Texas State FIN 4320 - The Role of Treasury Management (8 pages)

The Role of Treasury Management Lecture 1 Chapter 1 Trends in Treasury Management y Total Working Capital Management y Emphasis on managing all CA CL accounts y Management of the Entire Balance Sheet y Expanding Role and Responsibilities of Treasury y Collaboration with Other Departments y Greater Technological Expertise 1 Trends in Treasury Management y Legal and Regulatory Developments y Corporate Governance and Ethics y International Treasury Management y Outsourcing Primary Corporate Objective y What is the Goal of the Firm y Maximize Shareholder Wealth y Treasury Management creates value because cash flows are unsynchronized uneven and uncertain 2 Corporate Finance Objective y Finance Function and Financial Decisions y The Finance Function y Accounting y Funding y Capital Budgeting y Financial Planning y Financial Risk Management Corporate Finance Objective y Finance Function and Financial Decisions y Corporate Financial Decisions y Capital Structure y Asset Investment Decisions y Financing Decisions y Dividend Decisions 3 Treasury Management Objectives and the Cash Flow Timeline 1 Acquire Materials or Resources 4 Collect Payment for Goods or Services 2 Convert Materials to Goods Convert Resources to Services 3 Sell Goods or Services Treasury Management Objectives and the Cash Flow Timeline y Treasury Management Objectives y Maintaining Liquidity y Optimizing Cash Resources y Establishing and Maintaining Access to Short Term Financing y Maintaining Access to Medium and Long Term Financing 4 Treasury Management Objectives and the Cash Flow Timeline y Treasury Management Objectives y Maintaining Shareholder Relations y Managing Risk y Coordinating Financial Functions and Sharing Financial Information Treasury Management Objectives and the Cash Flow Timeline y The Operating Cycle and the Cash Flow Time Line Purchase of Resources Payment for Resources Sale of Goods or Services Collection of Sales Receipts 5 Treasury Management Objectives and the Cash Flow Timeline y Cash Flows y Cash Inflows y Collections from customers y Borrowings y Sale of Assets y Cash Concentration y Cash Outflows Treasury Management Objectives and the Cash Flow Timeline y Cash Flow Timeline and Float Supplier I Invoice i Received M Delay Mail Invvoice Prep O Order Sh hipping Credit Terms Payment Processing Invoicing Float Customer Order Received Customer Customer Invoice Receives Sent Invoice F d Funds Debited Clearing Avvailability Delay Delay Invoice Processing Credit Terms Processing Prrocessing Delay Delay Paymentt P R Receives i Ch k Check Payment Sent Deposited Payment Float Disbursement Float Mail Delay Ma ail Delay A P Orrder Entry A Acquire Convert Se ell Collect Supplier Order Placed Collection Float A R Customer Sends Payment Customer Payment Received Check Funds Deposited Available 6 Treasury Management Objectives and the Cash Flow Timeline y Cash Flow Timeline and Float y Collection Float vs Disbursement Float y Mail Float y Processing Float y Availability Float Clearing Float y Objectives are to shorten collection float and increase disbursement float The Future of Treasury Management y Continues to evolve y Technology y Banking Industry y Payments System 7 Questions 8