The treasury department of a business concern has evolved its importance over the years from being responsible for only cash handling issues to…

The fundamental tasks for which treasury department of any enterprise is responsible are: 1. Cash Management: It involves efficient cash collection process and managing payment of cash both inside the organisation and to third parties. Treasury will also manage surplus funds in an investment portfolio. Investment policy will consider future needs for liquid funds and acceptable levels of risk as determined by company policy. 2. Currency Management: The treasury department manages the foreign currency risk exposure of the company. In a large multinational company (MNC) the first step will usually be to set off intra-group indebtedness. The use of matching receipts and payments in the same currency will save transaction costs and also will save the organization from any unfavorable exchange movements. The treasury will manage any net exchange exposures in accordance with company policy. If risks are to be minimized then forward contracts can be used either to buy or sell currency forward. 3. Fund Management: Treasury department is responsible for planning and sourcing the company's short, medium and long-term cash needs. They also facilitate temporary investment of surplus funds by mapping the time gap between funds inflow and outflow. 4. Banking: It is important that a company maintains a good relationship with its bankers. Treasury department carry out negotiations with bankers with respect to interest rates, foreign exchange rates etc. and act as the initial point of contact with them. 5. Corporate Finance: Treasury department is involved with both acquisition and divestment activities within the group. In addition, it will often have responsibility for investor relations. * Any four points