What is Corporate Treasury?

Corporate treasury focuses on managing a company's resources to ensure stability and liquidity. Key responsibilities include overseeing short-term cash flow, maintaining long-term liquidity, allocating cash and managing financial risks. The goal is to optimise cash usage while safeguarding the company from and financial uncertainties.

Cash Flow

Corporate treasury monitors / manages cash requirements to ensure the business has liquidity. This involves...

• forecasting cash inflows and outflows,

• managing working capital (e.g., accounts payable and receivable),

• and ensuring that there’s enough cash available to meet immediate needs (payroll, supplier payments, and short-term debt obligations).

Liquidity

Treasury also ensures that the business has liquidity for the long term. This might involve securing financing or managing assets and liabilities over a longer horizon. Treasury ensures that the company can meet future obligations without jeopardising its financial health.

Cash Allocation

Cash allocation refers to how the company uses its available cash effectively. Corporate treasury decides where to allocate surplus cash, whether that’s investing it in short-term money market instruments, paying down debt, distributing dividends to shareholders, or reinvesting in the business. This is aimed at maximising returns while maintaining sufficient liquidity and managing risk.

Risk Management

Treasury also manages risks related to...

• interest rates,

• foreign exchange,

• commodity prices,

• and credit.

Treasury plays a key role in safeguarding the company’s financial stability by identifying, assessing, and mitigating these risks.