How does a treasury management solution simplify the management of banking authorities?

Managing banking authorities is a complex and time-consuming task. Discover in this article how to efficiently manage your banking authorities!

In every company, regardless of its size or industry, managing banking authorities is a critical aspect of financial management. Banking authorities define who has the right to conduct financial transactions on behalf of the company, whether it’s making payments, managing financial contracts, or overseeing bank accounts. This responsibility is essential for ensuring the security, compliance, and efficiency of a company’s financial operations.

However, managing banking authorities is a complex task for treasurers. It is often tedious and time-consuming, as it requires collecting legal documents, appointing authorized signatories, defining specific powers, and regularly updating this information. In a constantly evolving financial landscape where cybercrime is increasingly prevalent, this management becomes more strategic, demanding a proactive approach and the use of appropriate technologies.

Bank mandates can be categorized into several types, including:

• Payment mandates, covering web access, electronic payments, and checks.
• Financial contract mandates, essential for interactions with trading rooms. For example, in transactions related to currencies or hedging strategies for exchange rates, these mandates grant specific authorizations to those managing financing, particularly for drawdowns on Revolving Credit Facilities (RCF) and signing credit agreements.
• Bank account mandates, involved in opening, closing, terminating, and renewing accounts.

The variety of bank mandates, whether related to payments, financial contracts, or bank accounts, highlights their crucial role in ensuring smooth financial operations.

Bank power management requires the implementation of several essential steps. To enhance the company’s financial security, it is important to simplify this management. This can be achieved by clearly defining the risks and responsibilities of each stakeholder.

1. Identification of mandates: This involves identifying, usually in collaboration with the legal department, the legal representatives of the entities holding the contracts.
2. Document collection: Collecting documents that justify the authority of the mandate is essential. This can include the KBIS, statutes, or minutes of meetings. It is also necessary to obtain proof of address, identity documents, and signature specimens of the legal representative and any designated agents.
3. Definition of exchange format: It is important to establish a standardized exchange format with counterparts to facilitate power management.
4. Assignment of mandates: Define the agents and powers based on the company’s responsibilities and needs. This step helps secure and optimize financial transactions. It is crucial to consider various scenarios and requirements that the treasurer might face. For example, granting a cash withdrawal power to an employee responsible for managing petty cash or delegating temporary powers for specific projects. Another important aspect of this step is segmentation. If the organization has multiple entities or subsidiaries, it is important to assign appropriate powers. For instance, in the case of a subsidiary in Milan, the local financial manager may have specific powers. Similarly, the Chief Financial Officer may have an overarching view and control over the entire process.
5. Document production: Document production is the final step in the bank power assignment process. It involves drafting and issuing documents that formalize and materialize the authorizations granted to authorized individuals. It is important to ensure that the documents comply with current rules and procedures, that they are signed by the relevant parties, and that their signatures are collected. This phase is essential to ensure the validity and legal security of bank powers.
6. Updating bank powers: This step involves regularly verifying that the bank powers are up-to-date and in line with current authorizations.

Attention must be given to changes in personnel or signatories, as well as any potential expiration dates of powers. Continuous monitoring ensures that the company remains compliant with the latest authorizations and that documents are updated accordingly. This prevents complications and strengthens the company’s financial security.

This process occurs within the context of increasingly stringent KYC (Know Your Customer) standards imposed by banks, which require enhanced checks and controls on clients.

Treasury teams are thus required to spend a significant amount of time responding to these new demands.

eBAM (electronic Bank Account Management), which was meant to simplify and automate this management, is not yet widespread among all banking partners and its adoption remains limited.

A Treasury and Financial Risk Management System (TRMS) is a good solution to help treasurers digitize a large part of these steps.

To simplify and optimize the administrative tasks of the treasurer, the myDiapason Treasury and Financial Risk Management solution offers the capability to digitize a large part of these processes. By using the myDiapason TRMS tool, the treasurer can define the guidelines for powers and their applicability conditions, configure template letters, and generate correspondence for banking agents remotely.

• Define the guidelines for mandates and agents: With myDiapason, the treasurer can input information related to the entities holding the mandate, such as their role, effective date, and activity, as well as supporting documents. They can also enter details about the agent, such as their identification document, validity, and signature specimen.
• Configure template letters for correspondence to banks: With myDiapason, the treasurer can use various templates that can be configured globally or individually. Letters can be generated manually or automatically.
• Manage the applicability conditions of powers: With myDiapason, the treasurer can define as many powers as necessary, associated with each bank or specific application area, whether related to financial contracts or bank accounts.

The myDiapason solution also enables the creation of validation workflows for creation/modification operations, the ability to maintain an event history, the reception of automatic notifications (e.g., to be informed of an identification document’s expiration date), and access to a comprehensive audit trail of all modifications.

Bank power management is a complex task that requires good organization and traceability of actions. A treasury and financial risk management solution like the myDiapason TRMS simplifies and secures this process by automating the various steps.

1. Identification of mandates: This can be achieved by associating entities with contractual relationships with banks. The mandate data is then digitized and stored in the myDiapason solution, ensuring its compliance.
2. Document collection: Validating powers requires collecting supporting documents such as signatures and proof of address of the agents. These documents are then digitized and archived in the myDiapason solution, facilitating their future consultation.
3. Definition of exchange format: The format of letters to be sent to banks is defined based on the type of power and in collaboration with the banks. Digitizing and recording these letters in myDiapason greatly facilitates communication.
4. Assignment of mandates: The assignment of mandates, agents, and the determination of power limits are recorded in the myDiapason solution. This digitization of data allows for the historical tracking of the conditions specific to each power.
5. Document production: The myDiapason solution offers automation and alert features to facilitate the production of documents necessary for activating or modifying powers. Having all documents and supporting materials within the solution enhances process automation.
6. Updating bank powers: Using the myDiapason treasury management tool allows for better tracking of bank powers by centralizing data, automating processes, and ensuring traceability.

With the use of a treasury management software like myDiapason, repetitive and tedious tasks are eliminated. Bank power management becomes more efficient, automated, and secure, reducing the risk of errors and ensuring regulatory compliance.

Diapason offers an effective and secure alternative for managing bank powers. With the myDiapason TRMS platform, you benefit from several advantages:

• Reliability of Information: Reliable information is crucial as it allows for the archiving of powers, providing an accessible history of various exchanges. This also helps meet audit requirements, enabling quick justification of the powers in place.
• Streamlined Communication: Communication is simplified and facilitated by identifying signatories and their assigned powers both internally (to identify interlocutors for contract signatures) and externally (for the bank confirmation process).
• Process Automation: Documents and deadline information are generated automatically. Mail merge features are directly integrated into the platform, eliminating the need to manually track deadlines.
• Time Savings: This time savings results from the previous three benefits: reliable, easily accessible information centralized in one tool, and automated processes. As a result, bank power management, which is often done between Excel and Word, becomes more efficient, facilitating tracking, information retrieval, and document production.
• Access Security: The digitization of identification documents, proof of address, and signatures is secured through encryption in the system. In a bid for continuous improvement, two new features were added in 2023 to meet treasury needs: electronic signature with DocuSign and the ability to archive bank power correspondence on each relevant account.

Adopting a Treasury and Financial Risk Management System (TRMS) presents an effective solution for simplifying bank power management and enhancing treasurers’ efficiency. The myDiapason solution offers a centralized, secure, and automated approach to managing bank powers while adhering to corporate governance rules. With myDiapason, operational risks are reduced, costs are optimized, and internal control is strengthened.