Treasury brings together the entirety of the funds available to a business in the short term. These funds can be:

  • Cash held in the company’s current account

  • Cash kept in savings or investment accounts

  • Marketable securities

💡 Useful tip: marketable securities are assets or financial instruments that can be liquidated, i.e. turned into cash, at short notice. For example, a company can invest in another business by buying shares and then selling those shares if it needs the liquidity. It’s a useful way of making profit out of excess cash.

A company can turn to its treasury when it has a short-term need (current expenses, non-forecast costs related to higher sales, increased staff costs during seasonal peaks and so on).

Careful! Don’t confuse treasury with turnover or profit.

Turnover is the total amount generated by sales of a product or service.

Profit is what remains once total costs have been subtracted from the turnover. Unlike treasury, it does not take into account the entirety of funds available to a company (think of your marketable securities for example).

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