the treasury management tries to maximize the return on the assets available to the firm by making investments with a high return while low risk.
Fremont, CA: Treasury management may be defined as the planning, organization, and control of an enterprise's holdings, money, and working capital to make the best use of funds, preserve the firm's liquidity, minimize the total cost of funds, and limit financial and operational risk.
Working capital management, currency management, corporate finance, and financial risk management are all covered.
In simple words, treasury management is the administration of the financial concerns of the firm, such as obtaining funds from diverse sources, currency management, cash flows, and numerous corporate finance strategies and procedures.
Treasury Management's goal is to guarantee that the organization has enough cash on hand even during the outflow of funds. Furthermore, it helps to optimal money use and ensures that no unutilized funds are maintained in the organization for an extended period. The following are the treasury management functions:
Cash Management
Treasury Management comprises cash management, ensuring that the firm has an effective collection and payment mechanism.
Liquidity Management
An optimal level of liquidity must get maintained in the business for the better and smooth operation of the company, i.e., the firm must be able to meet its financial obligations, like payments to suppliers, workers, creditors, and so on, when they become due.
To do this, cash flow analysis and working capital management are the most crucial tools for treasury management to fulfill its strategic goals.
Availability of finances in sufficient amount and at the appropriate time
The treasury manager must guarantee that monies are accessible with the organization's inadequate amount, i.e., neither more nor less, to meet the day-to-day cash requirements for the enterprise's successful operation. Furthermore, timely availability of money smoothes the firm's operations, resulting in predictability about the quantity of inflows accessible with the company at any given time.
Optimal resource utilization
Treasury Management also attempts to ensure the optimal exploitation of the firm's resources to cut operational expenses and prevent a liquidity constraint in the future.
