The treasury department raises and manages company funds and liquid assets while the financial control department is responsible for financial control over receipts and payments, accounting for all financial transactions and regular reporting on the company’s financial position.
The treasury department will usually be responsible for:
• Strategic financial planning, as an input into the company’s overall strategic plan
• Identifying sources and types of funds and appraising their cost and risk
• Raising funds, managing service payments and repayment of funds
• Managing the company’s liquid assets, cash, marketable securities etc., currency management
• Managing risk associated with short and long term funds and currencies, using financial instruments where appropriate
• Financial appraisal of potential capital investments and other strategic opportunities
• Tax planning
• Pension fund investment
The financial control department’s main planning role centers around annual and shorter term budgets. The company’s annual budget is the responsibility of top management, but the financial control department will be used to carry out much of the preparation and evaluation work, including evaluation of alternative proposals.
The operational roles of the financial control department include:
– Management of receipts, expenditures and payroll
– Management accounting and reporting of financial position against monthly and annual budgets
– Budgetary control feedback to company managers at all levels
– Financial accounting and periodic financial statements for external stakeholders, including (Sometimes) internal financial audit
As part of its control role, the department will also carry out analytical assignments, including cost reviews and post-appraisal of capital projects.
The treasury department has more responsibility for setting financial objectives and policies, whereas financial control has more responsibility for implementing the policies and ensuring the achievement of objectives. In reality, however, the roles of treasury and financial control in these areas are inter-related, for example:
– Planning and policy setting are iterative processes, in which feedback from annual budgets or actual results may show that longer term policies need to be revised. It is important that the financial control department plays a proactive role in determining how effective existing policies are and making suggestions for their improvement.
– Treasury department is responsible for achieving and reporting on its own financial objectives (for example, on interest rates, cash control, exchange rate risk management etc.) and relies on information from the financial control department to help it.