A brief overview of the treasury function and the role treasurers play are outlined below.
Treasury is a broad label for looking after the financial state of an organisation by ensuring liquidity to meet liabilities, encouraging good financial practice, identifying any possible risks, and making sure business activities are funded in whatever is the most cost-effective manner.
Treasury is a specialist function usually found in larger commercial organisations or financial services groups. Most groups with large treasury functions have considerable international trade.
Often, an organisation's tax and treasury departments work closely together to manage a company's financial assets worldwide by structuring business to extract the most value. As international trade grows, the need for a treasury department to manage the flow of funds and stocks of currencies has risen dramatically.
And while the foundation skills of a treasurer do not really vary between different industry sectors, there will be differences and specialist skills developed according to the field in which the treasurer works.
The activities of a treasurer are not limited to but can include:
Money management means working to 'free up' as much of your company's cash as possible so that it can be used and the business can reduce its borrowings. This can include working with a system to track and chase overdue payments, and to raise interest on late payments, forecasting cash payments to identify possible shortfalls in advances, organising a company pool of funds to be used by various divisions and working to improve efficiencies.
This is making sure an organisation's financial activities tie in with the company's business strategy. Treasury professionals get involved in determining how to fund a company's operations, structuring the business to ensure tax payments are kept to the necessary minimum, and working with senior management to decide whether a company should return dividends to shareholders.
Treasury workers need to identify any possible risks and worst-case scenarios to be able to help ensure the company is in a position to survive any eventuality. This means putting into place procedures to prevent the company coming to financial harm, or, where this is not possible, trying to minimise any negative effects.
This area involves identifying the most favourable borrowing rates available for a business, and developing business relationships with potential investors and their contacts to be able to raise funds for the organisation. This could involve dealing with shareholders and negotiating any change in their investments, liaising with banks with regard to the company's loans, overdraft and so on, and finding ways to deal with any cash shortfalls.
Desirable skills in treasury professionals include:
Large companies, such as those in the FTSE-250, often have dedicated treasury functions, as do some medium-sized organisations. A small treasury department might just have one or two staff members, while a large one could have up to 50.
The number of treasury employees will depend how complicated the transactions are that are being dealt with, and on how much international business the company undertakes. Often companies employing a significant number of treasury staff will be multinationals with international operations.
Banks and financial institutions often have large treasury functions, and public sector bodies such as housing associations and government departments also have treasury operations. Treasury works alongside accountancy, taxation and chartered secretarial staff. A treasurer's work is quite varied and many people gain a general grounding in the field before choosing a particular specialisation.
There is no equivalent formal qualification in treasury such as those in accountancy and law, although work experience is important in gaining membership of the Association of Corporate Treasurers (ACT).
The ACT offers a range of recognised treasury qualifications, including the Associate Membership (AMCT) programme, which provides an understanding of treasury and financial risk, and the Membership programme (MCT) which is suitable for those seeking knowledge of corporate finance and risk management at an advanced level.
This qualification is regarded as MBA level and is geared to those in senior positions in complex treasury functions. The ACT also offers a programme of Continuing Professional Development to members, which is available on the internet.