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Main Targets of Treasury

Main Targets of Treasury . Priority Target %. 1). 1 To ensure liquidity 95 2 To optimize financing costs 92 3 To optimize yields on financial assets 74 4 To hedge costs (e.g. against possible exchange rate fluctuations) 61

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Main Targets of Treasury

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  1. Main Targets of Treasury Priority Target % 1) 1 To ensure liquidity 95 2 To optimize financing costs 92 3 To optimize yields on financial assets 74 4 To hedge costs (e.g. against possible exchange rate fluctuations) 61 5 To hedge sales (e.g. against possible exchange rate fluctuations) 52 6 To contribute to profit through active management of open positions 30 1) % of all companies surveyed Source: Price Waterhouse Top500 Survey (Germany)

  2. Cash Forecast Bank collection (E1) Payer of cash discount (E2) (E2) (E5) Payer of net amount (E3) France (E4) Payer of net amount (E3) France (E4) Groups:- Customers with similar payment history- Customers of particular interest • Incorporation of all data:customers, vendors, planned items • Expected cash in/outflows over a planning interval of 1-24 weeks • Assistance in optimizing financial investment and borrowing Control of liquidity development Cash forecast FI = Posting/Sales Levels:- Balance specified according to level FW = Bill of exchange XA = Blocking reason 'A'

  3. Logistics Summary: The Different Levels of Treasury Risk Liquidity Performance Planning Cash Forecast CashPosition TR-FM TR-CM TR-CM Sales Orders TR-Instruments TR-TM A/R G/L A/P G/L PurchaseOrders SalesProcurement Budgeting MM / SD Accounting Treasury Treasury Financials Financials

  4. Cash Position and Cash Forecast Cash Forecast Cash Position Subledgers: - A/R - A/P Bank accounts in currency: Account 1 : Account n Total Payment transactions: - incoming - outgoing Financial investments and borrowings

  5. Integration of Logistics and Financial Flow Purchasingdept. Goods receipt Purchase order Account state- ment Accounts payable Invoice Payment Cash mgmt / forecast Cash mgmt position Treasury Payment settlement by value date agreed or forecasted By value date on bank acct Delivery date + payment terms Historical payment behavior Updated Account state- ment Accounts receivable Cash receipt Invoice Salesdept. Goods receipt Purchase order

  6. Overview Typical planning interval Tools Database Cash management position • Bank accounts • Bank clearing accounts • Payment advices 0 - 5 days • By value date Cash forecast • Customers • Vendors • Memo records • Planned items • FI, MM, SD • Liquidity forecast • Expected cash in/out flows • Taxes 1 - 24 weeks Financial budgeting • Revenues • Expenses • Bank • Cash 12 months

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