The significance of treasury services
The prioritization of liquidity has credit union leaders seeking low-cost funds in the form of member deposits. Commercial deposits stand out as being known for large balances, low acquisition costs, and generally lower interest rates paid than retail deposits due to the unique banking needs they possess. Acquiring these commercial deposits require credit unions to be able to offer certain levels of service and support to businesses, most notably in the form of being equipped to offer treasury services which will support their crucial financial functions. Treasury management services offer numerous benefits to credit unions, such as fee income, spread income and member retention, but the most substantial value lies in the ability to serve as a source of low-cost funding.
What is treasury management?
Treasury management is the process of ensuring that a business’s funds are positioned effectively through various functions including managing cash flow, liquidity and debt, transaction processing and reporting capabilities. The goal of treasury management is to enhance efficiency in these daily financial tasks and mitigate risk by utilizing treasury services to automate daily functions and improve efficiency in movement of funds. Examples of treasury services include payables, integrated receivables, fraud protection, and information reporting, among many others.
The value to members and credit unions
Small business owners often find that managing cashflow is one of the most critical aspects of their operations, yet it is an area that is often overlooked or inadequately addressed by their current financial institutions. A strong commercial deposit portfolio contains much more than transactional accounts. Longstanding member relationships are built on the ability of the credit union to support businesses in every aspect of their operations, from lending to cash flow.
Businesses are increasingly recognizing the significance of placing their operating deposits with financial institutions that offer comprehensive treasury services. A business that can properly manage cashflow is a business that can ensure they have the funds needed to meet its financial obligations. Transparency in payments, enhanced speed of receivables, reduction in float, enhanced reporting and transaction monitoring are benefits of treasury services that your members will attribute to the capabilities you have provided by being a market leading treasury services provider. By providing these tools, a level of loyalty is derived from that relationship. Business members will see you as their trusted advisor when it comes to their success.
Relationship pricing is a tool that can be leveraged as a strategy to entice members and prospective members to move deposits held at other institutions to your credit union. By offering lower rates or fees to members who maintain a high balance in their deposit accounts, you can provide a benefit to both that member and your credit union. With treasury services bringing in non-interest income that allows the offset of a higher interest rate benefit, you can increase this leverage and in turn bring in more deposits.
How can we help?
A credit union that offers an effective treasury management program can provide their business members with the tools to allow them to maintain liquidity, optimize working capital, mitigate risks, reduce bad debt, and make the most of excess cash. Having a clear grasp of the essential worth of treasury management services can enable you to offer more effective guidance to your members, leading to increased deposits and the achievement of your credit union’s goals. To learn more, please visit us at https://www.trutreasury.com/.
