Tom Pittet

Tom Pittet,
Vice President, Investor Relations,
Chart Industries, Inc.

THE VALUE OF TREASURY MANAGEMENT

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.

 

 

“The more treasury is involved, the more that other
parts of the business listen to treasury or involve
it in the decision-making processes, the better off
the organization is as a whole.”

Treasury has the ability to increase enterprise value if it is structured the right way. Some companies keep working capital management within the treasury realm, and some do not. The treasury mindset of being as aggressive as possible in managing working capital coupled with treasury’s knowledge of the tools available to do that enable the business to get the greatest value out of its working capital. Sometimes, companies make accounts payable and receivable back-office functions. As a result, they aren’t pushed to be as aggressive as they could be with working capital or work to maximize those numbers.
From an insurance perspective, risk management is really just balance sheet management. It’s a question of deciding which risk you want to take off the table and pay for and which risks you’re willing to take within the organization. In the end, it’s a cash and balance sheet management decision. Treasury adds value there.

One thing that’s often difficult for treasury is bringing value to the business. Treasury works in capital markets to provide liquidity for the organization; beyond that, treasury is more a cost center that maintains bank accounts and manages cash. Without becoming more strategic and looking at the overall company and cash flow, it’s more difficult for treasury to add value. The more
treasury is involved, the more other parts of the business listen to treasury or involve it in the decision-making processes, the better off the organization is as a whole.

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

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