Role of Treasury Management

1
Role of Treasury Management

• Chapter 1

2
Trends in Treasury Management

• Total Working Capital Management
• Focus has widened from cash management to all
  current asset and current liability accounts
• Management of the Entire Balance Sheet
• Financing Strategy for Total Assets
• Expanding Role of Treasury
• Operational Risk Management, Insurance, Pension
  Fund Management

3
Trends in Treasury Management

• Legal Regulatory Developments
• Sarbanes-Oxley (SOX)
• Patriot Act
• Check 21
• Corporate Governance Ethics
• International Treasury Management
• Outsourcing

4
Treasury Management Objectives and the Cash Flow
Timeline

• Primary Goal of the Firm
• Maximize Shareholder Value
• Efficient Management of Resources
• Treasury Management Objectives
• Maintaining Liquidity
• Ability to meet current and future financial
  obligations.
• Optimizing Cash Resources

5
Treasury Management Objectives and the Cash Flow
Timeline

• Establishing and Maintaining Access to Short-Term
  Financing
• Access at the lowest possible cost of funds.
• Funding for the firms working capital gap.
• Maintaining Access to Medium Long-Term
  Financing
• Shareholder Relations

6
Treasury Management Objectives and the Cash Flow
Timeline

• Managing Risk
• Interest Rate
• Foreign Exchange
• Liquidity Risk
• Operational Risks
• Coordinating Financial Functions

7
Treasury Management Objectives and the Cash Flow
Timeline

• Cash Flow Timeline
• Total time interval from the time resources are
  purchased from vendors and suppliers at the
  beginning of the operating cycle until the time
  cash is received from customers.

8
The Cash Flow Timeline
Days Inventory
Days Receivables
Purchase of Resources
Working Capital Gap
Days Payable
9
Cash Flows Float

• Basic Types of Cash Flows
• Cash Inflows
• Concentration Liquidity Management Flows
• Cash Outflows
• Float
• Collection Float
• Disbursement Float