Main Targets of Treasury

1
Main Targets of Treasury
Priority Target
1)
1 To ensure liquidity 95 2 To
optimize financing costs 92 3 To optimize
yields on financial assets 74 4 To hedge
costs (e.g. against possible exchange rate
fluctuations) 61 5 To hedge sales (e.g.
against possible exchange rate
fluctuations) 52 6 To contribute to profit
through active management of open positions
30

1) of all companies surveyed Source Price
Waterhouse Top500 Survey (Germany)
2
Cash Forecast
Bank collection (E1)
Payer of cash discount (E2)
(E2)
(E5)
Payer of net amount (E3)
France (E4)
Payer of net amount (E3)
France (E4)
Groups- Customers with similar payment
history- Customers of particular interest
Cash forecast
FI Posting/Sales
Levels- Balance specified according to level
FW Bill of exchange
XA Blocking reason 'A'

• Incorporation of all data customers, vendors,
  planned items
• Expected cash in/outflows over a planning
  interval of 1-24 weeks
• Assistance in optimizing financial investment and
  borrowing
• Control of liquidity development

3
Summary The Different Levels of Treasury
Risk
Liquidity
Performance

Planning
Cash Forecast
CashPosition
TR-FM
TR-CM
TR-CM

Sales Orders
TR-Instruments TR-TM
A/R

G/L
A/P
G/L
PurchaseOrders
SalesProcurement
Budgeting
MM / SD
Accounting
Treasury
Treasury
Financials
Financials
4
Cash Position and Cash Forecast
Cash Forecast
Cash Position
Subledgers - A/R - A/P
Bank accounts in currency Account 1
Account n Total
Payment transactions - incoming - outgoing
Financial investments and borrowings
5
Integration of Logistics and Financial Flow
Purchasingdept.
Goods receipt
Purchase order
Account state- ment
Accounts payable
Invoice
Payment
Cash mgmt / forecast
Cash mgmt position
Treasury
Payment settlement by value date agreed or
forecasted By value date on bank acct
Delivery date payment terms Historical payment
behavior Updated
Account state- ment
Accounts receivable
Cash receipt
Invoice
Salesdept.
Goods receipt
Purchase order
6
Overview
Typical planning interval
Tools
Database

• Cash management position

• Bank accounts
• Bank clearing accounts
• Payment advices

0 - 5 days

• By value date

Cash forecast

• Customers
• Vendors
• Memo records
• Planned items
• FI, MM, SD

• Liquidity forecast
• Expected cash in/out flows
• Taxes

1 - 24 weeks
Financial budgeting

• Revenues
• Expenses
• Bank
• Cash

12 months