When treasury deals settle on terms nobody checked

A common failure is the unmatched deal. A debt or currency trade is booked in the treasury system with terms that differ from what the bank confirmed, and nobody compares the two before money moves. It surfaces as settlement breaks and wrong accruals. The fix is independent matching before settlement.

How it starts

It rarely begins with carelessness. It begins with speed. A dealer agrees a deposit, a loan drawdown or a forward contract on a call or a chat platform, then keys it in afterwards from memory or a scribbled note. The rate is off by a fraction. The value date lands on the wrong business day. The settlement account is an old one.

The bank sends its confirmation. Often it goes to a shared mailbox, or straight to the dealer who did the trade. If that dealer is also the person who checks confirmations, the check becomes a glance. People see what they expect to see.

Small teams make this worse. When treasury is a handful of people, separating dealing from confirming feels like bureaucracy. So the duty quietly merges. The policy still says the duties are split. The practice does not.

A second route in is the intercompany or cash pool transaction. These often skip confirmation entirely because both sides belong to the same group. Nobody owns the comparison, so it never happens.

How it gets noticed

The first clue is usually a settlement that fails or arrives short. Cash lands in an account the forecast did not expect, or a payment to a counterparty bounces because the instructions were stale. Liquidity planners see a gap between the position they projected and the balance on the bank statement.

Accounting catches a different symptom. Interest accruals stop agreeing with what the bank charges or pays. A loan that should cost one amount costs another. Someone in the close team posts a manual adjustment and moves on, which hides the cause.

Sometimes the counterparty calls first. A bank chasing an unpaid leg of a currency swap is an uncomfortable way to learn about the problem.

One quieter signal deserves attention. If the unconfirmed or unmatched items report is always empty, be suspicious. Either the process is perfect or the report is not being produced honestly.

Fixing it

Start by moving confirmation matching out of the dealing seat. The person who agreed the trade should not be the one who confirms it. In a small team, borrow someone from accounts payable or the controller's group. Independence matters more than treasury expertise here.

Route confirmations from banks to a mailbox or matching platform that dealers cannot edit. Many banks will send electronic confirmations if asked. Automatic matching against the treasury system takes the human glance out of the loop for routine trades and leaves people free to chase the exceptions.

Make matching a gate. Nothing should be released for payment until the deal is matched or a named manager has signed off the difference. Treat it as a hard stop in the payment workflow.

Clean up standing settlement instructions with every intermediary. Confirm them through a channel separate from the one used for dealing, and record who verified each change. Stale or fraudulent instructions do more harm than a wrong rate.

Bring intercompany deals into the same discipline. A simple internal confirmation, agreed by both entities, closes the gap that cash pools tend to leave open.

Finally, look back. Reconcile accruals on open debt and investments against bank statements and loan agent notices. Differences found here point to old trades that were booked wrongly and never caught. Correct the deal records, then the accounting.

Questions for the people who run it

The written procedure and the real one tend to drift apart here. Ask the people doing the work, and listen for the gap.

• When a dealer agrees a trade by phone, what do they write down before keying it?
• Where do bank confirmations actually arrive, and who can open, move or delete them?
• Who compared the last confirmation to the system, and was that person involved in the deal?
• What happens to a payment if the confirmation has not come back yet?
• Which transactions never get a confirmation at all? Intercompany loans, cash pool sweeps and money market fund subscriptions are common answers.
• How are settlement instructions changed, and how does anyone know a change request is genuine?
• When accruals disagree with the bank, who decides whether to adjust, and do they ever trace it back to the deal?
• Has anyone worked around the matching step during a busy period? What made it necessary?

The last answer often tells the most. Workarounds show exactly where the control is too slow or too awkward to survive pressure, and that is where the redesign should focus.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.