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Treasury Competencies

Cash Management

How can something so obvious create so many headaches. Cash management is all about, well, you guessed it, managing cash: bank balances, receipts and disbursements. Effective cash management is aggressive and mindful of risk at the same time. It involves having the people, processes and systems in place to prevent cash shortages while highlighting cash excesses that can be reinvested or returned to shareholders.

Funding

Know your options. Funding can come in many different forms; operating cash flows, terms with suppliers or customers, loans or lines of credit, and raising equity. Each form has different costs and risks but the objective is the same – provide the company with enough liquidity to execute your plan with some cushion for variability. Having cash, either on hand or available, will not only help to avoid bankruptcy, but also position your business with adequate resources to capitalize on growth opportunities as they come about.

Risk Management

The importance of capital and readily available cash drives companies to implement risk mitigation measures to protect their capital base. This is why the risk management function is a natural fit for the Treasury attribute. Many internal controls are designed to protect against cash shortfalls. These controls include; preventing cash from being misappropriated, monitoring bank covenant compliance to preserve liquidity and executing an effective capital policy to maintain a reasonable cost of capital. The demands and rigor associated with effective cash management are a natural extension to solid risk management practices.

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