A close eye needs to be kept on working capital management as this tends to crawl higher and higher if not kept under tight control. This becomes a critical function and directly impacts the top-line and bottom-line.
2.3 Cash Management:
All flows (inflows and outflows) in pure cash / bank (online) has to be tracked and monitored minutely. This is critical as all cash has to be brought into the system immediately and effectively without incurring must cost. This function is critical as if not monitored carefully, it may lead to higher costs and even penalties by authorities if not controlled and guided properly.
The treasury function is concerned with management of funds at the micro level.Since funds or cash is the lubricant of all business activity, availability offunds on day-to-day basis is to be ensured by the treasury manager.
The treasury function isthus complimenting to the finance function in general.
2.4 Investments:
Take part in designing the bank’s (or corporate) investment policy and acting according to it to make investments in approved instruments / projects as per the evaluation matrix.
Once the funds have been sourced in correct measure, the deployment adds further to theprofitability of the firm; it has come about done in tandem with the pace of sourcing. Correctdeployment ensures that there is no unnecessary accumulation of funds in the firm at anypoint in time.
2.5 Policies:
There are many policies that are to be designed and evaluated frequently for updating the same. This needs to be done religiously and adhered to. Example: Risk management Policy, KYC Policy, Limit monitoring policy, credit risk management policy, Asset-Liability management policy, etc.
2.6 Fund Raising:
This is a very critical function of a treasurer. When additional funds are required, access how much is required and where to raise the same from. Decide the best available choice as per the risk appetite of the organization – debt, equity, combination of debt and equity, structuring, etc or changing the existing manner of functioning that will impact the cash requirements or cash utilization or cash collection.
It is the duty of the treasury manager to ensure that the organization has the required funds at hand, so key tasks are not stuck for the want of cash. It could mean raising more capital / funds either through capital (IPO / FPO / Private Placement, etc) or through debt – loans, etc.
Availability of fund in the right quantity is the core objectives of treasury management. Additionally, the treasury manager has also to ensure that the funds are just adequate for the requirements, neither more nor less. Idle cash will mean loss of interest and will not result in effective return on capital.