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Treasury Best Practices: Improving Bank Account Management

  • By Nilly Essaides
  • Published: 5/20/2014
Without streamlining its roster of banks, treasury cannot do an effective job of administrating accounts and keeping track of all relevant account information. That’s the key takeaway from the second installment of AFP’s Treasury in Practice series, Improving Bank Account Management: Best Practices, underwritten by KeyBank.

“The clients who are successful in bank account management have centralized that [account structure] aspect within treasury,” said Tom Durkin, global head of integrated channels at Bank of America. Many companies endure a fragmented bank account structure, which means there are multiple accounts open—sometimes at different legal entities and geographies.

Effective BAM starts with ownership. “Treasury cannot be responsible for what it doesn’t own,” said David O’Brien, CTP, an independent treasury consultant. That means treasury, directly or indirectly, must own the process of opening/closing accounts, debt/investments and foreign currency. What’s important is having the right process flow and process controls in place to ensure all changes are made to the data—at a meta and transactional level—that the information is complete, and that it’s readily available to auditors, the tax department and senior management.

Because treasuries are often very lean and play multiple roles, BAM is often viewed as a low value administrative process, and it falls through the cracks. However, a good BAM process will enable a more strategic view regarding best use of funds, exposure to non-functional currencies and the value of a company’s banking relationship, and should therefore not be viewed as a mere administrative function.

“Make it part of your job rather than an exception,” said Bob Stark, vice president of strategy at Kyriba, an SAAS treasury system vendor. If reviewing the information and reconciling it with the bank is part of someone’s monthly role, it’s more likely to be effective.

Improving Bank Account Management: Best Practices is available here.

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