QUESTION:

Why managing a money is

needed?
OBJECTIVES:

At the end of the topic the students are able;

to impart the conceptual knowledge of the

cash and treasury management.
to analyze the potential risk involve in such
a transactions.
to apply the effective cash and treasury
management.
THE SIXTH FINANCE

FUNCTION: Cash and Treasury

Management
CASH MANAGEMENT
is the monitoring and maintaining
of cash flow to ensure that a
business has enough funds to
function. Investments, bill payments,
and unexpected liabilities can affect
a business' inflows and outflows,
and in turn their cash management.
 Made of four (4) elements of
effective cash management

1. Forecasting - process of obtaining estimate of

a companies future financial position.

2. Mobilizing and managing the cash flow

- acceleration of recievable and control of
disbursements.
3. Maintaining banking relations- it is
a day-to-day administration of
managing cash inflow and outflows.

4. Investing surplus cash - making a

fixed deposit of a desired maturity
period.
Motives for holding cash
1. Transaction motive - is to pay for
good and services.

2. Precautionary motive - the need to

maintain sufficient cash to act as a
cushion or buffer against unexpected
events.
3. Speculative motive- a strategy employed
by investors and traders to keep cash on
hand in order to take advantage of future
investment opportunities.

4. Compensating motive- cash balances are

kept at commercial banks to compensate for
banking services rendered to firm.
 TREASURY MANAGEMENT
-is the process of managing an
organization's financial resources in order
to achieve its strategic and operational
objectives. It encompasses a wide range of
activities, including cash management,
funding and investment management, trade
finance, risk management, and
working.
Key benefits:

1. Time effieciency
2. Cost saving
3. Improve cash flow
4. Risk Reduction
5. Maximized returns
Effective treasury management
1. Liquidity management- to maintain
adequate level of liquidity and raise
profitability of the bank managing the
surplus liquidity.
2. Money market transaction- money
market is where short term security with
high liquidity are traded. They purchased
the treasury bill within the approved limits.
3. Capital market transaction -
they make the long term investment
like government bond, equity
shares and etc.
4. Correspondent banking- they
provides credit, deposit, collection
and payment services.
5. Foreign Exchange Management - its is
often called the market which currencies are
traded.

6. Rate determination- treasury should use

two way of pricing system to publish rates.
(balanced supply, demand of supply,
purchasing power supply and interest rate).
Any questions ?