Adam Day

AVP & Associate Treasurer,
Rutgers, The State University of
New Jersey


How does expanding the scope of
treasury to include cash, risk, payments, and working capital increase its value to the enterprise?

Treasury plays different roles in different organizations, but many companies, particularly global organizations and those with complex funding requirements, have found value in making treasury a more strategic player in cash and liquidity management. In looking more closely at what treasury has to offer, it’s apparent that its value goes beyond just greater operational efficiencies.



“When you look at cash, risk, payments and working
capital holistically, you’re able to manage them more
closely and make better decisions about tradeoffs.”


Cash, risk, payments and working capital are all closely related, and managing them involves tradeoffs. When you look at these elements holistically, you’re able to manage them more closely and make better decisions about those tradeoffs.

For most traditional higher education institutions, cash flows are relatively predictable and consistent. The tuition cycle drives much of this flow. There’s also research, which can be variable but is typically steady. With research, you have expenses such as payroll and supplies; you then invoice the sponsor after the fact. Those expenses tend to be consistent, without huge spikes.
Invoicing and cash receipts tend to be consistent, as well. Endowment income is also part of the pie. All endowments work more or less the same way: They have a return target, which could be something like seven, eight or nine percent annualized. Then, a distribution policy sets a value for
distribution to the university—say, four percent—the idea being that it can go on forever. The goal of the endowment is to earn enough to keep up with inflation, provide a predictable distribution to the university and maintain its value indefinitely.

We try to forecast and manage our cash and our investments closely to avoid borrowing too much or not investing enough. That practice extends to many things, including operational cash flow, capital investments and risk. For instance, how much do we self-insure versus spending on purchased insurance? How do we manage interest rate risk and foreign exchange risk? A holistic
view of treasury makes it possible to balance all these things.

This is an excerpt from 7 Experts on Activating Liquidity. The eBook was generously sponsored by Kyriba.

Kyriba-eBook- 7 experts on activating liquidity