Cash Pooling

Planning & Operations – a clear vision and purpose

| 15-01-2018 | treasuryXL |

Planning & Operations
Treasury is a function which entails many different roles and responsibilities. The main task is to monitor and manage the cash within a company ensuring there is sufficient liquidity. This means monitoring all the cash flows – both inflow and outflow, together with the sources of the flows – current operations, investments, borrowing etc. There must be enough liquidity to maintain the daily operations, whilst excess funds need to be invested. At the same time, Treasury must ensure that excess funds are invested in a safe and prudent manner and that future assets and liabilities are hedged where appropriate.

Due to the complexity of the task, it is very difficult to give a short description of all the different roles. This is an overview of the main roles that Treasury undertake:

  • Planning and operations
  • Liquidity Management
  • Planning and operations
  • Risk Management
  • Funding
  • Stakeholder activity
  • Corporate Governance

Planning and Operations

This relates to the routines that Treasury perform to ensure that a company can move forward from day to day.

Payments – ensuring that a company meets its financial obligations – specifically to debtors, banks, tax authorities etc. It is very important for a company that it is seen by its counterparts to be secure, organized and that debts are paid on time.

Cash flow forecasting – this is the main planning element within Treasury. Information must be gathered from the entire organization both at head office level and subsidiary level. Information can come from accounting, capital investment budgets, operational budgets, loan maintenance records, tax and dividend records, etc. It is the responsibility of Treasury to ensure that there are sufficient funds within a company to meet all its operational requirements.

Risk assessment – Treasury needs to develop and maintain the risk matrix. This means not only identifying the risk, but also ascertaining the appetite within the company for the risk. A clearly defined matrix will ensure that all risks are recognized, and the correct procedures are carried out to mitigate the risk to the agreed level.

Treasury systems – how is data received and stored? If a decision is made to purchase a dedicated TMS, then Treasury is involved in discovering the criteria to meet the company mandate, the search for a relevant supplier, the implementation and maintenance of the system, together with the operation of the system. A good TMS system should enhance workflow, lead to more concise reporting and lead to financial savings.

Banks – banks and other financial service providers are an integral part of Treasury and their operations. This requires analysis, negotiation and selection of the preferred supplier. Treasury needs to keep a close eye on the costs charged against the service that is offered. This can mean regular appraisals and renegotiation of the fees. Ultimately, a company needs to know that the operations are performed smoothly, timely and accurately.

Strategic development – Treasury are responsible for the operational risk that have been agreed by the Board of Directors. Treasury needs to liaise, inform and alert the Board when issues arise – be they internally or the result of changes in legislation that have an impact on the smooth day to day operations that they perform on behalf of the company.

Next: Liquidity Management

Lionel Pavey


Lionel Pavey

Cash Management and Treasury Specialist