Managing Your Business’ Treasury

Since the 1970s, financial risk management has been regarded as an essential for almost all large businesses. A systematic process of identifying and guarding against company risks, risk management is often taught to business professionals through investment seminars and financial planning seminars. The professionals involved in the industry are trained in treasury operations, passing a Certified Treasury Professional test in order to receive certification in the industry. As of 2008, the test was passed by nearly 20,000 professionals.

Ultimately, treasury management involves management of an enterprise’s holdings, ultimately with the goal of maximizing liquidity and limiting operational, financial, and reputational risk. This includes management of collections, disbursements, concentration, investment, and funding activities as well as trading in bonds, currencies, financial derivatives, and financial risk management.

Among other things, Certified Treasury Professionals are trained to conduct financial conferences, informing professionals on how to run effective treasury management systems that manage finances and budget safely. The basics taught in financial seminars include:

• Pricing and costing products
• Banking strategies
• Understanding treasury management systems
• Identifying risks
• Effectively managing risks

Most banks have entire departments devoted to treasury management, though other non banking entities also offer help with treasury management systems. In the past, large banks were the primary providers of treasury management products, though smaller banks are beginning to launch and expand their offerings in terms of treasury management systems. Within bank treasuries, departments are often incorporated like:

• A fixed income or money market desk that buys and sells interest bearing securities
• A foreign exchange desk that buys and sells currencies
• A capital markets or equities desk that deals in shares listed on the stock market.
• A proprietary trading desk conducting trading activities for the bank’s own account and capital
• An asset liability management desk that manages the risk of interest rate mismatch and liquidity
• A transfer pricing or pooling function that prices liquidity for business lines within the bank.

Treasury management systems are essential for the running of a successful business and should be given utmost attention from serious business owners. Find more on this here.