Treasury Management - Benefits
Effectively using treasury management with cash management and trade finance products brings tangible benefits to both corporates and financial institutions. Let us discuss some tangible benefits of treasury function.
Effectively using treasury management with cash management and trade finance products brings tangible benefits to both corporates and financial institutions.
If managed properly, it can significantly reducing financial risks; ensures that the enterprise has sufficient liquidity for payments that are due and to monitor payment flows and helps by implementing strategies that lead to the best borrowing rates and lower investment costs.
Liquidity (i.e. working capital)
- Measuring, monitoring and managing cash flow to protect solvency.
- To establish good financial contract terms
- Ensuring that no excess working capital tied up in the business
- Arrangement for financing the supply chain
- Cross-border liquidity management
Funding (i.e. long-term finance) –
- Creating an optimal mix of equity and debt to meet capital expenditure and investment requirements.
- Determination of the optimal capital structure and reduction in cost of capital through long-term fund raising activities
Financial risk management
- Identifying potential risks and their impact and taking action to mitigate these.
- Expansion of credit to the end-user while continuously de-risking from potential defaults
- Structured hedging program
- Integrating currency and commodity price risk management
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