Treasury Transforma-on From Opera-onal to Strategic. Ari Morris, Founding Partner Global Treasury Partners Ltd.

Transcription

1 Treasury Transforma-on From Opera-onal to Strategic Ari Morris, Founding Partner Global Treasury Partners Ltd. Gtreasury User Conference Chicago, IL August 14, 2014

2 Ques-ons Prior to implementation, how many had a formalized process to identify needs? Were the objectives largely operational or strategic? Have those objectives been met? 2

3 Communica-ng the Value Achieving operational objectives very impactful for treasury operations E.g. multi- bank connectivity, ease of consolidated reporting, auto- generated journal entries, stream- lined payment authorization But, barely visible to Executive suite and other departments Reduced bank fees, but increased bank service fees; time saved within the department, but no reallocation of head- count 3

4 Implementa-on Assessment Strategic objectives are often not achieved E.g. Proactive FX risk management Regional cash pooling Treasury as a strategic advisor to business units Coordination with Shared Service Center structure But you can t get there unless the foundation is built on solid, reliable operational ground 4

5 Treasury Technology Evolution Deliver Value Activities Benefit to Organization Transact Organize Home grown technology - Excel TMS Manage Liquidity and Risk Strategic Partner Integral part of corporate planning Centralized risk management Front, Middle, Back ofwice integration TMS/ Integration Disconnected Bank Portals Processing requests Evolution of Treasury

6 Planning for Treasury Transforma-on

7 Treasury Transforma-on Planning Activity Impact Implementation Steps Achieve last mile Unfinished items erode confidence and operational objectives create obstacles for future improvements. Common items include international payments, GL integration and key reports Create mini project plan for last mile items and work with vendor to complete Stop banging your head against the wall some items will remain outside the TMS Reassess, Prioritize and Document Strategic Objectives Develop internal support Coalesces treasury and Executives on what to expect and how success will impact the entire organization. Sets the goals and objectives of Next Phase. Support should be introduced with the step above, but it is required throughout the project. Managers are more likely to provide resources and prioritize activities if they are vested in the result Work internally to vet strategic objectives Complete business case Validate role of technology Develop communication strategy for TMS in general to reignite enthusiasm Employ change management techniques

8 Treasury Transforma-on Projects Description Considerations Coordination with Shared Service Center Strategic Advisor to BU s Treasury can play an integral role with an SSC structure, leading bank connectivity, enabling multi-lateral netting and operating a payments factory Contribute reliable and predictive information as opposed to collecting and reporting on historical data Payment service expertise Inter-company invoices ERP integration Cash planning Contract support P2P and O2C Cash Pooling Pool funds notionally or physically within a regional entity structure to maximize investable funds and use working capital most efficiently Inter-company tracking Tax planning New bank services Centralized FX Management Centralize global FX activity to consolidate all risk and execution Back-to-back trades Trade on-behalf Position management

9 Example Centralized FX Management

10 Step 1 Last Mile Opera-onal Objec-ves Insure the following operational objectives have been met EfWicient front, back and middle ofwice workwlow Trade execution, capture, conwirmation, settlements, accounting, valuations, compliance and performance Determine what items should be dropped E.g. Tailored performance report, trade compliance blocking 10

11 Step 2 Next Phase Strategic Objec-ves Fully describe speciwic objectives and their purpose, working with relevant departments and stakeholders Eliminate simultaneous short/long positions and simultaneous buy/ sell activity Consolidate risk management with internal domain experts Enable complete picture of FX exposure and activity More effective decisions on company- wide hedge management Accurate knowledge of components of FX gain/loss Work with Vendor to determine the role of technology Integrate with trade execution, conwirmation and/or valuations/hedge accounting Enable In- house Bank and counter- party compliance Implement back- to- back FX trades and Trade on behalf 11

12 Step 3 Develop Internal Support Most effective change management tools are communication, inclusion and transparency 1. Current Assessment communicate openly to all stakeholders on the status of the original implementation and solicit their feedback; FX deal capture, remote system access, visibility of activity 2. Strategic Objective Development include those whose work would change the most in development of objectives and insure their pains are not overlooked; local controllers/ Winance managers 3. Project Structure Must have an active Executive sponsor whose own objectives are tied to success of the project. 12

13 When to Embark on Transforma-on

14 Key Observa-ons Based on actual project experience Too much time is spent on last mile items resulting in vastly diminished marginal returns and project exhaustion Not enough attention is given to remote operations needs resulting in cynicism and diminished support Project communication is too vague and/or infrequent Executive sponsor provides support in name only and loses interest Objectives are not well- understood across all stakeholders 14

15 Are You Set Up to Succeed? What is the state of your technology implementation? Are there any last mile items too costly to complete? Are there any items not implemented that prevent you from declaring the project complete? How important is the strategic objective you are considering and is it achievable? Is the objective part of or related to a current corporate initiative? Can you easily measure the value of a successful implementation? Where does it rate as a priority within the organization? Can it be done at an acceptable cost? Is there organizational support? Is there an engaged, committed Executive sponsor with power over allocation of resources Do you have the time to succeed? 15

16 Key First Steps 1. Assess current state of TMS DeWine and communicate a dewinitive end to the initial project Describe the benewits achieved and be transparent about what was not achieved 2. Gain full understanding of corporate strategy and objectives Solicit discussions with Treasurer and his/her peers Design project proposal aligned with those objectives 3. Develop business case Work with vendor and advisor to determine feasibility In addition to costs/benewits, insure to identify potential business process changes 16