Chapter 83. Advanced Treasury Management Concepts

JAMES SAGNER

Managing Principal, Sagner/Marks and Associate Professor in the School of Business of Metropolitan College of New York

MICHELE ALLMAN-WARD

Managing Partner, Allman-Ward Associates

Abstract: Advanced treasury management examines liquidity management using various cash forecasting techniques, including cash budgeting, the distribution method, and cash modeling. The movement toward formalizing investment policies and credit decisions requires active participation by senior management and the treasurer, given the choices of lines of credit, commercial paper, asset-based lending and asset-based securities. The complexities of international treasury management, bank compensation and risk management are managed by such specialized tools as pooling, netting, and various hedging instruments. Treasury information systems provide extensive module choices, including basic treasury activities and such advanced functionality as debt and investment management, and the capability for automated intra-company data transfer. Bank relationship management uses a comprehensive approach to the bank-corporate partnership, including requests for proposals (RFPs), which are increasingly used to bid treasury services.

Keywords: liquidity management, cash budget, distribution method, cash modeling, investment policies, line of credit, international treasury management, value dating, forward contract, futures contract, letter of credit, cross-border ...

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