The CFO Perspective: The Strategic Value of Treasury

To measure treasury’s effectiveness, it’s necessary to look at metrics for routine treasury functions to determine how efficiently team members perform those functions. Bettinger says, “To the extent you do those things well, you then get to play at a different level in the company.” The routine metrics are familiar to any treasury organization— days sales outstanding, days payable, days of inventory, past-due receivables, the timeliness of collecting, return on invested capital, and how the company is managing its cash balance compared to benchmarks. This information provides incentive for treasury to take advantage of its own policies and systems to create value-added efficiencies. For example, Bettinger’s company uses its treasury management system to provide self-service functionality that enables certain suppliers to choose payment terms. In this way, treasury more efficiently optimizes supplier payments based on suppliers’ preferences. Other value measurements exist beyond the basic treasury metrics. As Bettinger explains, “I try to measure what I call influencing events, or areas where we’ve partnered with the business to do something unique and different.” These events identify partnership opportunities that typically involve using the balance sheet to enable business, and then the team works to accomplish three or four of those tasks per quarter. Measuring this activity isn’t a simple metric, however: Some of these opportunities are quite involved. “I find that if you make those things visible and reward them, then more people will think about how to do other things like that,” Bettinger says. STRENGTHENING TREASURY ’S ROLE AS A BUSINESS ENABLER 15 Sponsored by: