What is treasury management?

Introduction to treasury management

Treasury management is the act of overseeing a business’s financial resources and associated risk, ensuring money flows smoothly, finances are managed strategically, and risks are mitigated effectively. 

A business’s financial resources includes all of its assets including cash or cash equivalents, securities, accounts receivables, and inventory. Financial risk refers to any money-related risk that threatens your business, such as those in liquidity, investments, foreign exchange (FX), and interest rate exposure.

As a business matures, so too does your treasury management, from focusing on day-to-day cash flow to the strategic, long-term management of your finances. For example, how much should you invest and where? How can you best manage  debt and equity financing? How can you improve your working capital ratio? And how will your financial strategy support your business objectives? Plus, as your business expands to new markets, treasury management will also take care of multiple accounts in multiple currencies and oversee regional investment strategies.

In practice, treasury management is made up of several activities. And the ones a treasury function will be required to perform will depend on various factors such as a business’ size, its internal structure and financial objectives. These activities include:

• Cash management
• ​​Working capital management
• Debt and equity financing
• Trade finance
• Risk management
• Investment and deal management
• ‍Insurance management

Cash management

‍Cash management deals with the day-to-day flow of money in and out of your business. This includes bank relationship management, payment operations, cash positioning, and cash flow forecasting. The goal is to ensure you have enough liquidity to cover your organization’s running costs and meet upcoming financial obligations. To learn more, read our in-depth guide to cash management.

Working capital management

‍Working capital management involves optimizing your current assets and liabilities to operate as efficiently as possible. This includes managing its accounts receivable, accounts payable, inventory, and cash in line with your desired working capital ratio.

Debt and equity financing

‍This includes arranging and negotiating credit facilities, managing debt issuance, ensuring compliance with debt covenants, and overseeing the process of raising capital through the sale of shares.

Trade finance

‍Trade finance refers to the financing of goods or services, usually in an international trade or transaction, from a supplier through to the end buyer. By optimizing this, you can minimize your financial risk and improve your liquidity in foreign transactions.

Risk management

Treasury management is in charge of evaluating and mitigating financial risks such as exposure to foreign currency fluctuations, interest rate changes, and investment performance. As well as anticipating these risks, treasury teams must also ensure there’s enough financial cushioning in place to protect your business from the unexpected.

Investment and deal management

‍Excess cash shouldn’t languish in a bank account – good treasury management puts your money to work by investing it strategically to generate returns while minimizing risks. Investment strategies must line up with the company’s risk appetite and working capital needs.

‍Insurance management

‍This involves managing risks associated with insurable events such as property damage, liability claims, and employee injuries.

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How Atlar can help with your treasury management

The past twenty or so years have seen dramatic changes in financial technology for consumers. The world of business software, and treasury technology in particular, has not kept pace. The treasurer’s toolkit is overdue for an upgrade. Atlar is rebuilding it from the ground up using modern, real-time technology that lets finance and treasury teams level-up without needing a years-long implementation project, teams of specialist consultants, and never-ending maintenance work.

Atlar provides customers like Acne Studios, GetYourGuide, and Forto with a single platform that connects to everywhere and gets you up and running in weeks. Finance teams are now better equipped to do the work that keeps our businesses running, saving hours on admin tasks and managing money more efficiently.

To discover how Atlar can simplify your treasury management, book a demo with our team and see the platform in action.