Christian P. Salazar Nov.

19, 2011
FM: 09303 Dr. Felicidad A. Dy Kam

1. Definitions of Treasury Management

firm's handling of all financial matters, the corporate handling of all financial
matters, the generation of external and internal funds for business, the management
of currencies and cash flows, and the complex strategies, policies, and procedures of
corporate finance.

Treasury management (or treasury operations) includes management of an

enterprise's holdings, with the ultimate goal of maximizing the firm's liquidity and
mitigating its operational, financial and reputational risk. Treasury Management
includes a firm's collections, disbursements, concentration, investment and funding
activities. In larger firms, it may also include trading in bonds, currencies, financial
derivatives and the associated financial risk management.

To plan, organize and control cash and borrowings so as to optimize interest and
currency flows, and minimize the cost of funds. Also to plan and execute
communications programs to enhance investors confidence in the firm.

2. Main activities of Treasury Department

The primary role is dealing with the management of a company's funds

Raising Equity capital and working capital

Investing surplus funds

The treasury dept is responsible for the timely availability of those funds when
needed for the support of the business.
The treasury is a key head office function that enables business managers to focus
on their key areas of expertise, be it manufacturing or sales.
Whether any company has a separate treasury function or, whether it is incorporated
into a finance department, for example, does not change the nature of the
underlying activity. The key is that it is a function that supports the main business
activity. The aim ought to be to improve the net worth of a company by managing
funds in the most appropriate manner.

Treasury management is an important part of the corporate accounting department.

Treasury departments are specialized in their accounting activities, and therefore
require certain levels of experience for employees. Treasury departments also engage
in the financial risk management of corporations, helping to manage corporate debt
and maintain cost-effective financing for corporate improvements.
 Treasury comprises the components Cash Management, Treasury Management, Loans
and Market Risk Management.

The treasurer uses the analyses of the current liquidity and risk situation to make
decisions about future company investments and borrowings, taking the conditions on
the financial markets into account. The resulting financial transactions are then entered
in Treasury Management.
The targets of Treasury Management are:
to support management of financial transactions and positions from the trading
stage through back office processing to the transfer to Financial Accounting.
To provide flexible reporting to analyze financial transactions and positions.
Treasury Management comprises the components Basic Functions, Money Market,
Foreign Exchange, Derivatives and Securities.

3. Functions of Treasury Management

1. To maintain the liquidity of business

It is the main function of treasury management to maintain the liquidity of business.
Without proper liquidity, it is risk for business to operate smoothly. By using cash
flow analysis and working capital management. Treasury officer make good ratio of
liquid assets and liquid liability.

2. To Minimize Currency Risk

In above example of Google Inc. business, I have already explained that it is the
function of treasury management to minimize the currency risk. For this, treasury
managers touch with currency market of world. They analyze the reason of crisis in
currency market. Sometime this crisis will be benefited for them because they have
to pay less to other country for getting their service at cheap rates.
 3. To provide quick finance to Company
It is also function of treasury department to supply quick finance to company, when it
needs the money. For this, a good network in financial market is required.

THE TREASURY FUNCTION

Governments need to ensure both efficient implementation of their budgets and
good management of their financial resources. Spending agencies must be provided
with the funds needed to implement the budget in a timely manner, and the cost of
government borrowing must be minimized. Sound management of financial assets and
liabilities is also required.
Financial management within the government includes various activities:
formulation of fiscal policy; budget preparation; budget execution; management of
financial operations; accounting; and auditing and evaluation. Within this broad
financial management function, the Treasury function is to achieve the set of specific
objectives mentioned above. It covers the following activities:

Cash management;
Management of government bank accounts;
Financial planning and forecasting of cash flows;
Public debt management;
Administration of foreign grants and counterpart funds from international aid;
Financial assets management

To carry out these activities, organizational arrangements and distribution of

responsibilities vary considerably according to countries. In some countries, the
Treasury Department focuses only on cash and debt management functions (which are
reviewed in this section). In a few countries, debt management is performed by an
autonomous agency

Treasury performs four basic functions: formulating and recommending economic,

financial, tax, and fiscal policies; serving as financial agent for the U.S. government;
enforcing the law; and manufacturing coins and currency.