Tresury Management

It is defined as ‘ the corporate handling of all finanacial matters, the generation of external and internal funds for business, the management of currencies and cash flows and complex, strategies ,policies and procedues of corporate finance.’

The key goals of treasury management are :-

1. Maximize the return on available cash.

2. Minimize interest cost on borrowing.

3. Mobilise as much cash as possible for corporate ventures.

4. Reduce the risk of currency fluctuation risk exposure.

Functions of Treasury Department:-

{ The function are to ensure proper usage, storage and risk management of liquid funds so as to ensure the organisation is able to meet its obligations , collect its receivables also maximize the retuen of investor.}

Types of treasury management

1. Cash Management:- Efficient collection and payment of cash both inside and outside to 3rd parties.

2. Currency Management:- Foreign currency risk exposure of the company.

3. Fund management:- Planning as per short, medium and long term needs.

4. Banking:- Negotiation with bankers and acts as the initial point of contact with them.

5. Corporate Finance:- Acquisition and disinvestment within the group. And investor relations.

Purpose of CASH BUDGET

1. Cash budget is most signifincant and frequently used device to plan and control cash receipts and payments 

2. It identifies the period when there might be shortage of cash or an abnormally large cash requirement;

3. It enables firm to take sufficient cash to take advantage like cash discounts; and

4. Lastly, it helps to plan/ arrange adequatly needed funds on favourable terms.

Different kind of float with reference to management of cash

1. Billing Float

2. Mail Float

3. Cheque processing Float

4. Bank Processing Foat

Concentration Banking 

1. Here the company establishes a no. of strategic concentration centers in different regions.

2. Separation of time of customer mails in his remittances & time when they become spendable.

3. Payment received by different collection centers are deposited at there local banks which transfers all the surplus fund to concentration of head office.

Lock Box System

It is used to accelarate the flow of cash.

Purpose:- Eliminate the time between receipt of remittance by co. &deposit in the bank.

A lock box arrangement is on regional basis which a company chooses according to its biling pattern.

Virtual Banking & Its Advantages.

Virtual banking refers to the provision of banking and related services through the use of I.T without recourse to bank by the customer.

The Advantages of virtual banking services are as follows:-

1. Lower Cost for handling transactions.

2. The Increased speed of response to customer requirement.

3. The lower cost of operating branch

leads to cost efficiancy.

4. It allows the possibility of improvement & range of services being made available to customer rapidly , accurately and at his convinience.

3 Principles relating to selection of marketable securities are:- 

1. Safety :- As the objective of this investment id ensuring liquidity , Minimum risk is the criteria of selection.

2. Maturity :- Matching of maturity and forcasted cash needs is essential .Prices of long- term securities fluctuates more with the interest rates and are, therefore ,riskier.

3. Marketability :- It refers to convinience spoed and cost at which a security can be converted into cash.

‘MANAGEMENT OF MARKETABLE SECURITIES IS A INTEGRAL PART OF INVESTMENT OF CASH’

Managment of marketable securities are intergral part of investment of cash as it serves both the purposes of liquidity and cash , provide choice of investment is made correctly.As the working capital needs are fluctuating, it is possible to invest excess funds in some short term securities, which can be liquidated when need for cash is felt . The selection of securities should be guided by 3 principles namely Safety, Maturity and Marketability .

                        [Exam Tip]

“Stop seeing the time for calculating the time of sitting and standing from study desk start seeing time for the start and completion of the tast you take in “.

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