The Strategic Treasurer

The current period of market and governmental turbulence is the most challenging—yet rewarding—time to be a treasurer. Now, as perhaps never before, the treasurer’s visions, skills, and worth will be tested and proven. A useful reference, The Strategic Treasurer: A Partnership for Corporate Growth systematically equips today’s corporate treasurers to move from merely being the liquidity manager to becoming a strategic driver and steward of corporate value as well as an equal partner with senior management.

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