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Key activities of the modern treasury

Bruce Lynn, Managing Partner at The FECG, presentations at the recent New York Cash Management Exchange on Managing the modern treasury department contained some insightful gems. Here are a few.

The sins of traditional treasury

  • Traditional corporate treasury:
    • Globally - % of time spent on “strategic” activities is low
    • US-S&P companies using a cashflow metric is low
    • Metrics are mostly P & L oriented
    • 51% of Treasuries feel organization NOT using its capabilities
    • 36 % Treasuries NOT part of the executive committee or “C suite”
  • Need for change - external trends
    • Rates will increase with Jerome Powell as Chairman 
        • Source & Copyright©2019 - The Financial Executives Consulting Group
  • Need for change - internal trends:
    • Free cash flow, a vital figure is going down, while debt continues to rise:
        • Source & Copyright©2019 - The Financial Executives Consulting Group

Modern treasury needs to be

  • Overview:
    • Treasury should be a strategic unit that adds significant value to the corporation
    • Treasury is pro-active and visible in the company
  • Seven key activities of modern treasury are:
  1. Global oversight of financial assets/liabilities/risks
  2. Maintain access to sufficient funding at all times
  3. Risk management role expanded beyond FX/IR
  4. Internal consulting and information resource for corporate management and business units
  5. Reduce processing costs and bank charges
  6. Prepare and analyze forecasts to enable better decisions on funding, hedging, pricing, investments
  7. Actively participate in major company initiatives, e.g. strategic planning, IT, compliance, M&A.

CTMfile take: A vital NEW point that Lynn makes is that corporate treasury departments are not measured correctly. They should be measured on free cashflow type metrics rather than P&L driven stats.


This item appears in the following sections:
Operational Risk Management
Outsourcing Cash & Treasury Management Operations
Cash Flow Forecasting

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