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Treasury management in a large company covers several areas including funding management, liquidity management, currency management...

Treasury management in a large company covers several areas including funding management, liquidity management, currency management and corporate finance.

(i) explain the benefits of having a separate centralised treasury department.
(ii) Describe areas covered by treasury.

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Answer #1

(i) Benefits of separate centralised treasury department:

  • Manage risk more effectively.
  • Leverage scale to reduce cost and ratios.
  • Increase efficiency by reducing redundancies.
  • Optimize liquidity across the organization.
  • Enhance visibility into cash flows.
  • Improved working capital management through increased access to cash, resulting in reduced debt and increased return on investments of excess cash.

(ii) Areas covered by treasury.

  • Cash Management
  • Liquidity planning and control.
  • Management of interest, currency, and commodity risks.
  • Procurement of finance and financial investment.
  • Contacts with banks and rating agenecies.
  • Corporate finance.
  • Asset Liability management
  • Funds Transfer Pricing
  • Trading and Hedging
  • Portfolio Management
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