Corporate Treasury

A corporate treasury is formed to manage and control the liquidity, risk, funds, capital reserves, and other resources of a company to align with its short and long-term strategies.

What Is a Corporate Treasury?

Corporate treasuries are in charge of a company’s cash reserves. They serve as financial risk managers who seek to protect a company’s value from the risks it faces regularly due to the nature of its business. Additionally, treasurers manage company cash reserves to ensure liquidity, risk, funding, proper capital allocation, and resources in line with the company’s strategic goals.

To better manage a company’s liquidity, the tools utilized are the balance sheet size and asset and liability liquidity. This ensures sufficient liquidity to engage in operations, such as takeovers, and derive the maximum possible return on cash reserves.

Corporate treasurers also have to oversee the execution of company-wide strategies, reporting back to C suites on the viability of buying a business or expanding into new territories. They may be tasked with finding the money if the C suite decides, whether through asset liquidation, stock issue, or reserves.

Lastly, corporate treasuries are also tasked with managing risks. These risks may relate to interest rates, credit, currency, commodities, or the company’s operations. The most common ones are related to liquidity, credit, and currency.

Author:

Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.

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