Context
As treasury product variety grew, some transactions were handled manually because they were not defined in the system. A manually handled treasury transaction carries three distinct risks: transaction error, accounting error and a reporting gap. In products with irregular cash flows — interim-interest or amortising structures — calculating accruals by hand was exposed both to error and to period profit-and-loss distortion.
Approach
- An inventory of manually handled money market products was produced and the set to be defined in the system was agreed.
- Transaction flows were designed for irregular cash flow products such as interim-interest and amortising deposits.
- Accounting entries and accrual calculations were systematised for each product.
- Reporting outputs required by treasury and financial control were defined.
Outcome
- Operational risk from manually handled treasury transactions was reduced.
- Accrual calculation moved from being person-dependent to systemic.
- Accounting consistency was achieved at product level.
- Expanding the treasury product range ceased to be constrained by infrastructure.
This case study describes the project through its scope and approach. Client name, commercial figures and performance metrics are withheld under confidentiality obligations.
What This Project Left Behind
A product not defined in the system usually means its risk is not defined either. Every manually handled transaction is in effect an unrecognised operational risk position. This is the first thing examined in cash management advisory too: which money movement sits in a system, and which sits in somebody's spreadsheet?
- Cash Management — Corporate cash management strategies that make your cash flow predictable and reduce liquidity risk.