What does the treasury function do? Part I

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If you’re new to the treasury function or you’re in a different department looking in, you may wonder what exactly does the treasury function (whether in a bank or a corporate) mainly do?

This is part one of two that looks at the functions of the treasury department.

Main activities of the treasury department

The primary role is dealing with the management of a company’s funds

  • Raising Equity capital and working capital
  • Investing surplus funds

The treasury dept is responsible for the timely availability of those funds when needed for the support of the business.

The treasury is a key head office function that enables business managers to focus on their key areas of expertise, be it manufacturing or sales.

Whether any company has a separate treasury function or, whether it is incorporated into a finance department, for example, does not change the nature of the underlying activity.

The key is that it is a function that supports the main business activity.

The aim ought to be to improve the net worth of a company by managing funds in the most appropriate manner.

Increasing net worth

  • This will require a detailed knowledge of a variety of areas of the company
  • Key will be an understanding of the overall business strategy
  • This will be the foundation that sets the framework that will drive the treasury function

Areas of control and oversight

The management of balance sheet exposures (funding, liquidity and cash management).

How?

By understanding and being responsible for:

  • The provision of capital and working capital
  • Functions and characteristics of financial markets, including offshore financial centres
  • Controls over dealing operations (segregation of duties, mandates, audit and accounting etc.)
  • Risk management principles for market, operational and credit risks
  • Understanding financial products, practice and procedures (such as money, FX, money market instruments, bonds and derivatives)

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