Overview of corporate financial management

Corporate financial management responsibilities include:

• Corporate finance
• Long-term funding
• Investment and
• Intercompany funding

Each of these responsibilities is a core technical competency for treasurers, as identified by the ACT's Competency Framework.

They are each discussed in more detail below.

Corporate finance

Corporate finance theory (risk/reward) is applied in practice to evaluate sources and uses of finance. This encompasses everything from capital structure (debt, equity and dividend policy), through major business transformations (e.g. mergers and acquisitions) to individual financing decisions (e.g. whether to buy a particular machine).

Long-term funding

The success of the organisation is dependent on access to funds. Identification of the most appropriate sources of funding to achieve the organisation's medium / long term objectives and putting funding solutions (including documentation) in place will ensure that funding is available whenever required.

Investment

Treasury needs to be prepared to handle cash surpluses as well as borrowing requirements. A financial investment strategy (based on security, liquidity and yield) that is consistent both with the needs of the business and with its risk appetite, should be in place as well as methodology to monitor the creditworthiness of investment counterparties.

Intercompany funding

Intercompany funding of subsidiary operations is generally an efficient source of funds for an organisation. It may not be straight forward to implement or manage, as tax, legal and regulatory aspects must all be taken into account especially when setting up intercompany structures such as netting systems, In House Banks etc.

See also

• ACT Competency Framework
• Corporate finance
• Financial
• Financial management
• In-house bank
• Technical skills

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