Building resilience through treasury policies
Following our webinar on Treasury Policy, it’s clear that the evolving financial landscape presents both challenges and opportunities for treasurers. The discussion shed light on the critical role of treasury policies in guiding organisations through uncertainty, fostering resilience, and embracing innovation. This blog captures the webinar’s key insights to help organisations stay ahead in 2025.
Importance of Treasury Policies
Treasury policies are more than just procedural documents; they’re the backbone of financial governance. They serve as essential frameworks to manage cash, foreign exchange, debt, compliance, and banking relationships. Effective treasury policies ensure consistency, provide clear guidance for stakeholders, and establish measurable benchmarks for performance, making them indispensable for organisations aiming to navigate challenges with confidence. As a treasurer, they’re your license to act.
2025 Challenges and Adjustments
Navigating Interest Rate Volatility
The Federal Reserve’s uncertain trajectory on interest rates continues to create market turbulence. This interest environment will require treasurers to remain agile, conducting out-of-cycle policy reviews to reassess investment strategies. What may be an annual or bi-annual review cycle, in times of uncertainty, can be increased to ensure you have the right risk exposure and controls. This proactive approach ensures that organisations can pivot quickly, safeguarding returns, and minimising risk.
The Rise of Bitcoin and Digital Assets
With increasing regulatory clarity and institutional adoption, boards are urging treasurers to assess the feasibility of incorporating digital assets. While this represents uncharted territory for many, it underscores the need for forward-looking treasury policies that adapt to emerging trends.
Evolving Treasury Policy Best Practices
Striking a Balance Between Flexibility and Governance
For multinationals with treasury teams operating across geographies, ensuring some degree of decentralisation of decision-making to account for regional nuances is important. The general philosophy of the policy should be the same everywhere, but global teams need flexibility for regional variations, particularly in areas with: exchange controls; less robust banking systems; limited financial options; different payment processing requirements etc.
Quantifying Policy Parameters
Clear, measurable guidelines, such as FX exposure limits or weighted average maturity targets only enhance a policy’s effectiveness. These metrics provide treasurers with actionable insights and a concrete framework for decision-making.
Socialising Policy Changes
Securing buy-in from audit committees, CFOs, and other stakeholders early in the process fosters trust and accelerates approval for policy updates. Transparency and collaboration are key to ensuring seamless implementation.
Emerging Topics in Treasury
Integrating Artificial Intelligence
AI is revolutionising treasury operations, offering unprecedented efficiency. However, this innovation comes with risks. Policies must govern the use of AI tools, ensuring compliance with data security standards and mitigating the potential for breaches or errors. By addressing these challenges head-on, treasurers can leverage AI’s benefits without compromising security.
Strengthening Bank and Vendor Management
Effective management of banking relationships remains a critical challenge. Treating banks as vendors, with clear oversight, transparency, and cost-control measures is essential. Regular reviews and structured policies can help mitigate risks associated with poor account management.
Enhancing Cybersecurity in Treasury Operations
With cyber threats on the rise, treasurers must prioritise cybersecurity. Regular penetration tests, employee training, and robust callback protocols are vital to safeguarding financial systems. Additionally, periodic reviews of cybersecurity insurance and internal disaster recovery plans ensure preparedness against potential breaches. As treasurers face an era of unprecedented challenges and opportunities, robust and adaptable treasury policies are more critical than ever. From navigating macroeconomic uncertainties to embracing technological advancements, these frameworks should enable organisations to remain resilient and forward-looking. And by staying proactive and collaborative, treasury teams can turn policy into a powerful tool for navigating the complexities of 2025 and beyond.
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*TreasurySpring’s blogs and commentaries are provided for general information purposes only, and do not constitute legal, investment or other advice.