Treasury Management Services
The role of commercial banks is to act as trusted partners to their corporate associates. Over the years, the degree of trust has been steadily increasing. As a result, many corporations across the world are outsourcing critical parts of their business to banks. In the previous articles, we have already seen how certain payment functions are being outsourced to banks.
It is one thing to outsource a non-critical function such as payment processing to commercial banks. However, the treasury department is at the heart of any business. Most chief financial officers are not comfortable allowing third parties to have access to the core of their financial operations. Hence, it is a remarkable feat by commercial banks that they have been able to convince corporations to outsource their treasury function to the bank.
In this article, we will have a closer look at what are the treasury management services which are offered by commercial banks to their corporate clients and what are the benefits of having such services.
What are Treasury Management Services?
Treasury management services are a group of financial services which have a very wide scope. They can be defined as making decisions that allow for the management of assets and liabilities of the firm.
Treasury decisions include decisions regarding the type of funding, the interest rate to be paid, forex operations, payments netting, receivables trade, etc. There is no exact definition of treasury management. However, it needs to be understood that treasury refers to all the financial resources which are available to a firm.
Treasury management is about taking a birds eye view of the finances of the firm and making effective decisions in order to maximize the value of the firm. It is also important to note that treasury management encompasses activities across the front, middle and back offices of the firm.
Approaches to Treasury Management Services
There are two main approaches that are followed in the market regarding treasury management services. They are as follows:
Benefits of Treasury Management Services
Over the years, the number of corporations opting to outsource their treasury management services to commercial banks is increasing. This is because of the following benefits which accrue to the customer.
The fact of the matter is that treasury management services are slowly becoming an important part of the entire value stream which is offered by commercial banks to their customers.
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