Yes, it’s hurricane season again.Here in the Gulf South we understand how much havoc a hurricane can wreak on a company and its cash flow. But it is worth being reminded that storms aren’t the only threat to business continuity. Covid-19, with the supply chain and labor issues it created, made that clear. In fact, a range of non-weather-related disasters — from fires to ransomware to terrorism and others — could impact any business community at any time.
So how do you protect your organization against a wide range of potentially disruptive events?
Building treasury resiliency
A well-documented treasury continuity plan can help your organization anticipate likely scenarios, outline response actions and react rapidly, so you can more quickly resume normal operations and revive cash flow.
One of the first steps in developing such a plan is to conduct a detailed review of operations and document all cash flow-related processes and how different disasters would impact them.
Another early step is to define all mission critical treasury activities — those you could not live without for several days — and determine how you could work around them if they were interrupted. For instance, how will you fund payroll and time-sensitive trade payment disbursements? How would you bring in money from your cash concentration system? How would you manage your cash position?
Central to your plan is knowing how you will regain internet access — critical for both obtaining account information and initiating transactions — if it is lost. That can mean designating a recovery site equipped with internet access, as well as ensuring key treasury employees can re-establish internet access, wherever they are, using a “hot spot” device.
Partner with your bank
Your bank can help bolster your continuity capabilities through various treasury management solutions, allowing you to:
- Make timely payments. With online and mobile banking applications, you can use your smartphone or other mobile device to review information, initiate and approve transactions, make payments and manage accounts anywhere you have internet access. In a disaster, you also will benefit from electronic payment origination capabilities your bank can provide, including Automated Clearing House (ACH) payments, which aren’t subject to Postal Service delays as checks are. For example, the ACH lets you directly deposit pay into employee accounts and avoid the delays that can come with distributing payroll checks.
- Collect payments. Remote and mobile deposit can enable staff to deposit checks into a bank account online, when physically transporting them to a bank branch would be challenging.
- Meet temporary financing needs. Talk to your banker about establishing a line of credit sufficient to keep your business afloat if cash flow from customer payments were to dwindle temporarily.
- Keep cash on hand. If you are a retail business with a lot of cash receipts, and you must be able to make change, plan to order extra coin and currency from your bank in advance of forecasted bad-weather events.
- Make emergency purchases. Commercial cards can enable essential personnel to cover emergency business expenses.
Test to evaluate preparedness
It’s not enough to draw up a good plan and adopt banking products that are useful in disaster situations. You also need to train your treasury staff on every facet of your plan, so they know what to do and how to use the tools at their disposal.
Don’t wait until a disaster strikes to learn if your treasury continuity plan works. Test your plan regularly using a combination of informal, discussion-based meetings — sometimes called “table-top” sessions — and actual hands-on, full-scale recovery exercises.
As part of your business continuity planning, talk to a Hancock Whitney banker or Treasury Services Specialist at 1-866-594-2304 to learn more about how our digital access and other treasury solutions can help.