Enhance Treasury Management Using Crypto Business Accounts
As finance continues to become more and more digitalised, institutions and businesses are being forced to upgrade their financial operations due to the many technological benefits on offer, but also out of fear of being left behind if they don't.
One prime example of an area that is being revolutionised is treasury management, which in its current form, is increasingly proving inadequate, and is often plagued by outdated data and manual processes. For this reason, many businesses are looking at new ways to enhance (or diversify) their treasury management operations, and one area that many are looking towards is crypto.
But due to the stark differences between traditional finance and crypto, there is a need for specialised crypto treasury management tools. The good news is that more and more providers are starting to offer crypto business accounts to meet this demand.
This article will therefore seek to enlighten readers on the benefits of using crypto business accounts to enhance treasury management, and will demonstrate why ICONOMI is an excellent choice for your needs.
We’ll guide you through:
- Treasury Management Overview
- Benefits of Crypto Treasury Management
- ICONOMI's Business Accounts — A Game Changer For Treasury Management
Let’s dive right in!
Treasury Management Overview
For many mid to large sized businesses, having a treasury management setup is crucial for maintaining a competitive advantage. But as technology continues to advance, new treasury management avenues are emerging, and ones which arguably have superior utilities.
What is treasury management?
Put simply, treasury management is a "continuous" and "holistic" financial activity that businesses employ to oversee and control their financial assets, operations, and risks. This encompasses a wide range of activities, ranging from liquidity management, ensuring operational cash flow continuity, optimising capital structure, and mitigating financial risks; to name a few.
In terms of why effective treasury management is so important, businesses rely upon this to safeguard their assets, plan for the future, and maintain financial stability in an increasingly dynamic economic landscape. This has traditionally involved financial controllers or accountants using conventional tools to manage this process.
But as mentioned previously, due to some outdated procedures and over-reliance on TradFi, businesses are looking for alternative mechanisms to ensure their financial stability, and the integration of technologies (and assets) such as blockchain and digital assets offer some compelling opportunities.
Key differences between traditional treasury management and crypto treasury management
In order to determine the value of crypto for treasury management, the best place to start is to first identify how it is different to traditional treasury management.
Below are some of the key distinctions:
1) Asset Management
Traditional treasury management usually involves human management of fiat currencies (pounds, dollars, etc) that are usually stable and regulated by government monetary policies. Crypto treasury management, on the other hand, deals with cryptocurrencies that are more volatile and operate on a decentralised network.
It is important to note, however, that although cryptocurrencies are more volatile, they also have some notable advantages over fiat. Either way, the fundamental differences between fiat and crypto mean that different strategies and tools are needed for crypto treasury management.
2) Banking and financial relationships
In traditional settings, treasury operations heavily rely on established relationships (often between humans) with banks and financial institutions for services like lines of credit, liquidity management, and investment opportunities. Conversely, crypto treasury management pivots towards technological solutions, utilising crypto wallets and exchanges, and is more decentralised in nature.
While crypto offers direct control over assets, it also means users need a robust understanding of digital security measures.
3) Regulatory environment
Traditional financial systems are well-entrenched within clear regulatory frameworks, providing a level of security and predictability. Crypto assets, however, are still navigating through an undefined global regulatory landscape, which can bring about significant compliance challenges.
As can be seen, the common themes that arise when analysing the key differences are fiat currency, regulation, and human oversight. This naturally means that for a business wanting to diversify into crypto treasury management, a bespoke and regulated solution is needed.
But before we delve into this, let's first look at the benefits on offer.
Benefits of Crypto Treasury Management
Now the differences are clear, you might be wondering why you should consider crypto treasury management?Below are some of the main benefits on offer:
1) Reduced dependence on fiat currency and banks
The first benefit that can be obtained through crypto treasury management is reducing business dependency on traditional financial systems and fiat currency.
Traditional treasury systems are often slow, encumbered by bureaucratic processes, and geographically or operationally restrictive, which can hinder a company's agility and growth; especially if they are looking to grow internationally. Crypto treasury management, on the other hand, allows for global investments and transactions with fewer barriers, enabling businesses to operate beyond the constraints of their home country's banking regulations and economic fluctuations.
What's more, fiat currencies are subject to the whims of governmental monetary policies and economic conditions, which can lead to instability through inflation or devaluation. It is why cryptocurrencies offer an alternative store of value, as they can act as a hedge against local currency depreciation, providing a more stable foundation for businesses operating in economically volatile regions.
2) Diverse crypto exposure
The second benefit that can be obtained through crypto treasury management is being able to obtain diverse crypto exposure, which enables a dynamic and adaptive treasury allocation strategy. This flexibility allows businesses to rapidly reallocate funds among various cryptocurrencies and stablecoins to respond to market conditions, or capitalise on emerging opportunities.
Crypto treasury management can therefore allow businesses to gain exposure to compelling cryptocurrencies like Bitcoin and Ethereum, which at times can result in higher returns than more mature and stable financial investments, depending on the timing and strategy employed.
Moreover, entering into the world of crypto also means businesses can gain access to crypto-specific financial instruments, including DeFi products such as staking or yield farming, which can also potentially bring about additional revenue beyond conventional investment mechanisms.
3) Continuous access
One of the standout advantages of crypto treasury management is its provision of continuous access to financial services. Unlike traditional banks, which operate on fixed schedules and are susceptible to downtime during holidays or operational disruptions, crypto platforms are available 24/7. This accessibility is critical for businesses that operate across different time zones or need to execute transactions outside of standard banking hours.
Another enticing benefit is immediate settlement, as crypto transactions typically conclude within minutes, dramatically enhancing liquidity management. This quick settlement process is especially beneficial for businesses that require quick access to funds in order to capitalise on immediate investment opportunities or to meet sudden financial obligations.
In addition to this, the technology (blockchain) underlying these transactions allows for automated reconciliation processes. The transparent and immutable record of transactions simplifies the traditional and laborious process of transaction matching, reduces errors, and frees up valuable resources for other important activities.
4) Improved capital efficiency
Another compelling benefit found with crypto treasury management is that it can significantly enhance capital efficiency within a business. This is because the "generally" lower transaction costs (compared to traditional banking fees) can reduce the overall capital required for transactional operations. This saving can then be redirected towards other areas of the business that may offer higher returns or require investment.
Optimised cash flow is another direct benefit, and this is a result of being able to conduct transactions swiftly, and with minimal fees. This efficiency allows you to have better operational planning, and can improve the ability of a business to respond to market changes (or investment needs).
Additionally, the predictable transaction fees associated with crypto further enhance financial planning, as businesses can better anticipate and manage their transaction fees.
5) Real-time analytics and insights
Last but not least, the use of blockchain technology in crypto treasury management provides superior real-time analytics and insights. This is because transaction data recorded on the blockchain offers an in-depth view of financial activities, enabling businesses to make more informed and timely financial decisions. This level of immediate transparency is simply not seen within traditional financial systems.
Therefore, crypto treasury management allows for better forecasting of cash flows and more effective financial planning. Businesses can track their assets in real time, respond quickly to any discrepancies, and adjust strategies based on up-to-the-minute financial data.
ICONOMI's Business Accounts — A Game Changer For Treasury Management
As can be seen, there are a wealth of benefits that can be realised through crypto treasury management. So if you are a business owner and have been sold on the benefits of diversifying into crypto, then the next thing you'll need to do is open an accredited crypto business account.
It just so happens that ICONOMI offers an effective crypto treasury management service through its crypto business account offering, and which allows European businesses to efficiently gain exposure to cryptocurrency; whilst simultaneously facilitating a secure and streamlined management process.
What is ICONOMI?
ICONOMI is a leading crypto investing platform that is best known for streamlining the investing process through its flagship offering, crypto strategies, which are essentially expertly managed crypto portfolios with low entry barriers.
Operating since 2016, 100k+ users have been using ICONOMI's user-friendly dashboard to invest in array of different crypto strategies, and it just so happens that this includes European businesses, who have been benefiting through ICONOMI's business accounts, which offer a structured approach to crypto investing.
Key features of ICONOMI's crypto business accounts
Below are some of the benefits that businesses can enjoy by opening a business account with ICONOMI:
FCA regulated: ICONOMI is one of the early crypto platforms to be registered with the Financial Conduct Authority (FCA) in 2021, providing businesses with a secure and compliant framework for crypto investment.
Diverse crypto portfolio options: Businesses have access to over 150 cryptocurrencies and can engage in more than 200 public investment strategies, which allows for diversified asset allocation and risk management.
Advanced trading infrastructure: The platform boasts a unique trading engine that secures the best market prices and includes features like automated rebalancing and copy trading to streamline investment processes.
Enhanced security measures: With a multi-tier system of hot and cold storage wallets protected by multi-signature technology, ICONOMI ensures that business assets are safe from unauthorized access.
Educational and operational support: ICONOMI not only provides educational resources to help businesses understand market dynamics but also offers dedicated customer support to assist with account management and strategic planning.
Setting up a crypto business account
The first step is opening a business account, and the process couldn't be easier. All you need to do is follow the steps below:
1. Go on the crypto business account section of the website, and click the green icon that says 'Register Business Account’.
2. You will then be shown a simple application box, which will ask you to fill in some basic details, including your name, email, country, telephone, and company website.
3. Once you have completed this and submit the application, one of ICONOMI's relationship managers will get in touch shortly after.
Additional information can be found here.
Conclusion
Due to the increasingly outdated (and stagnant) nature of traditional treasury management and fiat currency, crypto business accounts are increasingly becoming enticing value propositions for forward-thinking businesses who want to modernise and enhance their financial operations.
As was highlighted in this article, crypto business accounts offer a myriad of strategic advantages, including enhanced security measures, diverse cryptocurrency exposure, and real-time financial insights, which are all useful utilities for businesses wanting to navigate through the complex world of digital assets.
For businesses who want to explore the world of crypto treasury management, ICONOMI provides a robust and comprehensive platform for managing crypto investments in a streamlined and secure manner, making it an ideal onramp.
So what are you waiting for? Follow the simple instructions in the article, and start your Web3 journey today!
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