Treasury management plays a central role in the financial health and operational efficiency of a business. It encompasses a wide range of responsibilities that go far beyond simply managing cash. From ensuring day-to-day liquidity to supporting long-term financial strategy, treasury teams help companies maintain stability, adapt to market changes, and make informed decisions.
At its core, treasury management is about balancing risk, return, and operational needs – while aligning financial practices with the company’s broader objectives. Whether in a startup or a multinational enterprise, the treasury function ensures that the right resources are available at the right time, in the right currency, and at the lowest possible cost.
Core functions of treasury management include:
Effective treasury management reduces financing costs, improves cash flow, and builds trust with investors, banks, and other stakeholders.
An interest rate is the cost of borrowing or the reward for saving, expressed as a percentage of the principal amount in an account or loan, reflecting the time value of money and compensation for risk. It influences economic activity by guiding consumers, investors, and businesses in decisions related to spending, saving, and investing.
Interest rate risk refers to potential financial losses that may arise from fluctuations in market interest rates. Rising or falling rates affect borrowing costs, the value of fixed-income investments, and liquidity planning. For internationally active companies, this can also impact financing and the return on liquid assets. Effective treasury strategies, such as hedging, help reduce this risk.
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