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Strategic treasury management: a key driver of organisational agility and growth

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The role of the treasury has evolved beyond its traditional confines, emerging as a strategic linchpin at the heart of organisational success.

At the 2023 EuroFinance International Treasury Management conference, treasury leaders from travel technology company, Bookings Holdings, and data management and digital infrastructure company, Hitachi Vantara shared insights into leveraging treasury as a tool for strategic navigation, ensuring not only the stability but also the aggressive growth and adaptability of their businesses in an ever-changing global landscape.

Booking Holdings: Crafting a focused banking network

At Booking Holdings, an eminent global player in online travel services, Doug Tropp, the SVP of treasury, manages a banking network tailored to the unique demands of the company’s business model. Booking Holdings, the parent company of well-known brands like Booking.com and Priceline.com, operates across over 200 countries, each presenting its own set of banking requirements and regulatory frameworks. 

Tropp and his team face the challenge of developing a banking network that aligns with Booking Holdings’ diverse operations across various brands and international markets. To tackle this, they have devised a strategic approach, focusing not just on limiting their banking partners but on fostering deep, mutually beneficial relationships with a select group of banks. This strategy is critical for ensuring these partners can effectively support the company’s dynamic global needs. 

Beyond mere transactional interactions, Tropp emphasises the importance of choosing banks that can offer a wide range of services, from facilitating global transactions to providing strategic financial advice. This approach ensures that the banks are not just familiar with Booking Holdings’ unique business model but are deeply invested in its success. In this symbiotic relationship, banks are more than service providers; they are strategic allies, contributing to the company’s global expansion and enhancing operational efficiency.

Another layer of complexity that Tropp addresses is the management of credit risk. In an e-commerce giant like Booking Holdings, where substantial revenues are generated through online transactions, managing the associated financial risks is paramount. The treasury team’s strategy involves a careful evaluation of the credit risk associated with each banking partner. Tropp emphasises a risk-averse stance, steering clear of unnecessary financial exposure. This approach includes avoiding time deposits and limiting exposure to banking institutions, reflecting a strategic balance between leveraging bank support and mitigating financial risk.

By maintaining a focused yet flexible banking network, the treasury team ensures that Booking Holdings can navigate the complexities of global e-commerce with financial resilience and agility.

Hitachi Vantara: Mastering treasury management in a private enterprise

At Hitachi Vantara, a subsidiary of Hitachi Ltd., the treasury department, led by Cathy Fields, assistant treasurer and senior director of global risk management, has skillfully navigated the financial management complexities inherent to a private enterprise. The team has focused on adhering to governance standards unique to private corporations, meeting distinct investor expectations, and implementing appropriate financial reporting processes. A key element of their strategy involved refining Hitachi Vantara’s banking infrastructure and cash management practices to comply with Hitachi Ltd.’s directives while supporting the subsidiary’s operational requirements.

The treasury team embarked on optimising the banking framework to efficiently support operations across approximately 100 countries. This included not only managing a multitude of currencies but also navigating the complex landscape of local and international banking regulations. The strategic consolidation and streamlining of banking relationships and accounts, from over 500 to a more manageable number of around 150-160, significantly enhanced operational efficiency and financial oversight.

One of the central aspects of this strategic overhaul was ensuring the treasury department’s autonomy. This involved balancing adherence to parent company guidelines with tailoring strategies to suit Hitachi Vantara’s specific operational needs, requiring financial acumen and diplomatic skill to negotiate the necessary independence for effective financial management.

Fields and her team also focused on enhancing liquidity management across Hitachi Vantara’s international entities. They developed regional liquidity structures tailored for more efficient internal borrowing and lending practices, crucial for managing the cash flows and funding needs of the company’s global subsidiaries, each with its unique financial profile.

Furthermore, the treasury team developed a comprehensive risk management framework adaptable to the evolving risk profiles associated with private ownership. It included reassessing credit risks, foreign exchange exposures, and interest rate risks, ensuring that the company’s financial strategies were resilient against market volatilities and aligned with the corporate goals.

The insights from these treasury leaders underscore the importance of strategic treasury management in today’s corporate world. Their experiences highlight the treasury’s role as a key driver in navigating economic complexities, fostering growth, and ensuring organisational resilience. As businesses continue to evolve, the treasury function stands as a pivotal component in steering companies through the uncharted waters of the global market.