Trends in Treasury Management (Quiz Available) A number of important trends in treasury management represent a continuation of former trends are

thus considered evolutionary, while others represent major changes and are considered revolutionary. Electronic Commerce and globalization are examples of evolutionary trends, while recent legislation such Sarbanes-Oxley and the Check Clearing for the 21st Century Act (“Check 21”) represents revolutionary trends. Whether evolutionary or revolutionary, the following trends signify substantial changes to the treasury profession’s body of knowledge and or significant changes to treasury management practices: - Total Working Capital Management: As the treasury profession has matured, there has been a shift away from its original, narrow focus on cash management (i.e., the cash account on the balance sheet) to a broader focus on total working capital management. There is an emphasis on managing all current asset and current liability accounts. - Management of the entire balance sheet: in many organizations. Treasury’s role involves more than managing working capital (current assets and current liabilities). It also includes managing the entire balance sheet (total assets, total liabilities and equity). - Expanding Roles and Responsibilities of Treasury: The responsibilities of treasury have been extended to areas such as operational risk management, insurance and pension fund management. - Collaboration with other departments: Treasury has become an information hub for financial information used by other departments. In turn, effective liquidity management depends upon timely exchange of information with persons responsible for sales, purchasing, production, inventory, accounts receivable, accounts payable and capital project expenditures. It is especially important that treasury maintains timely exchanges of relevant information with accounting and other key departments. - Greater Technological Expertise: Electronic gathering and exchange of information and electronic transfer of value are basic to treasury practice today. Familiarity with enterprise resource planning systems, financial and value transfer software, file access protocols, hedging software, and other tools are essentials. - Significant Legislation: Sarbanes-Oxley (SOX), the Patriot Act and “Check 21” are among the laws that have made major impacts on the treasury profession and the financial services industry. - Corporate Governance and Ethics: Ethics have always been an important issue for treasury professionals. However, recent corporate scandals and bankruptcies have reinforced the importance of focusing on corporate governance. - International Treasury Management: AS the trend toward globalization continues, especially with the establishment of a unified currency (the euro) in the European region, many companies are establishing regionalized or centralized international treasury operations using Shared Service Centers (SSCs). - The use of derivatives to manage foreign exchange (FX) risk is no longer confined to large multi-national firms , but now extends to small and mid-sized companies, as well. - Outsourcing: As the trend toward outsourcing treasury functions continues, the nature of the relationship between treasury departments and third-party service providers has become more complex. More companies use a wide variety of non-bank financial services providers (FSPs) to perform functions formerly managed in-house or by commercial banks.