Treasury transformation: taking the first steps
Three treasurers from News Corporation, Schlumberger and CrowdStrike explain how they prepared for their treasury transformation journeys, from selecting new technology to getting internal stakeholders on board.
Treasury transformation is a goal for treasurers around the world – and the rewards can be considerable. Earlier this year, EuroFinance reported that HP’s treasury team had achieved savings running to hundreds of millions of dollars through changes to the company’s treasury structure and processes.
But the hardest part of any journey is the first step, as the adage goes – and when embarking on an ambitious transformation exercise, it’s essential to pin down the intended improvements and the steps needed to achieve them. Speaking at International Treasury Management Virtual Week, the treasurers of three very different organisations shared how they have approached this task.
The global technology company
Schlumberger is a global provider of technology and services to the energy industry, with revenue generated in over 120 countries. The treasury is currently in the process of implementing a five-year transformation plan, the goals of which include making treasury an effective and trusted business advisor. Claudia Jaramillo, VP & Group Treasurer, explains that treasury tends to be invited into conversations about strategic activities late in the process, when cash is needed – “so one of the things we have been working on is getting involved in the discussions early on.”
Another major challenge has been to gain timely visibility over the company’s cash. At the beginning of the project, the company had over 3,000 bank accounts spread across more than 100 banks – so as well as reducing the number of accounts, another objective is to use digital tools to pinpoint where cash is held, and in which currency.
In addition, Schlumberger is looking to develop its sustainability financing framework. “We have already communicated to the market our Net Zero commitment and targets in terms of reducing our Scope 1, 2 and 3 emissions,” says Jaramillo. “Aligning the financing targets and the framework that goes with it is very powerful, because it ties everything together.”
The fast-growing cybersecurity firm
Not all treasury transformation projects involve changing long-established systems and processes. Founded in 2011, Cybersecurity firm CrowdStrike went public in 2019 and its revenue has increased by over 70% in the last year – a situation that has presented some significant challenges when it comes to managing the company’s cash, which has grown from under $900 million to almost $2 billion in the last year. As Priti Kartik, CrowdStrike’s Head of Treasury and the former Corporate Treasurer of Logitech, notes: “We just cannot operate the same way that we did a year ago, even six months ago!”
In order to transform treasury in line with the company’s evolving needs, Kartik aligned her plans with the overall strategic goal of the company. This meant focusing on three key areas: building infrastructure and positioning treasury as a strategic partner; improving existing processes and controls; and reviewing technology offerings such as API connectivity and AI-powered cash forecasting.
The established media group
News Corporation’s businesses include Dow Jones, Book Publishing (HarperCollins), Digital Real Estate (REA Group and Realtor.com), Foxtel, and News Media. When Stephen Maire, Senior Vice President – Treasurer, joined the company in May 2020, part of his remit was to consolidate disparate treasury activities across the group’s operating businesses.
Maire began the project by mapping out his ideal end-state treasury, focusing on organisation, systems and personnel. Where technology is concerned, one goal is to make better use of the company’s existing treasury management system, FIS Integrity. By converting the system from a hosted model to Software-as-a-Service delivery, Maire plans to drive adoption by treasury personnel across the company’s business units.
Another objective is to review the way that the treasury organisation is structured. Today, the business units’ treasury teams operate in an autonomous way – but Maire is looking at potentially adopting a regional structure focused around the Americas, Asia-Pacific, and Europe. Maire is also working with the company’s procurement function to drive improvements to Days Payables Outstanding (DPO), and potentially adopt tools such as supply chain finance.
All three treasurers emphasise the importance of getting buy-in for the initiative. One of Maire’s goals is to increase the accuracy of cash flow forecasting, and an important step is to explain the benefits of the exercise to others within the organisation. “People may not see it in their narrow lane, but it has a big impact on how management thinks about dividends, share repurchases and acquisitions,” he says.
Securing the right technology is another recurring theme for transformation initiatives. CrowdStrike’s Kartik says that any treasury technology purchase has to be approved by multiple parties. “In my prior experiences, we could make treasury tools/systems decisions within Treasury and then get IT support as needed,” she says. At CrowdStrike, in contrast, “Procurement drives the RFP process, and they involve Internal Audit, Infosec, IT and legal upfront. Therefore, we need buy in from multiple teams before we can go ahead with tool selection and implementation.” Areas of focus include cash management, which is currently carried out by the accounting team – as Kartik explains, an RFP is underway to choose a tool that will improve visibility over cash.
Jaramillo, likewise, is focusing on cash visibility, which has been improved by centralising cash and bank account management into five finance hubs. Other ongoing challenges include effective currency risk management, as well as securing the right talent and digital resources. Finally, Jaramillo notes the importance of being prepared to adapt to any future disruption that might occur: “There are still many risks out there – and managing today’s reality, and being ready to react if the reality changes suddenly, is essential.”