What’s accounting (asked nobody)? What’s tax (asked nobody)? What’s treasury? (asks everybody!). That’s why myself and my team in Barden decided to put together this short “Barden Uncovered: Treasury Careers” series to shed a little light on treasury for those in, and those interested in, a career in this so often misunderstood profession.
Treasury professionals’ roles have taken centre stage – the flow of and the value of funds having a material impact on company performance now, more than ever. This has naturally driven a demand for treasury professionals to really get involved in business and financial strategy for companies large and small.
But what exactly is the role of the treasury professional? What role does treasury have in finance? What are the career options within treasury and how do you begin a career in treasury? We’re going to look at some of these questions in this and subsequent insight pieces. Let’s get started with the basics – what is treasury?
#1 Basics of Treasury
What is treasury?
The actual meaning of the term depends completely on context.
The basic definition of treasury:
The word “treasury” derives from the French “tresorie,” which literally means “room for treasure.” In its most basic form, treasury constitutes a place to store wealth, or a depository for the collection and dispersal of funds. It may also refer to the funds kept in such a depository. In accounting, a reference to “treasury” without further context may simply denote a place where a company, organisation, government or other entity stores its capital.
The treasury definition of treasury:
Businesses must raise money to pay for what they need to run their business. Without treasury the business does’t function. Fact.
Treasury is a key finance function but treasury is not accounting. Treasurers know how and where to raise money (debt/equity, margins, covenants, commercial paper, bonds, libor, fixings) and how to manage the flow of funds (cash/debt) to reduce risk and maximise return for stakeholders…finding the right balance between the two for their business.
Treasury Functions/Departments: The general mission of the treasury department is to manage the liquidity of a business. In essence treasury management is all about handling the banking requirements, the funding for the business and managing financial risk. It therefore incorporates raising and managing money, currency, commodity and interest rate risk management and dealing, and, in some organisations, the related areas of insurance, pensions, property and taxation.
Accountants typically work directly with their treasury department, keeping a record of and accounting for treasury transactions and activities. In smaller companies with basic treasury needs the accountant might well wear the hat of the treasurer. In larger companies Treasury is a whole separate team from accounting and play a central role in keeping the business on the right track.
In #2 in the “Barden Uncovered: Treasury Series” we will focus specifically on the role of treasury in finance and the role of a treasury professional therein. If we’re lucky we might even get a few insights from some true treasury professionals too…we’re working on that!
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