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:

  • Setting Corporate Financial Objectives: Strategies, policies, measurement, internal capital allocation, pricing, reporting and systems.
  • Liquidity Management: Cashflow management, control of funds, working capital, money transmission, banking relationships and streamlining the operational flow of funds.
  • Funding Management: Policies, procedures, types of funds and self-funding mechanisms.
  • Exposure Management: Currency exposure, international netting/pooling, exchange dealing, international monetary economics, commodities markets and hedging.
  • Corporate Finance: Equity capital management, taxation issues, pension funding, business acquisitions and disposals, project finance and joint ventures.
  • 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:

  • 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.
  • 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;
  • 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.