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© The Z/Yen Group of Companies 2008
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Treasury plays a pivotal role in managing risks and rewards both inside and
outside the organisation. As the function concerned with the provision and use
of finance, Treasury typically handles collections, banking, working capital,
short term borrowing, foreign currency management, provision of capital and
money market investment. In the past two decades, Treasury has become more
involved in identifying unmanageable organisational risk and hedging it in open
markets. Increasingly, Treasury is becoming involved in handling operational
risks through insurance mechanisms and, in some leading companies, viable
risk/reward management systems.
Z/Yen works with Treasury units in six areas, often as part of a larger look
at organisational risk/reward management systems:
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setting corporate financial objectives – strategies, policies,
measurement, internal capital allocation, pricing, reporting and systems;
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liquidity management – cashflow management, control of funds, working
capital, money transmission, banking relationships and streamlining the
operational flow of funds;
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funding management – policies, procedures, types of funds and
self-funding mechanisms;
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exposure management – currency exposure, international netting/pooling,
exchange dealing, international monetary economics, commodities markets and
hedging;
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corporate finance – equity capital management, taxation issues, pension
funding, business acquisitions and disposals, project finance and joint
ventures;
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corporate treasury structure – information systems support,
central/local procedures, cost-centre/profit-centre management, asset
management, compliance, staffing, controls, risk attitudes, fraud
prevention, business unit evaluation and Treasury performance evaluation.
Z/Yen has conducted numerous assignments to improve sections of Treasuries,
e.g. cashflow improvement projects, project finance structuring, leasing
reviews, stock and asset pricing models, cost of capital analyses, management
information re-design, capital allocation design, pricing studies and the design
of hedging strategies for operational risks. As an example of our wider work:
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working with one regional electricity company, Z/Yen people conducted a
thorough overhaul of the entire Treasury function from cash through to
taxation, the capital markets and on to the electricity pool. The result was
a more streamlined, effective and accurately priced service to the business
units.
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working with 26 banks and large corporate Treasuries, Z/Yen people
conducted one of the largest ever benchmarking studies on the cost of funds
for business units and transactions. A key conclusion was poorly implemented
information systems were holding back many significant players. Z/Yen went
on to model in detail the cashflows and potential performance improvements
of 10 large payment-handling organisations;
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Z/Yen recently looked at European processing of OTC derivatives,
concluding that the ability to outsource corporate Treasury derivative
functions was limited.
Treasury functions often need to lead their organisations in understanding
and managing risk and reward. Z/Yen enjoys working with Treasury units on
improving not just operations, but the entire risk culture of the organisation.
Z/Yen likes to help Treasury functions make a difference to their organisations’
use of that most key resource, finance. |
