Treasury Operations at Startups – Significance of Processes and controls

When it comes to creating and sustaining a company's financial stability, cash management is one of the key
business components. It, however, becomes even more sensitive in a set up like startup and needs constant
control-oriented monitoring and reporting. Investors also have keen interest in the overall cash flow
management focusing on various dimensions such as cash burn, high value transactions, runway, parking of
surplus funds etc.

In recent times, some eye opener instances have come up to the surface involving misappropriation, siphoning
etc of significantly large amounts of funds in certain startups. These have casted a shadow on the Indian
startup story. A big question mark has been raised over the corporate governance standards as well.

Key aspects of treasury operations:

▪ Setting up a systematic and efficient cash collection process

▪ Cash planning and forecasting
▪ Day to day cash management
▪ Parking of surplus liquidity/Money management
▪ Access to short-term and long-term financing
▪ Daily/weekly reconciliations and update of accounting & other records
▪ Weekly/Monthly review of MIS including forecast for cash flows

What it takes to building up efficient treasury operations:

Efficient treasury operations equipped with robust inbuilt controls and structured reporting, not only brings
financial discipline but also contributes immensely to building up investors’ comfort and trust in the
management. Following ingredients fuel the efforts towards establishing an efficient and stable treasury
operations:

▪ Staff with right set of skills and experience

▪ Well designed & implemented polices, processes and controls
▪ Implementation of approval matrix, specifically for high value transactions
▪ Defined segregation of duties (Maker – Checker approach)
▪ Strong relationships with banking partners
▪ Formation of investment policy for surplus liquidity, focusing on capital protection & optimized returns

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 Processes and Controls in Treasury Operations – Impact Overview

Inefficient Processes Strong Investor

& Controls Sentiments

Vulnerable treasury Positive Contribution

management in Business Growth

Fraud Risk Effective & efficient

treasury management

Plunging Investor Robust processes &

Confidence controls

Key takeaways:

▪ Risk is omnipresent and inexorable, it can only be managed and mitigated.

▪ Robust policies, processes and controls around treasury operations will act as an effective shield against
the potential risks.
▪ As all around accuracy is no longer a preference but a need, adoption of confident methods and new age
technologies have, therefore, proved to be key drivers in installing business supporting control
environment, optimizing returns on investments, and preventing scope for misappropriation.
▪ Tone at the top is crucial. Enforcement of governance framework must find a place in the top agenda items
of Founders and Leadership Team.