CAT / FIA FFM Syllabus C. Managing Cash Balances - Advantages of a centralised treasury department - Notes ^{2 / 5}

These are:

1. foreign currency management becomes easier, since the foreign currency expenditure in one company can be matched with receipts in the same currency in another group company.

2. higher interest rates may be attainable on investments because the department has larger amounts of cash available for investment.

3. the treasury department may be a profit centre in its own right, resulting in an increased likelihood of a profit being made.

4. lower interest rates may be sought for borrowing, since borrowing can be arranged for the group as a whole.

5. the level of cash held for precautionary purposes can be minimised since only one amount will be required for the whole group.

6. experts can be employed with specialised knowledge, more qualified to manage risk and make better investment decisions.