Emerging role of corporate treasury management in cyber space

Van Rooyen, J. H. (2002-12)

The original publication is available at http://www.sajim.co.za/

Article

The Internet has brought about many new implications for the way we do business and is becoming a feature of normal business (Forster 2000). The most important implication is the way in which the Internet links many different entities in a vast network, creating a pool of information that is accessible from any location in the world. The computer screen is a small window into this pool of information, allowing us to interact with other participants in cyberspace. The most important aspect of the Internet from the point of view of this research is that it allows or facilitates the flow of business information, called e-business, between businesses and consumers, allowing business-to-business and business-to-consumer interaction. One of the possibilities brought about by the Internet is that of trading on-line, also called ecommerce. This opens up a new world that allows trade with global markets from any location. The ease with which we change things (information) in this environment may cause us to be indifferent to the parties with which we do business – as long as we are able to verify their secure identities. The modern treasury environment in a corporate treasury will be affected materially by the Internet. How treasury departments are being affected and will be affected in the future is important for South Africa. As a developing country, South Africa needs to take note of important changes in the global environment. If the country does not keep up with developments, the cost of catching up, which may be substantial, will place further unnecessary strain on the SA economy. E-business is seen as one of the most important enablers of business and it seems as if SA companies are already about 18 months to two years behind their counterparts in the USA (Gordon 2000:10). Generally, South African companies have not yet fully exploited the business advantages of new technologies (Duffield 2001:18). South African corporate treasuries realize the benefits of the e-business environment but need to take note of the changes and requirements necessary to fully exploit these benefits and to enable them to better manage the overall treasury function and the increased exposure to financial risk which may come about owing to mismanagement, fraud, inefficient systems or the use of modern financial instruments. Devastating losses may come about owing to the incorrect use of, for instance, derivative financial instruments. These instruments may leverage a dramatic loss (Holton 1998) and may threaten the future existence of a company. It is today also much easier to place most or all of the capital of a company at risk with one phone call. This just underlines how important it is to employ technology to improve the flow of business information for transactional, timely and accurate information for management purposes. The management of risk from the enterprise perspective therefore becomes vital.

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