6 Tips to Manage the Treasury of a Company

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6 Tips to Manage the Treasury of a Company

In Latin American countries, a large part of small and medium enterprises, due to their level of informality, do not have effective systems to manage their reso

In this sense, it is everyone's job to advocate for the entrepreneur to learn how to manage their business effectively through solid financial information, which allows them to have the elements of judgment to make better business decisions. One of the key elements is undoubtedly treasury management.

Treasury management

This consists of handling the collections and payments well in order to guarantee the fluidity of the money. Current assets (cash, accounts receivable from customers and inventories) are those resources that are certain or that must be converted into cash in the short term. Therefore, the owner of an SME must establish action plans and controls for good management.

Tips for managing the treasury of a company

Keep and keep a strict and updated report of accounts receivable and accounts payable

It's hard to run a business if you do not know who owes you and who you owe. This failure could divert money to unproductive activities and put the sustainability of the business at risk.

Learn to calculate the conversion cycle of current assets of your business

This is no more than knowing how many days I convert my inventories into cash after the sale is made. This knowledge gives you the ability to negotiate better terms with suppliers.

Establish a payment procedure for suppliers

Care should be taken to ensure that this payment procedure is not substantially faster than the settlement capacity of accounts receivable with customers.

Create a credit policy manual

It is advisable to draft a credit policy manual that is distributed and fully understood by all members of the company, in order to ensure respect for the terms of sales and credits granted to customers. I have always argued that good collection management starts with the correct administration of credit.

Caring for the relationship with financial intermediation entities is key

If financing is maintained with one, we must try by all means to honor the commitment, because otherwise one of the main sources of financing would be affected. It is important to choose those entities that most adhere to the needs of your business. The reputation of bad pay is not good for the financial health of an SME.

Get involved in tax matters

Finally, the owner of an SME should never leave aside fiscal matters. Not knowing or not managing the tax commitments of the company can lead to a delicate situation. You should be trained especially concerning the tax system and be always vigilant to the dates of tax payments. It is not very prudent to leave alone the responsibility of the calculation or payment of taxes to the accountant, the good employer must also be involved.

Treasury management is vital for the survival of SMEs, since the cash flow of the company is its circulatory system, which if it stops or collapses, and the company cannot survive.

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