Mon. Oct 2nd, 2023

The current economic upswing is a great indication of flourishing business opportunities and treasuries must consider deploying surplus funds from corporate treasuries for a profitable outcome. The following blog sheds light on how the treasury function operates and how to achieve the best of it.

An organisation faces inefficiency and other issues while managing the treasury, even if it does not have a recognised treasury department.

Corporate treasury plays a critical function in most businesses, but many are unaware of how broad a scope it covers. In providing finances for an organisation, it can incorporate several different aspects to achieve it, which includes cash flow management, investments, and loans.

Off late, treasurers’ roles have become broader and challenging by trying to source and secure funds for their organisations at times of volatile economic condition.

CFOs must be skilful and thoughtful enough to handle treasurers.

Capitalising On The Past

The financial crisis of 2008 that shook the world and its aftermath have heightened the profile of the treasury function, establishing its influence and perceived value within organisations. Corporate treasurers and those engaged in the treasury are relied upon by their CFOs, boards and other members of their organisation’s management team to source efficient, innovative financial solutions to facilitate the business strategy and to manage its risks.

Bankers, qualified in corporate treasury, are also increasingly being relied upon to understand and anticipate customers’ needs, to efficiently sell such products and solutions with win-win strategies for both, and to minimise risks to the Bank.

Organisations that take a progressive and distinguished functional approach to treasury operations see it not as a discrete finance function or just another link in the management chain, but as an end-to-end activity that is fully embedded in the business.

Re-defining Business in India

In an increasingly prominent and essential space within the domain of the CFO of large and medium-sized Indian enterprises, the corporate treasury function is continuously assuming a critical role. Such a trend has become prevalent and is being perceived in all emerging nations and developing countries. India is undoubtedly leading them, particularly at this juncture when Indian MNCs are making their presence all over the world.

Business-friendly measures by the current government have created an ideal platform for investors to consider diversifying their portfolio.

The corporate treasury can assist in various forms of improvements in the financial management of Indian enterprises. The importance of quality of knowledge and skills of financial managers of different levels in delivering solutions to the financial and debt crisis has considerably increased since 2007 and continues to grow.

Corporate Treasury – A Strategy

Finance professionals in India slowly recognise corporate treasury and its core activities as a universal key enabler for successfully implementing business strategies and driving shareholders’ value.

They are keen to bring in specialised professional knowledge entirely focussed on cash and liquidity management, corporate financial management, funding, productive investment of temporary surplus funds, currency exchange and treasury risks management.


Treasurers in India are fully convinced that professionally managed treasury operations and controls with the right skill sets can immensely contribute towards minimisation of value-destruction and facilitate the process of innovative value creation. Treasury professionals are willing to maximise corporate treasury Income. This will help in accomplishing the challenges of governance, risks and compliance (GRC) oriented operations in a contemporary business ecosystem, where clutches of regulatory oversights are consistently increasing day by day and market volatilities coupled with uncertainties will continue to be a part of the game. They are also wholly conscious that treasury professionals need a distinct identity in the crowd of finance professionals.

Decoding the Treasury Strategy

A combination of financial and business strategy together forms a corporate strategy. The financial strategy depends on the business strategy – but the business strategy is enabled or constrained by the financial strategies available and by the chosen financial strategy.

Financial Strategy + Business Strategy = Corporate Strategy

There are three interrelated questions that form the key to treasury decision making:

  • What assets do we invest in?
  • How do we raise the money?
  • How do we control risk?


As a matter of fact, it is indeed impossible to take decisions as the priorities are different for every organisation and above all the questions are influenced and interdependent. However, At the strategic level, the treasury is all about advising on the right choices, trade-offs and compromises involved, and when new decisions are required. These key strategic issues are the concern of an organisation’s Board of Directors.

The financial criteria ultimately boil down to whether the investment will earn enough to cover the cost of funds and compensate for the risks involved. An organisation needs to know how much money it has available to invest and how much more it could raise, on what terms and at what cost, and from where.

Raising funds is the responsibility of the treasury.

Handling The Risk Factor

Being judgemental should become a trait while managing risks related to the treasury as the decisions may end up being wrong or even existential for an enterprise.

Invariably, identifying and managing some of those business risks, or arranging for the business to adapt to make the risks manageable, is also a part of the treasury brief.

Corporate Funding

As the old saying goes, ‘fund early and fund long’ remains true.

Fundraising by organisations can either be external one or internal with the choice between debt and equity or maybe even hybrids. Organisations need to work harder than ever on their funding relationships – not restricted to bank relationships, but all potential sources of funding such as private placement debt and asset-based finance. Funding plans must explore all options and think outside the box.

An organisation needs capital to fund its present assets including its planned future development. Also, absorb the cash flow effects of responding to unexpected shocks either internal or external.

Equity is the ideal shock-absorber. Debt funding normally involves eventual repayment – from business cash flow or from new fundraising of debt or equity.

Control Over Liquidity

Liquidity or Cash Management is the most fundamental element of treasury management — if it fails, the organisation cannot continue to function, and all other decisions, no matter how critical, cannot proceed.

In many organisations, cash forecasts are not performed well. They are often too long, too short, not used or are consistently inaccurate. Treasurers have an inherent task of processing cash flows like receipts and payments throughout the business as efficiently with the utmost safety.


The global financial crisis has had a noticeable impact on business, increasing the significance of treasury.


Financial markets are now more volatile, many financial risks have increased and traditional funding sources are changing. Additionally, regulatory changes since the crisis have added and will continue to add to the cost of funding and this eventually could have a detrimental impact on an organisation’s liquidity risk and change the ability of the firm.


Treasury is a remunerative function and yet to be tapped to its true potential by industry leaders across organisations. Not all Boards and senior management are well-versed with what their treasurer is or should be up to. It is therefore advisable to focus, plan and organise before implementing and appreciating the benefits.


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