MODULE 1
FI's 3rd Party Providers Rating Agencies External Investment Managers External Auditors Regulatory Agencies Industry Trade Groups Suppliers & Customers Legal Counsel Financial Markets
Areas of External collaboration for the Treasury Department FI's 3rd Party Providers Rating Agencies External Investment Managers External Auditors Regulatory Agencies Industry Trade Groups Suppliers & Customers Legal Counsel Financial Markets
Accounts Receivable Accounts Payable Pension Management Internal Audit Risk Management General Ledger Tax Purchasing Legal FP&A HR/Payroll
Areas of Internal collaboration for the Treasury Department Accounts Receivable Accounts Payable Pension Management Internal Audit Risk Management General Ledger Tax Purchasing Legal FP&A HR/Payroll
Stronger Control Economies of Scale Lower Operating Costs
Benefits of Centralized Treasury Stronger Control Economies of Scale Lower Operating Costs
Board of directors A group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management-related policies and to make decisions on major company issues. Such issues include the hiring/firing of executives, dividend policies, options policies, and executive compensation. Every public company must have this
Board of directors A group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management-related policies and to make decisions on major company issues. Such issues include the hiring/firing of executives, dividend policies, options policies, and executive compensation. Every public company must have this
Cash management The subset of treasury management that specifically deals with managing the daily liquidity (available cash) of a company or organization.
Cash management The subset of treasury management that specifically deals with managing the daily liquidity (available cash) of a company or organization.
Chief executive officer (CEO) The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of a company, and acting as the main point of communication between the board of directors and the corporate operations.
Chief executive officer (CEO) The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of a company, and acting as the main point of communication between the board of directors and the corporate operations.
Chief financial officer (CFO) The senior manager who is responsible for overseeing the financial activities of an entire company. This includes signing checks, monitoring cash flow, and financial planning.
Chief financial officer (CFO) The senior manager who is responsible for overseeing the financial activities of an entire company. This includes signing checks, monitoring cash flow, and financial planning.
C. Management of the company
Corporate governance refers to the principles and processes by which any organization (profit or not-for profit) is governed. It provides the guidelines to managing a company so that it can fulfill its stated goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. The stakeholders in this case include all interested parties: the board of directors, management, stock or shareholders of for-profit companies, donors to not-for profits, customers, employees and even society in general. The management of the company assumes the role of trustee or fiduciary for all the others. A. Board of directors B. Internal auditor C. Management of the company D. Risk manager
Eight major objectives of Treasury Management 1. Maintain liquidity: meet current and future financial obligations. 2. Optimize Cash Resources: implement/establish strategies to minimize holding of non-earning cash balances and maintain liquidity; invest cash to generate income to pay down debt and reduce interest expense. 3. Maintain access to short-term financing. 4. Manage investments. 5. Maintain access to medium/long-term financing. 6. Manage Financial Risk. 7. Coordinate financial functions and share financial information: communication/coordinate w/ internal divisions/departments to make financial decisions and share information. 8. Manage External Vendors: manage banking relationships and other financial institutions. make the most effective use of financial assets while minimizing risk and expense.
Eight major objectives of Treasury Management 1. Maintain liquidity: meet current and future financial obligations. 2. Optimize Cash Resources: implement/establish strategies to minimize holding of non-earning cash balances and maintain liquidity; invest cash to generate income to pay down debt and reduce interest expense. 3. Maintain access to short-term financing. 4. Manage investments. 5. Maintain access to medium/long-term financing. 6. Manage Financial Risk. 7. Coordinate financial functions and share financial information: communication/coordinate w/ internal divisions/departments to make financial decisions and share information. 8. Manage External Vendors: manage banking relationships and other financial institutions. make the most effective use of financial assets while minimizing risk and expense.
Financial planning An organizational function that involves determining the need for present and future funding to support operations. An important part of this function is the forecasting of revenues, income, and external financing required to support the company's planned growth.
Financial planning An organizational function that involves determining the need for present and future funding to support operations. An important part of this function is the forecasting of revenues, income, and external financing required to support the company's planned growth.
Five Items that the Board of Directors must grant management the authority to do. 1. Open, close and modify bank accounts. 2. Establish credit facilities. 3. Oversee investments. 4. Issue debt and equity securities. 5. Devise, implement and execute risk management strategies.
Five Items that the Board of Directors must grant management the authority to do. 1. Open, close and modify bank accounts. 2. Establish credit facilities. 3. Oversee investments. 4. Issue debt and equity securities. 5. Devise, implement and execute risk management strategies.
Four Phases in the CCC (Cash Conversion Cycle) 1. Purchase supplies, facilities...etc. 2. Build Inventory. 3. Provide / sell services and products. 4. A/R collect revenues.
Four Phases in the CCC (Cash Conversion Cycle) 1. Purchase supplies, facilities...etc. 2. Build Inventory. 3. Provide / sell services and products. 4. A/R collect revenues.
Board of Directors Shareholder Meetings Independent External Auditors Regulatory Agencies
Important components of Corporate Governance - Sets Checks and Balances that protects the Owners/Investeros 1. Board of Directors 2. shareholder Meetings 3. Independent External Auditors 4. Regulatory Agencies
B. make dividend payment decisions
In most large organizations, the board of directors serves as the general authority for all operations, including treasury. Ultimately, it is the board's responsibility to approve business policies, and approve major initiatives and contracts. In a board resolution the board typically grants the authority to: open, close and modify bank accounts; establish credit facilities; oversee investments; issue debt and equity securities; and devise, implement and execute risk management strategies. The board of directors must decide whether or not to pay a dividend. A. issue debt and equity securities. B. make dividend payment decisions. C. devise and execute risk management strategies. D. oversee investments.
Independent director Under New York Stock Exchange standards, this is a director who has no material relationship with the listed company, either directly or as a partner, shareholder, or officer of the organization.
Independent director Under New York Stock Exchange standards, this is a director who has no material relationship with the listed company, either directly or as a partner, shareholder, or officer of the organization.
1. Board of Directors Internal Auditors and External Auditors 2. CFO Controller and Treasurer A/P Risk Manager
Organization 1. Board of Directors Internal Auditors and External Auditors 2. CFO Controller and Treasurer A/P Risk Manager
Outsourcing Utilizing a third party to perform all or part of a core function.
Outsourcing Utilizing a third party to perform all or part of a core function.
Nominating Committee Compensation Committee Audit Committee
Required Committees on a Board of Directors 1. Nominating Committee 2. Compensation Committee 3. Audit Committee
They... Reduce costs of multiple or duplicate transactions. Standardize processes. Increase the quality and timeliness of services. Create a higher degree of strategic flexibility.
SSC's (Shared Service Centers) are typically deployed.... They... Reduce costs of multiple or duplicate transactions. Standardize processes. Increase the quality and timeliness of services. Create a higher degree of strategic flexibility.
Shared services center (SSC) A department or operation within a multiunit organization tasked with supplying multiple business units and their respective divisions and departments with specialized services, such as information technology (IT), human resources (HR), or accounts payable (A/P) services. In some companies this includes day-to-day treasury operations (cash management) and other treasury functions, which may be operated as this.
Shared services center (SSC) A department or operation within a multiunit organization tasked with supplying multiple business units and their respective divisions and departments with specialized services, such as information technology (IT), human resources (HR), or accounts payable (A/P) services. In some companies this includes day-to-day treasury operations (cash management) and other treasury functions, which may be operated as this.
B. The resulting SCC becomes an internal service provider similar to an external vendor.
Shared services is more than just centralized processing or operations. Services that are often provided within various operating units such as Treasury, HR or IT are consolidated in a shared services center and the funding and management is shared across the enterprise. The resulting SSC becomes an internal service provider and is, in effect, another vendor or supplier to the various operating units that use its services. Shared service centers are typically deployed for a variety of reasons: •reduce the costs of multiple or duplicate operations, •standardize processes, •increase the quality and timeliness of services, and •create a higher degree of strategic flexibility. A. Allows higher quality and lower cost but less timeliness or flexibility. B. The resulting SCC becomes an internal service provider similar to an external vendor. C. Allows regional processes to be autonomous and specialized. D. The resulting SCC reduces costs by creating multiple regional operations.
1. Prepare a cash position worksheet. 2. Monitoring cash balances on deposit at financial institutions. 3. Collecting, concentrating and disbursing cash. 4. Investing and borrowing funds on a short-term basis when needed. 5. Researching and reconciling exception items items such as unexpected charges on bank accounts, missing deposits and uncleared checks. 6. Coordinating functions with other finance areas, such as accounts receivables, accounts payable, tax, and accounting.
Six Tasks typical to daily Cash Management 1. Prepare a cash position worksheet. 2. Monitoring cash balances on deposit at financial institutions. 3. Collecting, concentrating and disbursing cash. 4. Investing and borrowing funds on a short-term basis when needed. 5. Researching and reconciling exception items items such as unexpected charges on bank accounts, missing deposits and uncleared checks. 6. Coordinating functions with other finance areas, such as accounts receivables, accounts payable, tax, and accounting.
1. Managing overall financial risk, including FX risk. 2. Arranging external financing, both short and long term. 3. Managing relationships with banks and other service providers. 4. Overseeing day-to-day liquidity and cash management. 5. Investing for the short and long term. 6. Developing and implementing treasury policies and procedures. 7. Managing domestic and internal payments.
The Treasurer's Primary Responsibilities 1. Managing overall financial risk, including FX risk. 2. Arranging external financing, both short and long term. 3. Managing relationships with banks and other service providers. 4. Overseeing day-to-day liquidity and cash management. 5. Investing for the short and long term. 6. Developing and implementing treasury policies and procedures. 7. Managing domestic and internal payments.
Overall financial risk management is treasury's responsibility, but specific risk areas, such as enterprise risk management, insurance, business continuity planning and disaster recovery, may be assigned to a separate risk manager. Reporting to the treasurer or CFO, the risk manager may evaluate and negotiate all insurance policies and coverage levels, as well as oversee disaster recovery and contingency planning. 3. Risk manager
Which of the following may be assigned to negotiate all insurance policies or perform business continuity planning? 1. Internal auditor 2. Credit manager 3. Risk manager 4. Operations manager
The incorrect answers normally fall under the purview of the treasurer. 4. Financial Reporting
Which of the following would normally fall under the purview of the controller? 1. Collection/concentration 2. Borrowing 3. Foreign exchange (FX) risk management 4. Financial reporting
The incorrect answers normally fall under the purview of the treasurer. 2. Financial reporting
Which of the following would normally fall under the purview of the controller? 1. Collection/concentration 2. Financial reporting 3. Borrowing 4. Foreign exchange (FX) risk management
4. The investor relations manager typically provides access to annual reports, managing regular investor briefings and answering questions that current or potential investors may have regarding the company.
Who would a treasury professional ask to receive an advance copy of the organization's annual report? 1. Internal auditor 2. Risk manager 3. Controller 4. Investor relations manager
Working capital gap The time gap between a cash outflow and a cash inflow.
Working capital gap The time gap between a cash outflow and a cash inflow.
