When was the last time you looked closely at your company’s financial processes and arrangements with your bank? If you’re like most small- to mid-sized manufacturers, it’s probably been a while. As the years pass and the demands of running a business grow, few pause to evaluate whether they’re getting the service, protection, and financial optimization they need.
This is where a treasury review can help. By identifying hidden inefficiencies and uncovering opportunities to improve liquidity and cut costs, a treasury review can help ensure you’re getting the most out of your financial institution.
What is a Treasury Review?
A comprehensive evaluation of a business’s financial arrangements, a treasury review focuses on banking services, risk management, and liquidity optimization. It ensures your banking and financial services align with your company’s current needs and long-term goals.
Think of it as a financial health checkup. Just as you’d go to a doctor for a periodic review of your physical well-being, a treasury review ensures your company’s financial systems are running efficiently and cost-effectively.
For manufacturers, this could mean examining everything from the rates and services on your checking and savings accounts to cash management systems, fraud prevention tools, loan agreements, and fees associated with each service.
Why is a treasury review important for manufacturers?
Effective financial management is critical to the success of any manufacturing business. Here’s how a treasury review can make a difference in yours:
1. Managing and Planning Your Financial Position
Cash flow is the lifeblood of every manufacturing operation. From purchasing raw materials to paying suppliers and employees, keeping your financial position strong and steady is crucial. A treasury review seeks to identify and adjust areas that can be tweaked in a way that shaves costs, increases value, or simply optimizes existing cash. Even a small half-percent savings, when multiplied over many transactions or months, amounts to significant savings overall — money that could be put to better use, such as paying off a high-interest loan more quickly or putting toward an investment. Pausing to evaluate your financial arrangements, at the very least, gives you the opportunity to ensure you’re not leaving potential earnings on the table by failing to capitalize on competitive savings account interest rates or investment opportunities.
2. Mitigating Risks
Manufacturers are exposed to numerous financial risks, including fraud and unauthorized transactions. Treasury services like fraud protection tools — Check Positive Pay, ACH filters, and Debit Blocks — are critical safeguards but are often overlooked or underutilized. A treasury review uncovers these gaps, helping ensure your company is well-protected against costly errors and cyber threats.
3. Optimizing Liquidity
Liquidity is a critical factor in managing your day-to-day operations and seizing growth opportunities, such as acquiring new equipment or expanding production lines. A treasury review helps free up cash-flow bottlenecks by identifying and reducing unnecessary banking fees, renegotiating loan agreements with better interest rates, and improving cash management strategies for more efficient use of funds.
What Should a Treasury Review Include?
To get the most out of a treasury review, you should expect it to encompass the following key areas:
1. Banking Services Evaluation
Review your account fees: Are you paying excessive fees for basic account maintenance or overdrafts? Ensure the fees are aligned with the services you receive.
Assess service inclusions: Does your bank offer robust fraud protection and cash management tools? Services like Positive Pay, ACH filters, and zero-balance accounts should be reviewed for effectiveness.
2. Cash Flow Analysis
Identify where your money is tied up and how to free it. For instance, are you holding excess funds in low-interest accounts that could be generating higher returns elsewhere?
3. Loan & Credit Analysis
Check the terms and interest rates on existing loans. Are they competitive? A treasury review can often uncover opportunities to refinance at better rates.
4. Risk Management
Evaluate fraud prevention protocols. Ensure your systems are updated with the latest technologies and processes to protect against unauthorized transactions and cyber threats.
5. Liquidity Optimization
Assess how cash is managed. Could accounts be consolidated for better visibility? Can funds be pooled for more effective cash management?
What to Look for in a Firm that Offers Treasury Reviews
Not all firms that provide treasury reviews are created equal. To ensure you’re working with the best partner for your business, look for these qualities:
1. Industry Expertise
Your business is unique, and so are the financial needs of manufacturers. A firm with experience in the manufacturing sector will be better equipped to address the specific challenges you face, such as managing fluctuating cash flows and financing capital-intensive equipment purchases.
2. Comprehensive Approach
Look for a firm that offers a full spectrum of services during the review. They should analyze banking relationships, assess risk, optimize liquidity, and identify opportunities for cost savings.
3. Personalized Recommendations
No two manufacturers are the same. Choose a firm that tailors its recommendations to your specific needs and goals, rather than offering a one-size-fits-all solution.
4. Proven Results
Ask for case studies or success stories from businesses like yours. If a firm has helped other manufacturers unlock hidden value, they’ll likely be able to do the same for you.
5. Transparent Fees
There should be no surprises when it comes to the cost of the treasury review. The firm should provide clear, upfront pricing and demonstrate how their service will generate a tangible return on your investment.
Take Action to Unlock Hidden Value
A treasury review is not just about playing defense against fraud or trimming excess fees —it’s about going on the offensive to maximize your financial potential. By managing cash flow effectively, mitigating risks, and optimizing liquidity, manufacturers can create a stronger financial foundation to support business growth and resilience.
If your business has been with the same bank for years without reassessing your financial arrangements, now is the time to act. A treasury review could uncover hidden value that strengthens your bottom line and positions your company for long-term success. Reach out to Dave Seman, part of Rehmann’s CFO Advisory Services team, at [email protected].