This lesson establishes the foundational infrastructure of treasury operations, how the function is structured to support the business, and the importance of policies and procedures.  The treasury function must be set up to reflect the needs and culture of the organisation, establishing a framework that enables resilience to external shocks and effective relationships with the business and financial institutions. 

1.1. Operational Infrastructure and Resilience

Treasury operations must be built on a robust infrastructure that supports the organisation’s core activities. This includes structuring the function to reflect the needs and culture of the business, establishing policies and procedures for day-to-day operations, and ensuring resilience to external shocks through disaster recovery planning.  The University of Birmingham’s Ethics, Governance and Regulation in Treasury module specifically examines IT system requirements needed to maximise the value added by treasury, alongside analysing a range of IT solutions, including security and controls. 

1.2. Core Operational Activities

The daily operational cycle of a treasury function encompasses several core activities:

• Daily cash management: Monitoring cash positions, processing transactions, and managing bank accounts.

• Cash flow forecasting: Preparing short-term forecasts to anticipate funding needs and investment opportunities.

• Payment processing: Initiating and authorising payments, ensuring accuracy and security.

• Bank reconciliation: Matching internal records with bank statements to identify discrepancies.

• Position reporting: Aggregating and reporting on treasury exposures and positions.

1.3. Operational Governance and Controls

A framework of policies and procedures is essential for operational governance. This includes defining roles and responsibilities, segregation of duties, and authorisation limits. The University of Birmingham module covers “operational risk and control” as a key element, along with “ethics and codes of practice from professional bodies, such as the ACT.”  Treasurers must also manage fraud and cyber risks as part of their operational responsibilities.