Treasury Management aims to ensure that adequate cash is available with the organization, during the outflow of funds. Further, it also contributes to optimum utilization of funds and makes sure that there are no unutilized funds kept in the firm for a very long term. The functions of treasury management are discussed below:
Cash Management: Treasury Management includes cash management, and so it ensures that
there
are
an effective collection and
payment system in
the organization.
Liquidity Management: An optimum level of liquidity
should be maintained in
the
business, for
the
better and smooth functioning
of the business, i.e. the company must be able to fulfil its financial
obligation when they
become due
for payment, such
as payment to
suppliers, employees,
creditors,
etc.And to
do so, cash flow analysis and
working capital management act as the
most important tool for treasury management, to achieve
its
strategic
goals.
Availability of funds in adequate quantity and at the right time: The treasury manager has to ensure that the funds are available with the organization in sufficient quantity, i.e. neither be more nor less, to fulfil the day to day cash requirement for the smooth functioning of the
enterprise.Further, timely availability of funds also smoothens the firm‘s operations, resulting in the certainty as to the amount of inflows available with the company at a particular point in time.
Deployment of funds in
adequate quantity
and at the right time: The deployment of funds has to be done in right quantity such as the acquisition of fixed assets, purchase of raw material, payment of expenses like
rent,
salary, bills, interest and so forth.
For this purpose, the
treasury
manager has to keep an eye on all receipts of funds and the application
thereof.Further, the funds must be available at the time of need, which may be different for different firms and also for the
purpose for which they are used. The period may differ from
a week to month when it comes to acquisition of
the fixed assets and two to three days
in
case of working capital requirement.
Optimum utilization of resources: Treasury Management also aims at ensuring the effective utilization of
the firm‘s resources, to reduce the operating
costs and also
prevent liquidity shortage
in
the coming time.
Risk
Management: One of the primary objectives of the treasury management is to manage
financial risk to allow the
enterprise to meet its financial obligations, as they fall due and also
ensure predictable performance of the business. It tends to identify, measure, analyze and manage
risk
in order to mitigate losses that has the potential to affect the company‘s profitability and growth in any way.Hence,
treasury
management is
accountable for all types
of risk that can
influence the
business entity.
Further,
the treasury management intends
to maximize
return on the funds available with the company, by
making such investments
which have higher return and
low
risk.
