Role of Corporate Treasury Management


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.

The Facts

Corporate treasury management is a specific accounting department found in banks and large public corporations. The size of the treasury department depends on the corporation's size; very large corporations may have regional treasury departments located in regional accounting offices. Its purpose is to manage all the cash operations of the company, including daily cash flow, corporate debt agreements and corporate investing activities.

Accounting Hierarchy

The main treasury department is usually led by a director, who reports directly to the company's chief financial officer (CFO). The director has accounting managers or controllers that oversee each specific division in the treasury department; beneath this management level are the senior and staff accountants responsible for the daily accounting entries. The size and scope of employee experience and license requirements depend on the activities of the treasury department. Corporations that engage in several investing activities may require accountants who are licensed stockbrokers.

Corporate Cash Flow

Corporate cash flow is the most important part of the treasury department. Making sure cash is available to pay current liabilities and cover payroll are daily activities managed by treasury. Large corporations may have several dozen bank accounts that need to be reconciled daily to ensure no fraud has occurred. Another important part of cash flow is the preparation of the cash flow statement for each division or subsidiary of the corporation. The cash flow statement helps the treasury director find areas struggling to generate cash each month and correct the business operations appropriately.

Corporate Debt

All corporations use debt in their financing activities; the management of this debt is usually relegated to the treasury department. Monthly repayments, balloon payments and interest payments are managed by treasury. Loan agreements and other related paperwork is also found in the treasury department. As other financing needs arise in a corporation the treasury director is relied on to help determine the best options for debt financing. Maintaining strong relationships with bankers is an integral part of the director’s responsibilities.

Corporate Investments

Corporations have various investment strategies for their cash retained from business operations. Money markets, bonds, securities and special long-term investments are all part of a corporation’s investment portfolio. The treasury director and CFO will usually have percentages of cash that are required to remain in cash and short-term investments, which are highly liquid. All other cash is held in higher-interest investments to gain the maximum interest.

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