Treasury policy

The means by which senior management can delegate decisions to treasury in a controlled manner.
Treasury policy sets out what treasury is expected to achieve, how success will be measured and what decisions are delegated.

Policy documents often include counterparty limits (the maximum exposure the treasury is allowed to have to pre-determined counterparties as a borrower and an investor), forex risk management parameters, the scale and tenor of back up facilities, the use of parent company guarantees, the nature of treasury reporting and forecasting.

Other factors can be included, depending on the nature of the business.

The Treasury Policy should be regularly reviewed at Board level.

Annual review is typical.

See also

• Counterparty
• Developments in corporate and market regulation: implications for the treasurer
• Foreign exchange (forex)
• Guarantee
• Policy
• Risk management
• Tenor
• Treasury

Other links

How to produce a treasury policy, The Treasurer Web exclusive

Guidance for Producing Treasury Policies - Treasurer's checklist