International Treasurer investigates an increasingly pressing topic.
The financial crisis made clear that treasury better have a good handle on cash. With capital markets virtually frozen and beleaguered banks in cash-conservation mode, the last place any treasurer wanted to be was in front of the board telling it he didn’t know the company’s cash position or whether or not there was enough to service debt or even pay for an acquisition. Therefore, to get a handle on cash, treasurers have focused on rationalizing their company’s bank accounts.
Optimizing treasury processes, getting a good view of cash and revving up cash velocity is critical for treasury. At this month’s EuroFinance conference in Miami, sessions on this topic were particularly well attended. At one, two seasoned treasury practitioners – one from power company AES and the other from Microsoft — gave overviews of their particular priorities and processes. And while they are from companies with different structures, they had one thing in common – the goal of paring down their bank accounts to a manageable number.
For AES, which had about 2000 accounts across 55 countries, this meant automation and moving all loan and deposit account management onto a single system. It also meant meeting with company managers around the globe as well as getting as many of his accounts on a common XML platform as possible. For Microsoft, it meant boosting a SWIFT project so that the company could get 100 percent visibility and utilizing its own Visio software to understand process flows. It then worked on improving its cash-flow forecasting, which allowed it to hold onto its cash longer.
A full recounting of their processes and experience will be published in the upcoming issue of International Treasurer.