Treasury Management

The treasury function makes sure a company always has enough cash to meet its obligations, invests surplus cash safely, raises funding when needed and manages financial risks.

Typical activities include forecasting cash flows, managing bank relationships and accounts, arranging loans, bonds and credit facilities, hedging exposure to changes in interest rates, exchange rates and commodity prices, and investing short-term surplus cash.

For example, a company expecting to pay a large sum in a foreign currency in six months might have its treasury team buy a forward contract to lock in the exchange rate, removing the risk that the currency will strengthen.

Good treasury management reduces the risk of running out of cash, lowers financing costs and protects profits from financial market movements. In large multinational groups, treasury is often centralized, pooling cash from subsidiaries to make better use of it. Treasury teams work closely with the chief financial officer and follow board-approved policies on risk limits.