Our economic environment of very high interest rates in a recessive environment, with an announced progressive devaluation, which accompanies the inflation rate; and with the collection chain unstable or cut off, among other characteristics, it gives special relevance to the function of the treasurer; to the treasury.
It is one of the critical functions within the financial area, since it must manage the cash flow with a certain rate of opportunity profitability for that market. This flow is very specific to each industry, each type of business, and each company in particular, with its products and services. Country characteristics, trends and seasonality, as well as the political and regulatory context, also influence.
To explain it better, it must be associated with the working capital cycle, which moves from the management of production and inventories, until these become invoices issued (accounts receivable), which when collected feed the treasury, providing the flow of funds necessary to pay the invoices received from suppliers (accounts payable) for the supply of inventories (and other resources), which, in turn, will serve the production process with which the cycle began.
The speed at which a company circulates the cycle of transformation of inventories in availability to pay or make investments, must be synchronized with the internal circuits of registration, preparation of checks and shipment to the cashier, until the supplier withdraws it, deposits it, and debited from the bank account.
As can be seen, much of treasury management is associated with collection and payment rates and speeds, most of which will go through the banks. Among the internal and external actors that move around the treasury, clients, suppliers and banks, the latter have the characteristic of being the platform on which transactions are carried out.
A large part of the success that a treasury can have will be given by the ability to go one step ahead of the banks, taking a proactive control of the operations that allows to anticipate with accurate and consistent information, the movements that the bank carries.
If the bank is the primary source of information on which the treasury relies, then that company will be highly reactive and dependent. The bank-treasury relationship is part of a positive conflict that should result in finding points where both win (mutual reciprocities).
The bank management strategy must be capable of maintaining a permanent balance reconciliation supported by information technology, which explains the discrepancies and is part of the business cycle. You can count on specialized accounts, some to deposit collections (collectors); others to issue payments (payers), both with zero balance; and other so-called concentrator accounts to manage the corporate spread and the floating of the company.
A treasurer must have a helicopter vision to be able to anticipate and be attentive to market variations; He must have access to both strategic information (of the same caliber as the company president has), and specialized financial information (to be able to advise).
Being a type of information-based operation, technology must accompany the processes and be reflected in the organization. A treasury operation is mainly a paperless operation, which could be fully virtualized under an aggressive and innovative design with high levels of delegation, and with strong control over information systems.
I recommend the use of specialized treasury software that is native to Windows and web technology, capable of interacting with relational databases on networks, with easy-to-maintain and compatible communication protocols.
From the online relationship with the banks to be able to control their movements, to the internal interfaces with the different transactional and managerial systems, to simulate the working capital cycle and work with scenarios; plus the possibilities of integrating technologies with suppliers and clients, according to the mutual asymmetries resulting from the alignment of processes and organization.
It must be supported by updated and reliable information, which is supported by a data structure that identifies the company from the inside, and the industry and the market from the outside. Well, only in this way can you trust that the structure of your investment and debt portfolio is what the system says it is. In the same way, you must be able to trust the accounts payable and receivable figures, as well as those of the banks.
A client-server design is recommended for decentralized business structures, in which a set of paying accounts must be managed, associated with a concentration scheme based on the company's collection structure.
As a premise, it could be established that if a treasury, in Venezuela, has not been reviewed / restructured / refreshed in the last two years, it will surely need changes and updates to be able to fulfill the relevant role that these times demand of it. Do not forget that:
- The business environment is changing and the treasury must not only accompany the change, but also be one of its supports or pivots. The new tools and technologies that banks are deploying give them leadership over the treasuries that have not yet been restructured. Working capital requires permanent monitoring of the situation, analysis of scenarios and projection possibilities. The long-term vision has an increasingly shorter horizon.
To carry out a reorganization project, I recommend modeling the treasury, automating the model and creating the organization that enables the above.
There must be a dynamic prototype that allows each step of the business model (process model) to be supported by technology (automation), following the steps of the life cycle.
A treasury reorganization project must include a strong change management component, in such a way as to cooperate in the deployment of a philosophy of operational decentralization and awareness by each member of the company of their role as executor of the policies financial company, especially in terms of budget execution and cost control.
Both in the current situation of Venezuela, and in the new economy towards which we are (inevitably) heading, it will be important, as a strategic instrument, to have a treasury capable of accompanying and enabling transformation processes in which the financial opportunity component may mean the difference between success and failure.
Organization
Due to its characteristics, the treasury organization must be process-oriented. Two staff organizations should report to the treasurer, one for planning and one for control; and two line organizations, one responsible for debt and investment management (long term) and the other responsible for cash flow (short term).
The treasury could be seen as an approach radar that manages the long and the short term in a coordinated way; Every day there is a transaction that passes, totally or partially from the long term to the short term, and this is how the activity is coordinated between the two line organizations that report to the treasurer.
Managing banks and cash (cash management) requires different times, talents, rhythms and technologies than managing funds (funds management).
In addition to the formal organization of the treasury, according to the relative importance of the treasury in the business, it is recommended that a treasury committee be formed in which the president, the person responsible for sales, the supply or procurement committee, and the production; and those who have something to contribute on different occasions participate on a rotating basis. The secretary of that committee should be the treasurer.
It must be centralized from the point of view of management and decisions, and highly decentralized from the operational point of view, delegating the execution of the financial component to the transactional processes of the business.
