The Strategic Treasurer: A Partnership for Corporate Growth

Preface xiii

Acknowledgments xix

Chapter 1 Building the Case for Being a Strategic Treasurer 1

Volatility and Turbulence as Opportunity 2

Resiliency, Diversification, and Due Diligence 3

Being a Strategic Business Partner 4

It Is Good to Be Needed 4

Technology Has Improved 5

Summary 5

Chapter 2 First Things for the New Treasurer 7

Study the Business 8

Assess Treasury 10

Identify Risks 13

Socializing Your Assessment 14

Put Your Team Together Like a Puzzle 15

Creating and Socializing the Vision and Plan 17

A Time for Action 18

Ongoing Intellectual Curiosity 19

Summary 19

Chapter 3 Being a Partner, Not a Vendor 21

Avoiding Inevitable Pitfalls 22

Keeping in Between the Two Lines 23

Know What Is Important to the Organization and to

Its Partners 27

Summary 29

Chapter 4 Managing Relationships 31

Scope of the Relationship Management Plan 32

Key Components of a Relationship Management Plan 33

Plan and Process for Accomplishing the Objectives 34

Rationale for Formally Documenting Relationships 41

Request for Proposal 44

Summary 45

Chapter 5 Owning Cash and the Five Os of Treasury 47

The Os of Treasury 48

Centralized or Decentralized Treasury 48

Taking Ownership 52

Protecting the Balance Sheet 56

Summary 59

Chapter 6 Cash Boot Camp for Treasurers 61

Cash 61

A Tale of Two Types of Cash 62

Disbursement Example 64

Collection/Receivable Example 66

Discussion 71

Technology Enables Appropriate Cash Recording and Reporting 71

Cash Implications 74

Summary 75

Chapter 7 Owning Working Capital 77

Two Definitions of Working Capital 78

Two Different Measurements for Working Capital 79

Working Capital Impact on Organizational Value 84

Differences Between Liquidity and Historical Working Capital Measures 87

Projecting Working Capital Usage and Variations 89

Steps Needed to Optimize Working Capital 90

Summary 92

Chapter 8 Differences Between a Process View and a Silo View 93

The Process Perspective Is Vital 93

Symptoms of a Silo View 97

Fighting the Silo Mentality with the Process 99

Summary 100

Chapter 9 Financial Risk Management, Part One: Considering Risk Through the Eye of the Beholder 101

Risk 102

Summary 109

Notes 109

Chapter 10 Financial Risk Management, Part Two: Altering the Risk a Company Faces to Match the Risk It Desires 111

Risk Management Choices 112

Possible Reasons for Hedging 114

Value in Risk Management 116

Volatility and Impact 117

What to Hedge? 119

Financial Risk Management Process 120

Treasurer’s Role 124

Black Swans 126

When Do We Hedge? 126

No Cheers for Hedges; It’s the Objective That Matters 127

Summary 127

Notes 129

Chapter 11 Losses and Fraud: What Can Keep Treasurers Awake at Night 131

Situations of Loss 133

Fraud 138

Summary 143

Chapter 12 Communication: Mars and Venus: Minimizing Communication Conflict Between Treasurers and Controllers 145

Cash 147

Forecasting 149

Working Capital 152

Controls 154

Summary 155

Chapter 13 Building and Developing the Treasury Team 157

Putting the Puzzle Together 158

Developing the Team 160

Summary 163

Chapter 14 Understanding and Maximizing the Use of Treasury Technology Tools 165

Technology Supports the Treasury Role, and Treasury Supports the Organization 166

Treasury Technology Landscape 167

Extension and Visibility Services 168

Treasury Workstation and the Technology Landscape 170

The Order of Activities 175

Respecting Your Time: A Tale of Dashboards and Reports 175

Other Treasury Systems 177

Managing Financial Processes 184

Summary 187

Notes 187

Chapter 15 Advice from Various Treasury Leaders 189

Change Management 189

Risk Management 192

Relationship Management 194

Mindset and Perspectives of the Treasurer 197

Developing Treasury Staff 200

Vision, Strategy, and Execution 201

Reading List 202

Summary 202

Chapter 16 Volatility and Liquidity Management 205

Protecting the King 205

Volatile Times 206

Financial Crisis of 2007+ 206

Financial Instrument Risk 207

Counterparties 211

Foreign Exchange Rates 212

Commodities 213

Rating Agencies 217

Banks and Insurance Companies 217

Governments 221

Summary 222

Chapter 17 Achieving Visibility to Your Liquidity: Visibility and Process-Automation Requirements for the Strategic Treasurer 223

Achieving Visibility to Liquidity Requires Internal and External Data 225

Prerequisites to Achieving Visibility 230

Connecting Through Networks 231

Assessing Threats and Impacts to the Organization’s Liquidity 237

Summary 241

Chapter 18 Envisioning Treasury in the Future 243

Treasury’s Role in the Corporation 244

Stewardship: Technology Developments and Green Treasury 244

Everything as a Service: Cloud Computing Comes to Treasury 245

Visibility and Risk Management 248

Relationship Power Shifts 251

Liquidity and Balance Sheet Management 252

Chairing the Working Capital Council and Advising Business Areas 253

Cash, Checks, and Miscellaneous Projections 253

Some Things Will Not Change 254

Summary 254

Chapter 19 “Not-to-Do” List for the Treasurer 257

Relationship Management 258

Technology Decisions and Perspectives Don’ts 260

Staffing, Resources, and Consultants 261

Projects and Communication 261

Decisions, Debates, and Assumptions 262

The Crowd: Follow or Take the Road Less Traveled 263

Some Basics 264

Summary 265

Appendix 267

Index 275