The Treasury Department was created in March 2014, within the framework of the Controlling Department. Kamila, who is responsible for the newly created department, will discuss the importance of liquidity management at Sii.
The main tasks of the Treasury Department include managing the company’s liquidity, forecasting and investing surplus funds, hedging the currency risk, authorization and execution of transfers as well as cooperation with the bank.
The liquidity is very important for the company – cash is a particular asset. There are reports of many companies that generated profit, but were unable to ensure liquidity, which lead them into huge financial problems. It is customary to keep a supply of cash to cover short-term needs of the company. At Sii, we ensure that liquidity is maintained at a high level, which has significant effects on lowering the financial risk. Thanks to that, Sii is assessed much more favorably by external contractors.
The most important factors improving the liquidity are the generated profit and appropriate debt collection. At Sii a major role is played by the effective allocation of financial surpluses. Effective debt collection results in several months’ of decrease in the DSO factor, which determines the number of days spent waiting for the inflow of receivables.
Additionally, we secure receivables in foreign currency through forward transactions. This helps minimize the risk associated with sudden drops in the exchange rate and optimize the costs arising from exchange rate differences.
Sometimes cash levels fluctuate more than normally. At Sii, receivables are the main cause of fluctuations. Timely payments from clients ensure constant cash level. That is why debt collection and negotiating short payment terms with clients are so important.
Monitoring of the level of cash and receivables is very important. At Sii, the status of cash held is monitored on a daily basis and the state of receivables is monitored on an ongoing basis by the Administration Department, which is responsible for contacting clients in the event of late payment.