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Financial Control, Treasury and Cash Management in ACCA BT

Updated 11 October 2026 · Fact-checked

The financial controller looks after accounting records, reporting and internal control. The treasurer manages cash, funding, investment of surplus funds and financial risk. Cash management sits with treasury and covers forecasting, borrowing and investing. To answer BT questions, identify whether the task is recording and controlling or funding and managing liquidity.

Understand Financial Control, Treasury and Cash Management

Large organisations split the finance function into two broad roles. One looks backwards and inwards: recording, reporting and controlling. The other looks forwards and outwards: finding money, keeping enough cash and managing risk. BT tests whether you can tell them apart.

The financial controller is responsible for the accounting system. Typical duties are producing financial statements, keeping the ledgers accurate, running internal controls, preparing budgets and variance reports, and meeting reporting and tax deadlines. The financial controller reports on what has happened and helps ensure the numbers are reliable.

The treasurer runs the treasury function. Typical duties are cash management, raising funds from banks and investors, managing relations with banks, investing surplus cash, and managing risks such as interest rate and foreign exchange risk. Small firms may not have a treasurer, and the owner or financial controller does these jobs.

Cash management means making sure the business has enough cash to pay its debts when they fall due, without holding too much idle cash. It involves forecasting cash flows, speeding up receipts, controlling payments, borrowing to cover shortfalls and investing surpluses. Too little cash risks failing to pay bills (a liquidity problem). Too much cash earns a low return.

Working capital is current assets less current liabilities. It covers inventory, receivables, cash and payables. Managing it well means balancing liquidity against profitability. Funding means deciding how to finance the business, using short-term sources such as overdrafts for temporary needs and long-term sources such as loans or equity for lasting needs.

Key formulas to remember

Working capital: Working capital = Current assets − Current liabilities; Positive means current assets exceed current liabilities. Too much can mean idle resources.
Current ratio: Current ratio = Current assets ÷ Current liabilities; Measures short-term liquidity. Compare with the industry rather than relying on a fixed ideal.
Quick (acid test) ratio: Quick ratio = (Current assets − Inventory) ÷ Current liabilities; Excludes inventory because it may be slow to turn into cash.
Role split: Controller = record, report, control; Treasurer = fund, invest, manage cash and risk; Use this to classify any duty in a question.
Matching principle for funding: Short-term needs → short-term funds; long-term needs → long-term funds; A guide, not a rule. Firms often fund part of permanent working capital with long-term funds.

How to solve Financial Control, Treasury and Cash Management questions

Use this method for any question on treasury, financial control or cash management.

1Read the question and underline the task described, such as preparing accounts, arranging a loan or forecasting cash.
2Decide whether it is about recording and controlling (financial controller) or funding, cash and risk (treasurer).
3If the question is about cash, decide whether it concerns a shortage (borrow, delay payments, speed up receipts) or a surplus (invest, repay debt).
4If it concerns working capital, identify the item: inventory, receivables, payables or cash.
5For funding, match the need to the source: temporary need to short-term finance, permanent need to long-term finance.
6Check the wording of options for traps, such as a controller duty placed in a treasury list.
7Choose the answer that fits the role or need most precisely.

Quickest way: Verb test for roles

When to use it: Use this for multiple choice questions that ask who is responsible for a task.

Find the key verb in the task.
If the verb is record, report, reconcile, audit or control, choose the financial controller.
If the verb is borrow, invest, hedge, forecast cash or negotiate with banks, choose the treasurer.
Eliminate options that mix the two roles.
For liquidity questions, ask whether cash is short or surplus and pick the matching action.

Common mistakes in Financial Control, Treasury and Cash Management

Assigning cash management to the financial controller.
Both roles sit in finance and both handle money, so they seem alike.
Fix: Remember that treasury handles cash, funding and risk, while the controller handles records and reports.
Saying treasury exists in every business.
Textbook descriptions describe large organisations.
Fix: State that smaller firms often have no separate treasury and the duties are done by other finance staff.
Thinking more cash is always better.
Students focus on liquidity and ignore return.
Fix: Explain the trade-off: idle cash earns little, so surplus funds should be invested sensibly.
Confusing working capital with cash.
The word capital suggests money in the bank.
Fix: Working capital is current assets minus current liabilities, including inventory and receivables.
Recommending long-term loans for every shortage.
Students overlook how long the need lasts.
Fix: Use short-term finance for temporary shortfalls and long-term finance for lasting needs.

Worked examples

Example 1

A company's finance team must (1) prepare the monthly management accounts, (2) arrange an overdraft facility with the bank, and (3) invest a temporary cash surplus. Which tasks belong to the treasury function?

Show the solution

Task 1 is preparing accounts, which is recording and reporting. It belongs to the financial controller.
Task 2 is arranging bank funding. It is a funding task, so it belongs to treasury.
Task 3 is investing surplus cash. It is a cash management task, so it belongs to treasury.

Answer: Tasks 2 and 3 belong to the treasury function.

Example 2

A business has current assets of $480,000, of which inventory is $180,000, and current liabilities of $240,000. Calculate working capital, the current ratio and the quick ratio.

Show the solution

Working capital = $480,000 − $240,000 = $240,000.
Current ratio = $480,000 ÷ $240,000 = 2.0.
Quick assets = $480,000 − $180,000 = $300,000.
Quick ratio = $300,000 ÷ $240,000 = 1.25.

Answer: Working capital is $240,000, the current ratio is 2.0 and the quick ratio is 1.25.

Exam tips

BT objective questions often ask you to match a duty to a role. Use the verb test and answer quickly.
Read multiple response questions carefully and select exactly the number of answers stated.
For number entry on ratios, check which items to exclude, such as inventory in the quick ratio, and enter the answer in the format requested.
Expect liquidity versus profitability trade-off wording. The best answer usually balances both.
Do not spend time on small firms' exceptions unless the question mentions a small business.

Practice questions from Accounting and finance functions within business organisations

Financial Control, Treasury and Cash Management in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Financial Control, Treasury and Cash Management: frequently asked questions

What is the difference between a financial controller and a treasurer?

The financial controller is responsible for accounting records, reporting and internal control. The treasurer is responsible for cash, funding, investment of surplus funds and financial risk. In small firms one person may do both.

What does the treasury function do in a business?

It manages cash, arranges borrowing, invests surplus funds and manages risks such as interest rate and currency exposure. It also maintains relationships with banks and other finance providers.

Why is cash management important?

A business can be profitable yet fail if it cannot pay bills when due. Good cash management keeps enough liquidity while avoiding large idle balances that earn little.

Is working capital the same as cash?

No. Working capital is current assets minus current liabilities. Cash is only one current asset, alongside inventory and receivables.