Excursion: Treasury

Excursion: Treasury

by Marc T. PIRA
The treasury of a company is certainly one of the most exciting, versatile and vitally important areas. There is a reason why Treasury is organizationally associated to the extended management. How you can benefit from a well-organized treasury is described on this page.

Great unknown

Many established companies rub their eyes in wonderment: According to a recent study, the treasury in the company has almost no university curriculum. If it is then treated, then the related topics are outlined rather stepmotherly. How can that be? After all, the importance of treasury has been rising ever since the financial crisis.

Industry or Bank

Depending on your perspective, the tasks of a treasury department are strikingly different. Although we advise both banks and industrial companies, the most frequent inquiries are certainly those from the industrial sector, which is why our article places a clear focus on treasury in industrial companies.

If one follows the definition of the Treasury in the businessdictionary one may find that it is described as

The process of administering to the financial assets and holdings of a business. The goal of most treasury management departments is to optimize their company’s liquidity, make sound financial investments for the future with any excess cash, and reduce or enter into hedges against its financial risks.

The control of cash flows and the associated management of liquidity are thus the central concepts, the task area is thus clearly outlined. And yet, restricting it only on liquidity management is too easy. While former Treasury departments mainly focused on cash and risk management activities, the Treasury today is increasingly seen as an in-house financial adviser and service provider to the business.

The respective objectives within the Treasury vary depending on the strategic orientation of the company and the activities of the Treasurer can therefore vary widely depending on the company. One of the key tasks, however, is to control the liquidity in the company in such a way that the solvency of payments is maintained at all times. In this respect, the treasurer holds a strategically important position for the development of the company.

However, there are other subordinate goals, such as general financial risk management, in particular the risk-adequate management of interest, currency or credit risks, the optimization of financing costs, the consideration of yield aspects, the management of banks and accounts, as well as the compliance with internal and external regulatory requirements. In all, close coordination with the Board is essential.

The influence of treasury on corporate governance is increasing, especially with regard to strategic decisions and even more when treasury is value-adding. A treasurer is often seen as an internal consultant to the management. Typical tasks in such cases include participation in the financing of external growth, the exploitation of synergy potential and participation in the reduction of the tax burden.

With our experience in the management of financial risks as well as the design of cash and liquidity management, we are your all-rounder in the analysis and optimization of existing and the implementation of new processes. Contact us.