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4/7/2014
1
Tracey Ferguson Knight
Director – Solution Consulting
Reval
April 25, 2014SoCal Expo
Long Beach, CA
Treasury Transformationfor the ‘Now’ Normal
Agenda/Notes
o Current Corporate Treasury Environment
o The ‘Now’ Normal– Increased Requirements
– Moving from Tactical to Strategic
o Achieving Treasury Excellence– Techniques Matter - Case Study Examples
– People Matter – Talent Management
– Communication Matters – Promote Treasury– Technology Matters – Treasury & Risk Management (TRM)
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FBARFBAR
Dodd FrankDodd Frank
IFRS9IFRS9
TAGTAG
SOXSOX
FASB EDFASB ED
FINANCIAL REGULATORY REQUIREMENTS
FINANCIAL REGULATORY REQUIREMENTS
The Perfect Storm: Evolving Market Conditions, Mounting Treasury Expectations
MARKET RISKMARKET RISK
Reporting Requirements 59% Reporting Requirements 59%
Internal controls 46%Internal controls 46%
Fraud 43%Fraud 43%
Derivatives Regulations 43%Derivatives Regulations 43%
Counterparty Risk 76%Counterparty Risk 76%
Interest Rate Risk 57%Interest Rate Risk 57%
Liquidity Risk 65%Liquidity Risk 65%
FX Risk 57%FX Risk 57%
Commodity Price Risk 30%Commodity Price Risk 30%
Building the Next Generation of Treasury: Survey Participant Report, Treasury Strategies Inc., March 2012
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As Requirements Increase, Treasurers Must Respond Dynamically
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Efficiency and Connectivity
To integrate core treasury systems to streamline efforts, accessibility and achieve straight-through processing functionality
Collaboration Across Business Units
By solidifying Treasury as a key driver for change cross-functionally
Flexiblity
To respond quickly and effectively to evolving market conditions
Insight
Into financial metrics and performance to support business decisions
Visibility
Across the organization globally to mitigate risk
Efficiency and Connectivity
To integrate core treasury systems to streamline efforts, accessibility and achieve straight-through processing functionality
Efficiency and Connectivity
To integrate core treasury systems to streamline efforts, accessibility and achieve straight-through processing functionality
Collaboration Across Business Units
By solidifying Treasury as a key driver for change cross-functionally
Collaboration Across Business Units
By solidifying Treasury as a key driver for change cross-functionally
Flexiblity
To respond quickly and effectively to evolving market conditions
Flexiblity
To respond quickly and effectively to evolving market conditions
Insight
Into financial metrics and performance to support business decisions
Insight
Into financial metrics and performance to support business decisions
Visibility
Across the organization globally to mitigate risk
Visibility
Across the organization globally to mitigate risk
Increased Expectations = Increased Requirements
State of Corporate Treasury - Observations
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Global Observations: Treasury Continues to Become More Strategic
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*Source - gtnews / AFP 2012
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Global Observations: Treasury is Becoming More Strategic
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*Source - gtnews / AFP 2012
Expanded Role of the TreasurerWhat does this mean?
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Traditional Treasury
o Strategico Analytical
o Collaboration Across Business
Unitso Drive Change
o Tacticalo Transactional
o Technicalo Status Quo
New Trend
Great Concept – What Now?
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Achieving Excellence in 2013Delivering on expanded mandates
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Greater Visibility
Greater Analytics
Compelling Value Proposition
Foster Talent
Treasury Value Proposition
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Vision
Vision
Vision & Strategy
Accountability
Measurement
Organization &
Examples of Strategic Initiatives
o Globalization of Treasury
– Optimization
– Exposure and hedge programs
– Commodity hedge involvement
– Technology maximization
o Global liquidity structure opportunities
– Centralized v. decentralized
– Intercompany Lending
– Cash pooling
– Multilateral Netting
– Payment Factories
– Bank Rationalization
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Source: AFP Guide to Mobilizing Global Cash
Source: Scandinavian Financial Solutions AB.
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Becoming Strategic
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TRADITIONAL TREASURY CLIENT TREASURYORGANIZATION VISION
Company’s Strategic Plan Support
M&A and Business Model Support
Enterprise Risk Management
Leasing and Customer Financing
Trade Finance and Complex Transaction Structuring
Working Capital and Capital Expenditure Management
Company’s Intl Footprint and Global Infrastructure Committee
Treasury Organization Strategic Planning and Talent Mgmt
Bank Relationship Management Treasury Partner Relationship Management
FX Hedging Financial Risk Management
Investments Efficient Frontier Portfolio and Capital Allocation based on ROIC
Debt Management Capital Structure Planning and Management
Treasury Systems Information Management Strategy
Short-term Cash Forecasting
Optimized OperationsControls, Policies and Procedures
Insurance Program Management
Cash Mgmt and Bank a/c Structure
STRATEGIC
TACTICALTA
CTICAL
Establish Roadmap
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Strategic Roadmap
Basics under Control
Best Practice Excellence
Strategic Planning
Develop models and align to
FP&A processes
Liquidity and debt forecasts –Stress testing
Capital structure planning & EPS
maximization
ERMRisk
identification and ownership
Risk management –
Response, recovery & BCP
Financial modeling and
portfolio analysis
Foreign Exchange
Management
FX exposure reporting and FX
P&L variance analysis
Streamline FX ownership and
processes
Benchmarking and Dynamic
hedging
From Basics to Excellence
Staggered
rolling
hedging
Re-defined
strategic
hedging
objectives
-
Quotes
Cash flows
Balance
sheet
-
Metrics &
risk
tolerance
Re-
designed
system
strategy
-
Selected
system to
support FX
vision and
strategic
goals
Re-vamped
FX strategy
implemented
and
operational
Developed
new FX
programs
to support
Company’s
business
growth
Re-
designed
FX-related
business
processes
and
ownership
Concrete Application—FX Management
Year 1 Year 2 Year 3
Strategic
Treasury
X-functions
Senior Mgt
Basics
under
control
-
Identified
exposures
Reconciled
P/L impact
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Strategic
Treasury
X-functions
Senior Mgt
Concrete Application—Cash Forecasting
Working
capital
forecasting
Working
capital
management
Stress-testing
Short-term
operational
cash
forecasting
Cash
forecasts
for
annual
plan
3-year
strategic
plan
cash
forecasts
Scenario
planning
through
ERM
Contingency
action plans
3-year
balance
sheet
forecast
Capital
structure
planning
Capital
expenditure
forecasting
Year 1 Year 2 Year 3
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o Treasury organizations are morphing
o Rotation still desirable
o Need to add capacity and intellectual capital to get to strategic treasury
o Need support of more sophisticated technology to keep people out of execution
Talent Management
o Content AND form (make it pretty)
o Board and Senior Executive communication
o Development
Communication
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Requirements for Treasury Transformation
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Innovation
Integration
Speed
Intelligence
Technology Matters - TRM
20Disparate, Disconnected, Siloed Systems and Processes
Multiple Systems and Data Sources Interfaced to Address Tactical Treasury Requirements
Integrated, Connected, Seamless Processes and Capabilities
All-in-one Fully Integrated Solution for TRM Built to Deliver on Strategic Treasury Requirements
GL Ledger
Market Data
Bank Accounts
Commodities
Risk
ManagementLight Web
User Interface
Custom
AppsTWS
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Benefits of a True SaaS for Treasury
o Current
o Responsive
o Available
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Future Proof Your Treasury
Effective risk management strategy is key
Align treasury structure, resources and technology with organizational initiatives
Best way to be ready for change is to get out of executionalmode
Flexible, scalable SaaS treasury technology is paramount for future
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Q&A
Tracey Ferguson KnightDirector, Solution Consulting
972-668-0419
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