Corporate Treasury

Understanding Corporate Treasury

Corporate treasuries have a vital role in the management of a company’s cash reserves. They act as financial risk managers, with the objective of protecting the company’s value by addressing the risks inherent in its business operations. The main responsibilities of treasurers include overseeing the company’s cash reserves to ensure liquidity, managing risk, securing funding, allocating capital appropriately, and managing resources in line with the company’s strategic goals.

To effectively manage a company’s liquidity, treasurers rely on various tools, such as the size of the balance sheet and the liquidity of assets and liabilities. These tools help ensure that the company has enough liquidity to support its operations, including potential acquisitions, while maximizing returns on its cash reserves.

In addition to liquidity management, corporate treasurers also play a role in implementing company-wide strategies. They provide feedback to the C-suite on the feasibility of acquiring businesses or expanding into new markets. If the C-suite decides to proceed, treasurers may be responsible for sourcing the necessary funds through asset liquidation, stock issuance, or reserves.

Furthermore, corporate treasuries are entrusted with managing various risks. These risks can be related to interest rates, credit, currency, commodities, or the company’s operational activities. Among the most common risks are those associated with liquidity, credit, and currency.

Author: Gunnar Jaerv

Gunnar Jaerv is the chief operating officer of First Digital Trust, a technology-driven financial institution in Hong Kong that supports the digital asset industry and serves financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Peak Digital in Hong Kong and Elements Global Enterprises in Singapore.