Eleanor Hill

Eleanor Hill is a Editorial Board Member, covering treasury, cash and payments at Trade Treasury Payments.

Latest Post

Content

Treasury Management | The 2025 Ultimate Guide

What is treasury management?

Treasury management is a broad term that refers to the strategic oversight of an organisation’s financial resources to ensure that there is enough cash when needed and that funds are used wisely​. 

The treasury department of an organisation is responsible for making sure that there is enough money in the right accounts at the right time to meet day-to-day expenses or pay suppliers when invoices come due. They need to make sure that there is enough liquid cash available to make payroll even in instances where payment from buyers won’t be expected for several months. 

Treasurers also help ensure that the organisation invest excess cash flow while also ensuring that it has the cash available to finance any planned expansions, such as a new factory or distribution centre.

What are the main functions of treasury management

First and foremost, the treasury is responsible for cash management and ensuring that the organisation has enough cash available to pay its bills and continue to operate. This could involve securing and managing a line of credit that the company can dip into as needed.

Once the business is secure in its immediate cash needs, the treasury department can explore ways to maximise the impact of the cash that it does have while also minimising its risk. 

For instance, they may decide when to purchase or divest different currencies to mitigate currency risks or fluctuations in interest rates. They will be the ones to analyse whether it is better to pay an invoice early to receive the agreed discount or to wait until the end of the payment window to send the cash out the door. 

To summarise, treasury teams engage in several core activities as part of their role, including: 

• Liquidity Management
• Risk Management
• Cash Flow Forecasting
• Working Capital Management

Each of which works to help maintain a company’s financial health and support its strategic goals.

Why is treasury management important?

There is a belief in the industry that treasury management is the lifeblood of a company’s finances – and for good reason.

Aside from the day-to-day, treasury has a large role to play in planning for the future and taking steps that the company needs to mitigate against any unexpected challenges that may come its way.

Unsurprising, 96% of treasurers say that being a value-add partner to the CFO is part of their mandate​, which shows how important this role is even at the highest levels of the organisation.

Who uses treasury management?

When many people hear the term treasury, the first thing that often come to mind is a large government department, like the US Treasury Department. While its certainly the case that treasury functions exist here,we want to focus on the role of corporate treasury management.  

In large companies, there is usually a dedicated treasury team (led by a Treasurer and overseen by the CFO) responsible for managing the firm’s cash and financial risks. These treasury professionals work full-time to monitor the company’s finances, forecast cash flow, and make strategic financial moves. 

For many smaller businesses, there won’t be a separate treasury department per se, so these functions would usually be completed by the finance team, the CFO, or even the owner themselves if the business is small enough.

Regardless of the company’s size, the same principles apply. Someone needs to keep an eye on cash balances, manage bank accounts and loans, invest any extra funds, and ensure the business can meet its financial obligations. 

Regulatory and compliance considerations

Like most business functions that deal with money movement, treasury management is subject to regulatory compliance safeguards – like Anti-money laundering (AML), know your customer (KYC), and financial reporting standards – that treasurers must be aware of.

Public companies, for example, have to maintain strong internal controls over cash and reporting (as mandated by regulations like the Sarbanes-Oxley Act in the USA, or the UK SOx, which is the UK’s version). 

Failing to comply with the regulations can lead to fines, legal penalties, or, perhaps worst of all, reputational damage, which is a major reason why accuracy, transparency, and strong controls need to be top priorities in treasury operations.