Treasury primer

Irrespective of the size of a company, its geographic location or its range of business, it needs to answer the following questions...

• what treasury activities does it have?
• who is responsible for them?
• what are the limits of their authority?

If we accept that businesses need comprehensive risk management at their heart, then the education, experience and skills of a treasurer make him or her the most suitably placed business executive.

Of course, not all organisations develop at the same pace or in the same manner. There is no doubt that working practices in fast developing organisations are usually seen being far ahead of any existing policies. In addition, where there are traditional elements of cultural or business sector practice within a business, the approach to addressing these issues and creating a contemporary management structure needs to be clear, robust and have executive leadership. To address these issues, treasurers must focus on training, systems and policies and management commitment.

The effective management of financial flows – payments, receivables, liabilities and assets – requires more than simply the treasury delivering its processes. A spirit of co-operation – between systems, people, management approaches – is required; this represents for treasurers the opportunity to develop and utilise professional skills in many varied aspects of management. It must be accepted that interdependencies with other corporate disciplines will affect the treasurer’s freedom of manoeuvre with the risk management strategy and opening up and maintaining dialogue with the business is essential for success. Broadly, however, good practice will recognise the key steps required to create and embed an effective financial risk management framework that interlinks with other risk management capabilities of the company.

It will be hugely instructive for readers to feedback on their experiences of treasury management within the ACTME region. Comments can also be directed to pmatza@treasurers.org

By Peter Matza