Treasury Basics

Introduction

A company’s treasury function is an important factor in the success of its overall business model. Treasury professionals (such as chief financial officers, corporate treasurers, and financial controllers) are closely involved in managing the financial direction of their company; this covers a range of responsibilities including equity and debt funding, investing, purchasing, risk management and reporting.

Treasury professionals constantly assess their company’s position, both within its local market and from a global viewpoint. They use their skills to manage their company’s financial well-being, both on a day-to-day basis and from a long-term structural perspective.

Corporate Treasury tools and products

The tools that corporate treasurers may use to balance cost with benefit, risk with growth, may include:

• common financial products such as loan finance or overdraft
• more sophisticated financial and treasury products such as foreign exchange arrangements, interest rate swaps and other derivative contracts
• equity or debt capital market funding
• non-core or core investment in real estate, securities or other assets

Good financial practice

An effective treasury function ensures that a company is run according to principles of good financial practice. This can affect a company’s relationships, both internal and external. Management of ongoing cash as well as longer-term funds will influence interaction with clients, service providers, investors and lenders. On the other hand, budgeting, insurance, tax and quality planning can all impact internal elements of the business, including marketing, sales, production and service delivery.

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