Treasury Capabilities and Resourcing (Breakout Session)

Transcription

1 Treasury Capabilities and Resourcing (Breakout Session) Andrew Derry Treasurer Save the Children International May

2 Hallmarks of an effective treasury operation PricewaterhouseCoopers definition: Has full ownership and control (of liquidity management). Manages all economic foreign exchange and commodity risk in underlying operations. Has ability to set treasury policies to concentrate banking, cash and risk management. Can manage surplus cash effectively, including concentrating centrally. Can borrow on international markets. Is a strategic partner in all operational decisions. Notice the emphasis on RISK MANAGEMENT! 1

3 KEY CHALLENGE INGOs like to de-centralise: Empower programs and country teams Federal membership structure leads to Separate governance Dispersed resources Risks of duplication, confusion, aspects not being considered But, treasury is most effective as a centralised function: Consolidate cash management, risk management, and specialist knowledge KEY CHALLENGE: How to build an effective treasury and effect such counter-cultural change? 2

4 PRIMARY CAPABILITIES An effect treasury team needs to: Manage core treasury risks across whole organisation: Liquidity, Currency, Counterparty, Transactional Strategic risk management, Tactical transaction execution Identify cost savings in treasury operations: External: Competitive exchange rates, minimise bank charges Internal: Identify process improvements that free up staff time E.g. payment automation, cash transfer programming controls Manage stakeholders: Internal: sell value of team, reassurance around competence, especially to empower treasury as a shared service External: professionally represent the INGO in dealings with banks, etc. 3

5 RESOURCES - STAFF Broad set of skillsets required Transactional tactics o FX execution, hedging instruments, bank charges Advisory strategy o Liquidity & FX risk management o Contract management (donor awards, bank ISDAs) o Regulatory risk (EMIR, Dodd-Frank, MiFID People skills salespeople Career development Specialist treasury staff how to progress? Training, qualifications Networking events Rotating through different treasury roles 4

6 RESOURCES - SYSTEMS Typical system requirements: Treasury Management System (TMS) or Internet Banking (IB) Platforms ERP / Accounting systems FX Dealing Platform (360t, FX-All, etc.) Sanctions databases Interfaces between the above (e.g. cash flow forecast and monitoring) Requires: Some staff with mix of IT and treasury skills Good relationships with other stakeholders (e.g. IT & Legal, banks) Capital investment 5

7 RESOURCES - PROCESSES Without effective cross-organisational processes, treasury can be ineffective or potentially risk increasing IT systems are useless without effective data management/processing: Consistency of budget and CFF data across different parts of the organisation Ability to map any hedge activity to donor reports Clean payment data and secure processes to automate payments In worst case, treasury can increase risks to an INGO Hedging FX risk without clear agreement of donor (and funding member) Requires strong cross-organisational collaboration to fully implement! 6

8 RESOURCES INTERNAL STAKEHOLDERS An effective treasury needs effective internal relationships, with: CFO and broader finance team Risk of falling through cracks between budget and audit processes CFOs must not be surprised by treasury risks: Controls, governance, reporting, KPIs, etc. Legal Sanctions compliance, financial contracts (e.g. ISDAs), regulatory (e.g. EMIR, MiFID) IT / Systems department Integration of TMS, IB, etc. platforms with ERP Management of IT aspects (e.g. users, security, etc.) Program / Award / Donor Management Teams Many treasury risks are created when donor terms are agreed Treasury needs to be involved in donor contract negotiations 7

9 RESOURCES EXTERNAL STAKEHOLDERS An effective treasury needs to leverage external stakeholders: Banks, other financial insitutions Commercial, mutually beneficial relationships with core banks is an essential resource for long-term treasury success Peers at other INGOs We are all struggling with the same issues and in general are not competiting, make use of willingness of other INGOs to share Private sector resources: Pro-Bono / Mentors Many private sector treasury specialists have an interest in INGO sector Make the most of the skillset: voluntary/pro-bono support for treasury (rather than painting a youth centre ), utilise as mentors to bounce ideas off 8