Building Treasury s Influence Within an Organization

Transcription

1 FEBRUARY 2013 Building Treasury s Influence Within an Organization Table of Contents EXECUTIVE SUMMARY Why Does it Matter?...2 Three Steps to Greater Influence...3 Step One: Initiate... 3 Step Two: Educate... 4 Step Three: Communicate Overall Benefits... 5 Treasury processes touch many functions across an organization but all too often, leaders in other departments may have a limited understanding of how treasury can help them further their goals and inform their strategic decisions. By working to develop business relationships with their peers across the company, treasurers can enhance their profile, improve their understanding of treasury s role across the organization, increase their involvement in company-wide projects and gain a seat at the decision-makers table.

2 Building treasury s influence within an organization 2 One of the questions treasurers often ask is, How do I gain more influence within my own organization? This quest for more influence is first about having a deeper level of communication with peers in other departments across the company. Additionally, it is about being in a position to offer strategic advice to senior stakeholders at the decision-making level typically the C-suite executives. Many treasurers feel that their influence is lacking in both areas. Communication between treasury and other departments is often minimal and, as a result, other departments sometimes have a limited understanding of what treasury does. At the same time, treasury s goals may directly conflict with the goals of other departments. For example, procurement may be purchasing raw materials in bulk in order to take advantage of discounts, whereas treasury may be working to reduce the amount of working capital that is tied up in inventory. Such discrepancies can have a major impact on the treasurer s ability to perform well and achieve objectives. Much of the treasurer s role relates to optimizing internal processes, gaining efficiencies and saving costs goals often connected to processes carried out by other departments within the organization, including accounts payable (AP), accounts receivable (AR), procurement and information technology. In practice, treasurers do not always have a strong working relationship with their peers across the organization. As a result, they are not always consulted on projects related to their areas of expertise, such as a procure-to-pay initiative. All too often, treasurers hear about a decision they could have influenced only after that decision has been made. WHY DOES IT MATTER? Relationship building may seem inconsequential when compared to the technical demands of the treasurer s role. Unlike days sales outstanding (DSO) or straightthrough processing rates, influence can t be quantified. However, it can directly impact the treasurer s ability to achieve quantifiable goals. For example, a treasurer who has a strong working relationship with colleagues in AP and AR is more likely to succeed in driving optimization in the company s cash conversion cycle. Today, treasurers have a unique opportunity to build on the progress they have made since the beginning of the financial crisis in As liquidity, credit lines and risk management have become top priorities for companies around the world, the role of the treasurer has also become more visible to the C-suite executives and board, as well as across the organization. Today, treasurers are looking to convert that visibility into influence.

3 Building treasury s influence within an organization 3 Meanwhile, CFOs and other executives are looking for greater visibility over the company s cash flows, and finding ways to add to the bottom line. Because treasury, along with some of the functions with which they work, is seen as key to achieving these goals. THREE STEPS TO GREATER INFLUENCE Influence can be defined as the ability to affect something or someone. By developing working relationships with individuals in different departments across the company, treasury s strategic role and organizational perspective will be more widely recognized, and sought after when strategic decisions are being made. There are many activities a treasurer can undertake, regardless of the company s size or location, to boost his or her profile within the company. Three of the most successful actions are: initiating a relationship with business leaders from other departments, exchanging information about respective roles within the company and sustaining communications with the other parties on an ongoing basis. The object of the exercise, of course, is to promote a better understanding of how treasury can help other departments within the organization achieve their goals, while also increasing influence, and improving processes and informational flows for the treasury/finance function. STEP ONE: INITIATE CASH FLOW FORECASTING EXAMPLE: INITIATING CONTACT A treasurer wishes to set up meetings with contacts in the company s working capital and tax functions in order to discuss the benefits to both parties of a new cash flow forecasting project. Prior to setting up the initial meeting, the treasurer informed the working capital leader about a key industry conference on working capital. Likewise, the treasurer alerted the tax leader to an important certification program for tax professionals. Activities such as these can pave the way to building a strong working relationship, increasing the likelihood of prompt meeting acceptance. Treasurers should first reach out to their peers who stand to gain mutual benefits from the relationship: leaders of such functions as AP, AR, tax, IT, HR and working capital. Before making contact, treasurers should think about ways they can help their colleagues in other departments and be prepared to cite specific examples. Once contact is made, treasurers should aim to identify the common ground early on by asking about the other person s role and discussing how treasury can help. Highlighting potential benefits at the outset can help break down existing silos, which can be an obstacle, particularly when departments are under-resourced. Discussing activities that are relevant and beneficial to the other person s role can be an effective way of initiating a relationship. For example, treasury professionals could invite their business colleagues to a pertinent webinar or conference, or invite them to weigh in on a strategic project from which they could directly benefit.

4 Building treasury s influence within an organization 4 Such actions can position the treasurer as someone who understands and actively supports colleagues business interests, and focuses on the goals of the company as a whole, rather than focusing narrowly on treasury objectives. It s all about organizational networking and relationships. When you get to know somebody and develop a relationship it makes it just so much easier. STEP TWO: EDUCATE Dave Symons, Treasury Manager, Southern Company Once the relationship has been established, it is important to build upon that rapport with a period of education. Treasurers should work to understand more about what the other department does and at the same time discuss the role that treasury plays. This dialogue not only provides an opportunity for treasurers to learn about the goals, processes and challenges faced by their colleagues, it gives treasurers an opportunity to advise their peers about how their skills and expertise could be of some benefit for example, in areas such as contract negotiation, software selection and process improvement. Establishing connections such as these may lead to opportunities for collaboration. The education phase could include lunch and learn meetings involving colleagues across the organization. Such occasions are most effective when they are focused on a specific topic. For example, a meeting focusing on the procureto-pay process could include participants from procurement, AP and accounting. Other education opportunities with peers who manage working capital, and other treasury touch points such as IT, accounting and HR, should be initiated by treasury to build a greater understanding of the company s overall strategy and the role treasury can play throughout the organization. I always challenge my people to understand a little bit about the strategy of the company on a global basis. I want them thinking in terms of us being a global group, a global enterprise and operating across multiple disciplines. Rene Bustamante, Staff Vice President & Assistant Treasurer of Global Cash Management, FedEx Corporation CASH FLOW FORECASTING EXAMPLE: MUTUAL EDUCATION The treasurer has succeeded in setting up meetings with the working capital and tax leaders. The treasurer might open both meetings by taking the time to learn more about the colleagues goals and pain points, followed by an explanation of the expertise treasury can offer in the areas of working capital and tax. From there, the course of the two meetings would diverge. The meeting with the working capital leader would focus on how both parties can collaborate in order to choose the most suitable bank. Meanwhile, the meeting with the tax leader would cover managing cash flow to facilitate a timely and accurate repatriation strategy to minimize the company s tax liabilities and meet its cash targets. In both meetings, the treasurer will have gained new knowledge and identified common ground and opportunities to help colleagues achieve their goals. Meanwhile, the working capital and tax leaders will leave the meetings with a greater understanding of the treasury function and an appreciation of how the treasury can play a role in supporting their future success.

5 Building treasury s influence within an organization 5 STEP THREE: COMMUNICATE Even after both parties have gained a better understanding of their respective challenges and goals, the relationship will need to be nurtured. Ongoing communication is the key to keeping the relationship both relevant and productive. The channels used may vary depending on the organization and its geographic footprint some treasurers may keep in touch with their peers using regular in-person meetings, whereas for others, phone calls or video conferencing might be more practical. Whatever the medium, the goal is to continue sharing information about each party s priorities and to find areas in which treasury can add value. Ongoing communication needn t always involve formal meetings; treasurers should continue to pass on details about relevant industry events and articles to keep the relationship alive. Hopefully the other parties will do the same, and treasurers should never pass up an opportunity to participate in crossdepartmental projects no matter how small as one opportunity may lead to another. It is also important to reciprocate by giving colleagues in other departments the chance to advise on treasury initiatives relevant to their areas of expertise. Our business peers benefit from regular reviews because they have a better understanding of their own business and of the banking environment. They also have a better understanding of what s being planned. This means they re strategically setting goals and objectives, thinking through challenges and opportunities... they ve heard it firsthand. CASH FLOW FORECASTING EXAMPLE: COMMUNICATION Once the treasurer has completed the forecasting project, regular meeting routines should be established with working capital and tax leaders in order to review the project and identify areas for improvement. These meetings could also be used to identify other areas in which treasury might collaborate. This will help solidify these interactions as ongoing business relationships, and not one-off engagements and perhaps future strategic projects will take into consideration the views of the treasurer. Kim Sipes, Director Treasury at Duke Energy OVERALL BENEFITS Building relationships with peers across the organization can benefit treasury on many levels. By taking on a greater level of involvement with different departments, the treasurer is able to boost the profile of his or her own department while also demonstrating leadership skills and taking a more proactive role within the company. As a result of this increased visibility, senior stakeholders will increasingly recognize treasury s role within the organization and appreciate that treasury focuses not only on its own objectives, but also on the company s overall strategy and performance.

6 Building treasury s influence within an organization 6 Background The content in this paper is based on a proprietary study conducted after a recent roundtable, during which treasury representatives of top clients discussed their challenges with gaining influence in their organizations. To delve deeper into this topic, the authors of this paper spent several months interviewing: treasury professionals who have experienced increased organizational influence (exemplars); top treasury sales professionals who have interacted with influential treasury professionals (external perspective with the ability to compare and contrast) and senior consultants who have perspective on the matter. In addition, a review of academic and practitioner literature was also conducted. Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation ( Investment Banking Affiliates ), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed Bank of America Corporation AA-AH-0288ED