What Does treasury Mean
The concept of treasury refers to the office, activity or position of the treasurer . This individual, on the other hand, is the one who must dedicate himself to the custody and distribution of the funds of an entity.
For example: "I worked for twelve years in the treasury of a bank" , "The manager asked to reinforce the security of the treasury in the face of the recent events of insecurity that affected the neighborhood" , "We should install an air conditioning in the treasury: not like this you can work ” .
The notion of treasury is also linked to the sector of a company where the procedures related to cash flow are carried out , also known as monetary or money flow . In the treasury, in this way, the company's cash is managed, banking operations are approved and controlled, and collections and payments are executed.
Suppose that, in a company, the marketing department wants to acquire a new computer (computer). With this in mind, it sends the order to the purchasing department, which approves it and forwards it to the treasury. The treasury confirms that the funds for the acquisition of the computer are available. Thus, it supports the operation of the purchasing department and the computer is finally acquired by the marketing sector.
Returning to the concept of cash flow, one of the most significant in this context, we can define it in a few words as the variation between the inflow and outflow of cash in a given period of time . In other words, it is the accumulation of liquid assets in said time frame. For this reason, it is a resource to measure the liquidity of a company , that is, its ability to generate money.
The treasury must know perfectly the cash flow, since this benefits the most important components for the operation of the company, such as creditors, administrators and investors to achieve the following objectives, among others:
* the evaluation of the company's ability to meet each obligation it acquires and generate positive cash flows ;
* make the internal management of the control of the company's budget easier;
* correctly identify financial needs.
In addition to managing the company's economic resources, the treasury area is in charge of a series of functions that distinguish it from others with which it is generally confused, such as accounting , and some of them are the following:
* must act in case of deviations , taking the necessary measures to return the accounting situation to normal. A deviation is the difference that is noticed between the amount that is budgeted and the amount that is appreciated in the result. It can occur in items of expenses and income, be positive or negative;
* is in charge of designing the policies on which the company is based to carry out collections and payments;
* Related to the previous point, the treasury area must also control that such collections and payments are made effective in accordance with the pertinent provisions;
* Make payments every time the company carries out activities for third parties, something very common in large-scale ventures;
* pay suppliers, without whose products and services the continuity of any company would be impossible.
Treasury, finally, is the asset of a business that is in cash or that can be converted into cash in a simple way: "We have a treasury problem: we should not renew the fixed term when it expires" , "I am calm because our treasury does not registers any inconvenience and we will be able to face the payments without problem ” .