Treasury Management

Gaining Confidence Through Insight into Borrower Liquidity and Financial Risk

A borrower's effective treasury management is a critical indicator of their financial health and ability to meet debt obligations. For lenders, gaining a clear understanding of a company's cash management practices, liquidity position, and financial risk mitigation strategies is essential for informed credit decisions and ongoing portfolio monitoring. Opportune's Treasury Management services, offered as part of our Lender Advisory Capability, provide lenders with in-depth analysis and insights into these vital areas.

We help you assess how effectively your borrowers are managing their cash flows, banking relationships, and financial risks. This goes beyond just reviewing financial statements; we delve into the operational aspects of their corporate treasury management to provide a holistic view.

How Opportune Enhances Lender Understanding of Treasury

Opportune's Treasury Management services provide lenders with the expertise to assess the strength and effectiveness of a borrower's treasury function. We offer valuable treasury insights that can inform your lending decisions and risk assessments.

Our Treasury Management Services for Lenders Include:

• Cash Flow Forecasting Review and Validation: Assessing the reliability of a borrower's cash flow forecasting methods and the sophistication of their tools (e.g., cash flow forecasting software).
• Liquidity and Working Capital Analysis: Evaluating how effectively a borrower manages its short-term liquidity and working capital cycles through their cash management activities.
• Treasury Operations Assessment: Reviewing the structure and efficiency of the corporation treasury, including their use of a treasury system and the capabilities of their treasury team or treasury manager bank relationships.
• Financial Risk Management Evaluation: Assessing a borrower's policies and practices for managing financial risks, including their use of hedging instruments and relevant systems (e.g., integrated with compliance risk management software).
• Treasury Technology and Systems Review: Evaluating the suitability and effectiveness of the borrower's treasury system and other treasury tools.
• Benchmark Analysis: Comparing a borrower's treasury practices against industry peers and best practices in corporate treasury management.
• Analysis of Banking Relationships and Treasury Products: Reviewing the borrower's utilization of treasury products and treasury management products and services.

Understanding the Nuances

We help you differentiate between basic cash management vs treasury management, highlighting the strategic aspects of a mature treasury function that contribute to long-term financial stability. We also provide context on the role of a treasury team and the interaction with their treasury manager bank, and the implications of concepts like global treasury management for multinational borrowers. While a treasury management certification indicates professional development, our focus is on the practical application of treasury principles within the borrower's business. We also consider aspects like what is treasury in banking from the perspective of how the borrower interacts with their banking partners.

Benefits for Lenders:

• Improved Liquidity Assessment: Gain a more accurate picture of a borrower's current and projected liquidity position.
• Enhanced Risk Identification: Identify potential vulnerabilities in a borrower's financial risk management.
• Greater Confidence in Financial Data: Better understand the processes behind the financial information provided by borrowers.
• More Insightful Covenant Setting: Structure more effective covenants related to cash flow and liquidity.
• Proactive Risk Management: Identify potential issues early by understanding the health of the borrower's treasury function.