Treasury management, or more broadly, Supply Chain Finance management, remains an overlooked topic for many small and medium-sized enterprises (SMEs). While large international corporations invest in expensive treasury management solutions (often integrated into their ERP systems) and even establish their own In-House Banks, SMEs face greater challenges. Limited funding, time constraints, and expertise make deploying such platforms difficult for smaller businesses. Additionally, many existing solutions lack the flexibility required by SMEs. Despite these obstacles, effective treasury management is crucial for SMEs in today’s globalized and competitive market.

Here are some compelling reasons why SMEs should prioritize it:

Cost Reduction: A well-implemented treasury management system can significantly reduce costs in various ways:

Working Capital Optimization: By streamlining processes, SMEs can collect payments from customers more efficiently, manage inventory effectively, and pay suppliers only when due.

Improved Debt Collection: Better follow-up and debt collection techniques can minimize unpaid invoices.

Avoid Penalties: Timely payments prevent penalties (such as administration costs or late-payment interests) and foster better supplier relationships.

Resource Efficiency: Automated payment tracking and invoice management reduce the workload for financial teams.

Optimized Cash Management: Maintaining the right cash balance in the current account ensures efficient business operations and allows for strategic investments.

Foreign Currency Management: Properly managing foreign currency reserves and applying hedging techniques can mitigate exposure risks.

Transaction Cost Reduction: Selecting the right banking products and partners can lead to cost savings.

Technology Solutions: Although many SMEs still rely on complex Excel sheets for treasury management, there’s a growing opportunity for incumbent banks and fintech companies to offer user-friendly tools.

These solutions, often delivered via Software-as- a-Service (SaaS) platforms, connect seamlessly to customers’ banks through Open Banking APIs. The setup costs are minimal, making them accessible to SMEs. By embracing modern treasury management practices, SMEs can enhance their financial stability, streamline operations, and position themselves for growth. Its very important for smaller businesses to have effective Treasury Management to be able to thrive in todays dynamic business landscape.​I’ve provided a concise overview of the value of treasury management for SMEs, emphasizing cost reduction and technology solutions. If you’d like further details or have specific questions, feel free to reach out and ask how we can help.