Treasury Management

Section 3 Treasury Management

3.01 Introduction

How is the foreign exchange exposure on individual transactions being managed by the head of finance?

3.03 Banking Facilities / Funding

Is the approval of the regional finance director sought before opening a new account (either an account in a new bank or a new account in the existing bank) or for any new source of finance such as new loan, new credit facility, renewal or increase in existing credit facilities?

Is any approval from the regional finance director and or regional managing director sought before pledging of assets to bank?

3.04 Cash Management

What is the limit of the maximum cash and or cash equivalents? Is this more than average sales ratio of 5 days? i.e. average sales ratio of 5 days = budgeted sales for the year x 5

260 days (52 weeks x 5 days)

3.05 Cash Flow

Does the head of finance prepare a cash flow forecast for the following two months to determine whether the loan can be settled within two month or not? Does he send a cash flow statement to DIC AP on monthly basis?

3.06 Foreign Exchange Movement

Are the inflows and outflows in each non local currency greater than JPY 10,000,000 covered with forward foreign exchange contracts? Is the quantum of all future inflows and outflows and the status of hedging currency exposure communicated to the regional finance director? In case, exposure is not being hedged, is the decision not to hedge communicated to the regional finance director along with proper justifications? Are all the outstanding current assets and liabilities in non local currencies reported to the regional finance director on monthly basis?

3.07 Foreign Currency Cash Flow Forecast

Is a foreign currency cash flow forecast prepared? If yes, is it communicated to the regional finance director along with the status of hedging for the following 3 months?

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