What Treasury Does and Why It Matters

Every organisation that holds money in a bank needs someone to make sure that the right amount of cash is in the right account, in the right currency, on the right day. In a small company this is one part of the finance manager’s job. In a larger group it is a separate team called treasury.

Treasury is the function that manages the organisation’s cash, bank relationships, payments, funding and financial market exposures. Accounting records what has happened. Financial planning and analysis predicts results and explains variances. Treasury acts on cash in real time: it moves money, releases payments, deals in foreign currency and talks to banks every day.

This course is for people who work in or next to treasury: treasury analysts, finance officers who carry treasury duties, accountants moving into treasury, and managers who approve treasury work. It assumes you can read a balance sheet and a cash flow statement.

Where treasury sits beside other courses

Treasury touches many finance topics, and other courses in the catalogue teach several of them in depth. Managing receivables, payables and inventory is taught in the course Cash Flow and Working Capital Management. Measuring and hedging credit, liquidity and market risk, writing a treasury policy and building a 13-week cash forecast are taught in the course Credit, Liquidity and Market Risk. This course concentrates on the operating work of treasury: cash positioning, forecasting as a process, banks, payments, FX dealing operations, surplus cash and Islamic finance instruments.

Example: a day without treasury discipline

Brenlow Engineering, an engineering contractor, had twelve bank accounts in four countries and no one checking them daily. On one Monday, its main operating account was overdrawn because a large supplier payment was released before a customer receipt cleared. At the same time, a project account in another bank held more than enough cash. The company paid an overdraft fee and an apology to its bank, although the group as a whole had plenty of money. The problem was not a lack of cash; it was a lack of visibility and positioning, which is the first thing a treasury team fixes.