Turning Treasury from Reactive to Proactive – part 4 of 5

By Kyriba July 28, 2015

We asked 24 treasury experts, from banks, consultancies, analysts and leading brands worldwide, to give their guidance on what treasury teams can do to turn their treasury function into one that is proactive and creates value across multiple levels of the business.  

After discussing areas including thinking more strategically, managing risk more effectively and creating a treasury vision, the next step that our team of experts discussed is centralizing treasury. According to Ari Morris, founding partner of Global Treasury Partners, a key feature of this, particularly for companies that have large volumes of intercompany loans and settlements, is to implement a multilateral netting solution. The improvement for one of GTP’s clients was significant: “When multilateral netting had been implemented, things changed markedly. Rather than being defensive, treasury became an enthusiastic supporter of the company’s growth. It now had a technical structure upon which it could layer in all its new business and became a key contributor to the company’s overall success.”

Jim Cashin, partner at McGladrey, also sees that robust treasury management fundamentals are essential, so that “companies can strategically manage cash flows as different factors of the business change.”

However, one point that he makes is that, contrary to what some believe, companies need to have multi-billion dollar revenues before needing to invest in a treasury management system.

He says, “Enormous market capitalization isn’t a prerequisite for making the leap to a proactive treasury function. There is the argument that a centralized treasury function is not necessary until the company reaches a certain critical mass and begins to engage in internationalized business. McGladrey’s vast experience shows that this argument is not necessarily true, especially for our middle market clients.

He continues, “Many middle market companies are already global. As such, they need to understand ever-changing global regulatory impacts, be responsive to international political and market uncertainty, and understand foreign exchange implications—all nearly impossible using reactive, labor-intensive, manual accounting procedures.”

Turning Treasury from Reactive to ProactiveTo read more of these essays, as well as those of other leading treasury consultants, analysts and practitioners, download the mini-ebook, Taking Treasury from Reactive to Proactive: Centralize Your Treasury.

To hear directly from some of the contributors to the series of mini-books, sign up for the webinar, From Reactive to Proactive: Real-World Solutions for Becoming a Strategic Treasury, taking place on Thursday July 30th at 2pm ET / 11am PT. This webinar will feature experts from TRW Automotive, Bank of America and Merrill Lynch discussing their own perspectives on how to become more proactive and strategic in their approach, as well as a lively round table discussion.

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