A company's treasury manages cash flow.
Treasury is a concept that refers to the office , activity or position of the treasurer . This individual, for his part, is the one who must be dedicated to the custody and distribution of the funds of an entity.
For example: “I worked for twelve years in the treasury of a bank ” , “The manager asked to reinforce the security of the treasury in light of the recent incidents of insecurity that affected the neighborhood” , “We should install air conditioning in the treasury: not like that.” “you can work.”
Treasury of a company
The notion of treasury is also linked to the sector of a company where management related to cash flow is carried out, also known as monetary or money flow . In the treasury, in this way, the company's cash is managed, banking operations are approved and controlled, and collections and payments are executed.
Suppose that, in a company, the marketing department wants to purchase a new computer (computer). With this objective, it sends the order to the purchasing department, which approves it and sends it to the treasury. The treasury confirms that the funds for the acquisition of the computer are available. Thus, it supports the operation of the purchasing department and the computer is finally acquired by the marketing sector.
The importance of cash flow
Returning to the concept of cash flow, one of the most significant in this context, we can define it in a few words as the variation between the income and expenditure of cash in a given period of time . In other words, it is the accumulation of liquid assets in said time frame. For this reason, it is a resource to measure the liquidity of a company , that is, its ability to generate money.
The treasury must know the cash flow perfectly, since this benefits the most important components for the operation of the company, such as creditors, administrators and investors to achieve the following objectives, among others:
- The evaluation of the company's ability to meet each obligation it acquires and generate positive cash flows .
- Make the internal management of the company's budget control easier.
- Correctly identify financial needs.
The idea of treasury can refer to a cash asset.
Other functions of the treasury area
In addition to managing the company's economic resources, the treasury area is in charge of a series of functions that distinguish it from others with which it is generally confused, such as accounting , and some of them are the following:
- You must act in case of deviations , taking the necessary measures to return the accounting situation to normal. A deviation is the difference between the amount that is budgeted and the amount that is seen in the result. It can occur in expense and income items, and can be positive or negative.
- He is in charge of designing the policies on which the company relies to carry out collections and payments.
- Related to the previous point, the treasury area must also control that said collections and payments are made effective in accordance with the relevant forecasts.
- Make payments every time the company carries out activities for third parties, something very common in large undertakings.
- Pay suppliers, without whose products and services the continuity of any company would be impossible.
The cash asset
Treasury, finally, is the asset of a business that is in cash or that can be easily converted into cash.
“We have a treasury problem: we should not renew the fixed term when it expires”y “I am calm because our treasury does not register any problems and we will be able to face the payments without problem” son expresiones que muestran este uso.