How to Write a Treasury Policy

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After “The Role of the Treasurer”, how to write a treasury policy follows logically.

The treasury policy is the executive management’s mandate to the treasurer as the guardian of financial risks. By clearly articulating treasury objectives and covering core components such as hedging strategy, it is designed to provide more predictable outcomes and should gain buy-in from other stakeholders.

TMI’s latest guide describes the steps to creating a purpose-driven financial policy and putting systems in place to ensure compliance.

The treasury policy clarifies expectations for treasury when interacting with potential clients. Certain treasurers appear to find it difficult to clarify the specifics of hedge policies, referring to them as “industry standard.”

An out-of-date policy is a waste of time and effort. Furthermore, it is a missed opportunity to inform internal and external stakeholders:

  • How financial risks affect a company’s capacity to survive
  • The importance of the Treasury’s function and duty in controlling the effects of financial risks
  • The significance, obligation, and role of stakeholders in aiding Treasury in accomplishing its goal of managing financial risks

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