Treasury management is a type of financial management system that involves managing business money. It includes managing a company’s daily tasks such as cash flow forecasting, risk assessment, investing, and everyday operations like banking and invoicing.

This type of management is an integral part of any business operation. It helps a company ensure that there is enough working capital to maintain operations and reduce financial risks.

What is Treasury Management?

Treasury management is the process of managing the financial resources of an organisation to achieve its day-to-day operational and long-term strategic goals. This system helps businesses to earn profits by monitoring and managing all their financial aspects. The primary objective is to improve the finances of a business. 

What is the Importance of a Treasury Management System?

This type of management system is important to optimise business finances and reduce financial risks. The whole process of treasury or cash management ensures that businesses have enough money to meet any short-term goals. This is while having enough funds to meet their long-term strategic growth opportunities.

Other than this, it also provides a detailed analysis of the assets and liabilities of a business. It is necessary to be well-informed when carrying out financial activities. 

What are the Main Functions of Treasury Management?

  • Cash Management

The treasury or cash management system optimises the cash flow of a business. It does so by offering real-time transparency to the cash position of the company. Another important aspect of cash management is to have an idea about future cash needs. 

  • Risk Management

It enables businesses to monitor and manage financial risks associated with their business operations. Foreign exchange and interest rate risks are some of the most critical risks businesses face. Treasury management helps to diversify the wealth of a business between cash and non-cash assets. Managing the risk will improve the company’s financial position. 

  • Financial Reporting

Generating financial reports such as balance sheets and income statements are very important part of treasury management. These statements help to track the performance of the company and make informed decisions. 

  • Compliance

The compliance function of the management system helps companies to meet regulatory requirements and all financial reporting standards. The treasury management system implements internal controls and policies to ensure transparent and legal financial activities.

  • Transaction Management

It helps businesses in conducting their financial transactions such as payments, receipts, and investments. The cash management system improves and automates the transaction cycle which leads to the efficiency in reconciliation of accounts and transaction tracking.

  • Debt Management

The debt management function of treasury management helps to track and manage debt obligations. It includes loan repayments and interest payments of organisations.

9 Types of Treasury Management Services

  • Account Reconciliation

Account reconciliation is a treasury management service in which the internal financial records of a company are compared against statements from external sources. The records compared in the process are for a specific period. These external sources can be a bank, credit card company, or other financial institution.

  • Automation

Automation helps to streamline day-to-day routine tasks such as payments and collections.

  • Integrated Receivables

This type of treasury management service helps to accelerate the growth of the funds and capital of a company.

  • Risk Assessment and Prevention

Risk assessment and mitigation help to protect a company from unnecessary exposure to fraud and losses. It also improves the risk tolerance level of the business.

  • Global Treasury Services

Global treasury services help to ease monetary transactions with foreign currencies. 

  • Account Sweep Services

Account sweep services help to improve cash balances by conducting the financial process of investment sweep between the cash account and investment account.

  • Consulting Services

This type of cash management service helps to streamline services and optimise treasury procedures of businesses.

  • Payroll Services

It helps businesses to automate payment-related services such as payroll distribution and reimbursements.

  • Merchant Services

With the help of this treasury management service, businesses can improve their convenience in maintaining client relations and redressing payment-related issues.

What are the Benefits of Treasury Management in a Business?

  • Efficiency

The treasury management of a business helps to automate and streamline the whole financial operation of a business. It helps to reduce mistakes and saves time by helping in cash management, risk management and transaction management.   

  • Transparency

It provides real-time transparent information about a businesses’ cash position. This ensures effective cash management and reduces the risk of running out of cash.

  • Better Risk Management

The management system helps to assess and manage the financial risks of an organisation much better. Mostly it reduces the chances of loss in the foreign exchange and interest rate risks.

  • Greater Control

With the help of a treasury management system, organisations can achieve greater control over their financial resources. It enables them to make more informed financial decisions about their company.

  • Time

It helps businesses to save time on unnecessary business activities and allow them to streamline their operations.

How Does RazorpayX Help in the Treasury Management of a Business?

RazorpayX supercharges the whole business operations from finances, marketing and human resources. 

One of the most important offerings of the banking suite is the RazorpayX-powered current account. It allows unlimited savings and effortless payments, deposits and withdrawals, which leads to seamless financial operation. Other than that, it helps with Forex funding, which allows businesses to meet their foreign financial requirements.

Check out RazorpayX

Read more:

Current Account Documents

What is Current Account

Business Account

Monthly Average Balance

Zero Balance Current Account

Types of Current Account

Frequently Asked Questions

What is the difference between treasury management and financial management?

The most important difference between financial management and treasury management is that the former focuses on the business’s short-term liquidity and financial risk management. Whereas, financial management focuses on the long-term financial performance and strategy management of an organisation.

What are the two main components of treasury management?

The two main components of treasury or cash management are the amount held and liquidity of the held cash.

What is treasury risk?

The treasury risk is the risk associated with the management of a business's holdings. It can range from money market instruments to traded equities. It allows one to assess the liquidity and capital risk with the enterprise's ability to convert an asset or security into cash.

How does treasury management help to protect businesses from fraud?

The treasury management system monitors any suspicious activity, identifies all the threats and recommends the necessary preventive measures and its redressal mechanism.

What is an ACH or Automated House Clearing?

Automated House Clearing or ACH helps with all sorts of fund transfer transactions, such as monthly auto-debits of regular payments and direct deposit of paychecks. It is a type of fund transfer that happens between NBFCs and banks.


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