in immediate and long-term repercussions. When not properly addressed, these risks could become urgent issues that impact business operations.
Liquidity Risk Management
The most common risk factor impacting your company’s treasury management is not having enough cash on hand to cover day-to-day expenses. As a result, your business could struggle to meet basic financial obligations like rent, payroll, corporate taxes, vendor payments and other key expenses.
Interest Rate Risk
Fluctuations in interest rates can significantly impact your company’s loan payments for existing debts with variable interest rates. In addition, higher interest rates can make it more difficult for your business to secure a loan for future investments or purchases.
Credit Risk
If your company receives revenue through invoicing clients, your company’s financial stability and credit history may be vulnerable if customers fail to remit payments in a timely manner.
Operational Risk
Companies are also at risk of fraud through phishing scams and cyberattacks, which can include internal errors or process breakdowns. These operational risks can make financial records and accounts vulnerable and bring your daily operations to a grinding halt.
Treasury Management: Understanding Your Business Needs
Taking proactive steps with financial management may help limit your company’s risk exposure and create safeguards that align with your business goals and operational needs.
At Texas Gulf Bank, we believe that effective Treasury Management begins with taking an in-depth look at your business and developing a custom treasury management solution tailored to address your risks, goals, and needs.
Our review typically starts with analyzing your current cash flow, ongoing and future expenses, and unique industry concerns or issues, such as seasonal revenue fluctuations.
To help your business manage risk while taking advantage of growth opportunities, we typically start by focusing on your cash flow needs. This initial review can help your business determine how much cash should be kept readily available for day-to-day operations and how much to set aside for growth or investments.
We’ll also complete a risk assessment to determine your company’s comfort level with risk. This review will help us create a risk management strategy designed to protect your cash while giving you room to grow. Our goal is to help you manage risk without missing opportunities to put your cash to work with investment growth.
In addition, we also provide guidance on emerging market trends, regulatory or financial changes that impact your finances, and potential new security threats. With our tools and guidance, your business may be better equipped to track your financial transactions and highlight potential risks before they become bigger problems.
Good Cash Management Helps Businesses Weather Any Storm
At any point in time, your business could be impacted by outside forces, including:
- Economic changes
- Foreign exchange rates
- Currency fluctuations
- Current events
- Market trends
- Regulatory changes in your industry
You’ll need the financial resources and flexibility to withstand the impact of these events. Strategic cash management can help you plan well in advance for financial uncertainties so your business always has the liquid assets available to keep your business fully operational.
Our Treasury Management department can help you evaluate several factors that will help identify how much cash should be accessible, including operating expenses, unexpected events, and seasonal fluctuations.
With the support of our team, your business may enjoy consistent access to funds in the event of major repairs, storms that temporarily close operations, or a sudden investment opportunity.
In addition, market volatility can negatively impact cash flow if your business is not well prepared. Our experienced Treasury Management team can provide tools to help you identify market risks for commodity prices or interest rate changes that can immediately impact cash flow and make proactive plans for these scenarios.
Improved cash visibility may allow your business to forecast cash flow more accurately for future needs. Our support may reduce your treasury risk while giving you a more realistic view of how money is being managed.
Treasury Management Positions Your Business Toward Future Growth
Evaluating your company’s future growth plans is a key part of developing a risk management framework. Our Treasury Management Services may help you achieve those goals while mitigating risk.
If your business has extra cash beyond what’s needed for daily operations and emergencies, investing that cash could help your business build long-term wealth and increase asset values. Our Treasury Management team can help ensure your funds are accessible if you plan to expand your operations, acquire a competing business, or make other strategic investments.
We’ll help you assess the current market conditions and your business goals to decide if this is the right time to invest. In addition, we offer financial tools and services that make it easy to pursue growth and investment opportunities while minimizing negative impact to cash flow.
The Importance of Reducing Security Risks
Technological advances have made it even easier for companies to manage cash flow, investment portfolios, and financial transactions. However, the latest technology comes with its share of risks, such as security breaches, fraud, and theft.
At Texas Gulf Bank, we are committed to helping clients safeguard their assets while also educating them on the latest financial security threats. Our Treasury Management team keeps you informed of the latest online or cybersecurity threats to watch for, including:
- Phishing scams
- Malware
- Identity theft
- Duplicate payments
- Fraudulent account access
Proactively addressing risk areas may increase the security of your financial data, customer data, and other sensitive business documentation. We help your business by staying on top of the latest technology threats and providing timely education to our clients.
Treasury Management Services through Texas Gulf Bank can help with risk identification to understand your company’s potential risk factors, develop strategies to reduce or eliminate these financial pitfalls, and help put your business on a path toward financial health.
Texas Gulf Bank: The Treasury Management Partner Your Business Needs
For over 110 years, Texas Gulf Bank has supported businesses throughout the Southeast Texas Gulf Coast with effective lending solutions and banking services. We value strong relationships with our clients, and strive to help them achieve new heights of success and growth.
A good Treasury Management experience is based on trust, transparency, and strong communication between businesses and the Treasury Management team. By partnering with Texas Gulf Bank, your business gains the expertise of our Treasury Management team, which can help your business successfully manage your business finances and plan for future growth.
Contact our office today to learn more about how Texas Gulf Bank can help you successfully balance your Treasury Management risk, cash flow, and investment needs.
Our Treasury Services team is eager to help your business thrive. Let us help you navigate various types of treasury risks.
Services offered through the Treasury Services Dept are fee-based and subject to approval.