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Plain business sense and focus is what counts

Strategic is the current and most overused buzz word in corporate treasury and payments today, but what the hell does it mean? Strategic what……..

Strategic accounts receivable

FEI Daily recently had an article From Checkers to Chess: Thinking Strategically about AR, which  focussed on “The chief area that organizations need to assess and most likely can improve is accounts receivable.”

They wrote, Accounts receivable, or AR, has historically been too often overlooked by company executives when examining ways to create more efficient processes and ultimately accelerate cash flow. For the most part, the goal with AR is to get the job done with the resources at hand, and re-examining a traditional process that works might be considered too time consuming or expensive. However, just getting the job done does not mean it’s getting the job done well.”

They argue that by taking a strategic approach, “You win the health of your business: a predictable cash flow to grow business and invest in innovation, more cost-effective processes that save time and money, happier customers loyal to your brand and more efficient employees focused on more impactful projects.”

The article argues that accountants need to change the way they think about A/R by:

  • not relying on manual processes
  • automate with all the new technologies because “automation is the key”.

The article finishes with, “It’s critical for CFOs to look at AR from a strategic standpoint rather than a tactical one, in order to lead to greater efficiency and ultimately better cash flow.”

Strategic corporate treasury 

A CTMfile WEBchat to be posted later today on ‘The Do’s and Don’ts of Corporate Treasury’ features the thoughts of the Association of Corporate Treasurers’s CEO - Caroline Stockmann, PwC’s Bas Rebel, and Bengt Elvinsson (well worth a view) and is full of really important and sensible thoughts and ideas about corporate treasury, for example:

  • First you need to know where you aiming to get to (a vision)
  • Don’t do things that anyone else can do better or can be automated
  • Face outwards and become part of the business rather than just focus on the corporate treasury department
  • The skill set needed to be successful, etc.

Peter Drucker defined strategic planning, as “the continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their futurity; organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organized, systematic feedback." 

In other words, corporate treasury could be defined as making good decisions about the future. 

Business focused 

Calling the new focus of the corporate treasury as strategic treasury is missing the point and confusing the issue. Corporate treasury clearly needs to face outward and focus on the business as a whole not just on corporate treasury. What is needed is for corporate treasurers to see themselves as business people who are in charge of adding value to their business. Maybe ‘business focused treasury’ would be a more accurate and more effective term, sadly it doesn’t sound so neat as ‘strategic treasury’. Maybe AFP and the Association of Corporate Treasurers should offer a prize for someone (even to a consultant) coming up with a more effective term?

This item appears in the following sections:
Best Practices & Benchmarking in Operations
Control & Compliance in Operations

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