Treasury

Parvez RangwallaSainatth Wagh

What is Treasury ?

Treasury department are meant to reduce the risk that a company faces like Interest rates risk, Credit risk, Currency & commodity risk & Operational risk.

What is Trade Finance ?

The science that describes the management of money, banking, credit, investments and assets for international trade transactions..

Highlights Trade Finance Survey 2009:

1. Management Structure2. Integration Between Trade Finance and Cash Management3. Trade Finance Policies4. Measuring Discrepancies5. Mapping Processes6. Extending DPO and DSO Through Trade Finance7. Integration of FX Hedging Policies8. Using KPIs to Reduce Lead Times in Document Transfer9. Treasury Influence10. Including Trade Finance Data in Cash Flow Forecasting

1. Management Structure

The major benefits companies would see from the centralization of their trade finance process are:1. Enhanced control, attained when one individual or department takes responsibility and has an overview of the whole company's process. 2. More consistent implementation of risk mitigation policies - again achieved when one individual overseas the process. 3. Ability to leverage their buying power with banks, enabling them to obtain better transaction pricing and, to a certain extent, risk pricing.

Some of the negative consequences due to lack or limited centralization are non-homogeny process and procedures leading to higher cost of operation plus diminishing competence.

2. Integration Between Trade Finance and Cash Management

3. Trade Finance Policies

43%

32%

25%

Risk Mitigation Policy

Cost

Trading partner preference

4. Measuring Discrepancies

Measuring discrepancies is a key part of using LCs, since their purpose is to safeguard against any error in the transaction, both from a financial and a logistical point of view.

5. Mapping Processes

Collecting real-time data and making effective use of it regarding manufacturing status, shipping status, costs, financing and receipt is one of our major concerns

6. Extending DPO and DSO Through Trade Finance

CCC = DIO + DSO – DPO

7. Integration of FX Hedging Policies

FX hedging policy is integrated with their trade finance policy. Better control over trade flows will enable companies to hedge more effectively.

8. Using KPIs to Reduce Lead Times in Document Transfer

9. Treasury Influence

10. Including Trade Finance Data in Cash Flow Forecasting

Thank You