The Relationship Between Cash Management and Treasury Management

October 11, 2019

Many business owners tend to use the terms "cash management" and "treasury management" interchangeably. They may be aware that both treasury and cash management involve monitoring business liquidity, mitigating risk, and maintaining consistent cash flow—but understanding the nuances within each of these related (but distinct) disciplines can help your business create steady and manageable growth. Learn more about the relationship between cash management and treasury management.

How are Cash and Treasury Management Different?

Treasury management is handled at the highest corporate level and involves large-scale decisions about liquidity, borrowing, and deficit spending. Those tasked with treasury management (or treasury operations) will be responsible for making decisions to reduce the company's financial exposure during uncertain economic conditions or to borrow funds to expand into a new market.

For most companies, treasury management is handled by the Chief Financial Officer, the Vice President, the Director of Finance, or the company's Treasurer. On a day-to-day basis, treasury management may be administered by the controller or comptroller.

Cash management, on the other hand, is a sub-function of treasury management—it refers to the management of a company's daily cash flow and other short-term assets, moving funds when and as needed to ensure adequate liquidity. In many companies, both cash and treasury management fall to the same group of key employees and officers, while in others, the CFO or VP handles treasury management while the treasurer and accounting team are assigned cash management responsibilities.

What Can Businesses Do to Improve Their Financial Operations?

Many businesses, especially those on the smaller side, choose to outsource their treasury management duties to a bank with experience in this area. It's often far more cost-effective to put these financial decisions in the hands of a knowledgeable fiduciary with access to industry-standard financial products and software programs, particularly when the alternative includes paying a CFO's salary (plus benefits) and risking a loss of institutional knowledge each time there's a turnover in the position.

Guaranty Bank & Trust offers its treasury management services to businesses of all sizes and types, helping take this enormous responsibility off business owners' plate and provide them with the time and opportunity to focus more on what they do best—charting the future of their business. Visit the treasury management section of our website to learn more about the services we offer or to get in touch with one of our experienced representatives.

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