When Damian Glendinning joined Chinese computer manufacturer Lenovo in 2005, he faced an unusual challenge. Lenovo was in the process of acquiring IBM’s PC division, a business three times its size. At the time Lenovo had no operations outside of China, while IBM’s PC division had no treasury of its own. Glendinning was appointed treasurer and vice president and given the task of setting up a treasury and cash management operation covering 66 countries. And he had less than five months to get the new treasury up and running.
“This was with no staff, no systems and no functioning bank relationships outside of China,” Glendinning says. “While this was an enormous challenge, it was also a once-in-a-lifetime opportunity to design a treasury from a completely clean sheet of paper. If you’re in a large corporation, your existing operations tend to be a constraining factor—it’s very unusual not to have that.”
Prior to joining Lenovo, Glendinning had spent 21 years working for IBM, where he served seven years as treasurer of the Asia-Pacific region in Singapore and two years as director of global treasury operations in New York.
Without the constraints of legacy systems and mindful of the project’s tight deadline, Glendinning decided on a structure that was simpler than most.
Lenovo’s highly streamlined and centralized treasury, based in Singapore, has no local treasury staff and, with the exception of China, works with a single global bank.
His decision to go with a single global bank weathered the financial crisis, when many other corporates were looking to diversify their bank relationships. That arrangement has given Lenovo unusually high visibility into its cash position and allows treasury to provide senior management with a daily cash report.
“Going into the crisis, we were not rushing around trying to find out which banks we had accounts with,” Glendinning says. “We knew how much we had and where.”
Despite his decades of experience, Glendinning keeps an open mind, and his experiences at Lenovo, which reported 2010 revenue of $21.6 billion, continue to provide the occasional surprise.
“IBM had been factoring its receivables to its credit division, and one of the terms of the acquisition was that we would continue to do so for five years,” he says. Despite his initial reservations about factoring, Glendinning has been impressed by the benefits of this approach. “It’s actually a very flexible form of funding which adjusts automatically to the level of business.” He recently extended the factoring arrangement beyond the original five-year term.
Looking forward, Glendinning says Lenovo’s growth ambitions could result in M&A activity, and the associated tasks of funding acquisitions and integrating the acquired entities. Meanwhile, as president of Singapore’s Association of Corporate Treasurers, Glendinning also has an eye on the bigger picture.
“Treasurers around the world face a number of challenges in terms of how we and our banks use technology,” he says. “The next step in terms of making treasury more efficient is to significantly increase the level of straight-through processing. For me, that’s really the next area that treasurers collectively need to focus on.”
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