From the July/August 2011 issue of Treasury & Risk magazine

Bridging the Business

Treasurers need to reach out now to work with other parts of the business on areas such as working capital management and FX risk before the opportunity slips away.

Treasurers have long been accused of operating from an ivory tower, but when the financial crisis hit, all that changed. Today treasurers are more visible to the rest of the business than ever before, and they are expected to have a more strategic focus. But if the treasurer still has that ivory tower mentality—and if other departments still have no idea what the treasury actually does—this can be difficult to accomplish. Meanwhile, areas like working capital management, which treasurers are increasingly focusing on, cannot be tackled holistically without a good deal of interaction between treasury and the business.

While no one will argue with the fact that the financial crisis presented corporate treasurers with unprecedented challenges, it also came as something of an opportunity. With CFOs paying more attention to treasurers’ role and activities than ever before, many treasurers found that they had a chance to drive forward initiatives and policies that otherwise might never have gotten off the ground. However, as memories of the crisis begin to fade, this opportunity could start to slip away.

SpitzerAreas like supply chain finance, working capital management and cash flow forecasting can be problematic because by definition they involve a number of different departments across the company that have historically focused on different goals. A common example is inventory management: The procurement staff might choose to buy in bulk to receive discounts, but from a working capital point of view it may be preferable to reduce the amount of cash tied up in raw materials. Increasingly treasurers are taking a more active role in bridging these gaps.

“Treasury must be the agent to bind these working capital processes together and create awareness across team silos,” says Jack Spitzer, assistant treasurer at Starwood Hotels & Resorts.

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