Description
Book SynopsisA guide to operating a corporate treasury from a global perspective. This book is suitable for treasurers looking to re-align their treasuries with the growth of the global firm, bankers who seek to maximize the value they create for clients, treasury and finance firm employees, and even finance students.
Table of ContentsForeword xiii
Preface xv
Acknowledgments xix
Part One: the World of Corporate Treasury 1
Chapter 1: Role of Treasury in a Global Corporation 3
Introducing Treasury Leadership 4
Organisation Structure and Responsibilities 6
Treasury Functions and Responsibilities 10
KPIs and Deliverables 15
A Day at the Office—What Does the Treasurer Do? 17
Summary 19
Chapter 2: Treasury Design 21
Key Elements of Treasury Design 22
Introducing Centralisation 24
Evolution of Treasury Models 25
Summary 36
Chapter 3: Treasury Culture 37
Qualities 38
General Skills 40
Technical and Work-Related Skills 41
The Many Hats of the Treasurer 43
Summary 44
Chapter 4: Importance of Operations and Control Efficiency 45
Tools 45
Different Offices: Front, Middle, and Back 48
Summary 54
Part Two: Transactions and Cash Management 55
Chapter 5: Account Management and Structure 57
Putting an Account Structure in Place 58
Account Operation and Approaches 62
Rationalising Account Structures 65
Examples of Account Structures Across Sectors 68
Summary 69
Chapter 6: The Movement of Money 71
Money Transfer Mechanisms 71
Domestic Clearing and Settlement Systems 75
Cross-Border Payments and Collections 83
Summary 94
Chapter 7: Netting 95
Introduction and Concepts 95
Netting Implementation 101
Benefits and Caveats of a Good Netting Solution 106
Summary 107
Chapter 8: Liquidity Management Introduction and Float 109
Introducing Liquidity Management 109
Pooling as a Concept 111
Float and Its Causes 111
Summary 121
Chapter 9: Cash Pooling and Efficiency 123
Cash Concentration Structures 123
Pooling Structures 127
Implementation Aspects of Concentration Structures 130
Summary 134
Chapter 10: Cash Flow Forecasting 135
Forecasting in the Context of Liquidity Management 135
Forecasting Methods 139
Summary 143
Part Three: Balance Sheet and Liquidity Management 145
Chapter 11: Liquidity and Working Capital 147
Working Capital in the Operating Cycle 148
Cash Conversion Cycle 149
Financial Supply Chain and Its Potential Pain Points 158
Summary 168
Chapter 12: Financial Strength and Linkages with Liquidity 169
Importance of Company Financials 169
Key Financial Ratios 171
Summary 194
Chapter 13: Sources of Capital 195
Capital Markets 195
Capital Structure 197
Factors in the Capital Decision 199
Debt Capital Markets 203
Equity Capital Markets 205
Summary 211
Chapter 14: Financing the Supply Chain 213
Physical and Financial Supply Chains 213
Different Financing Solutions 215
Summary 225
Chapter 15: Managing Operating Cash and Investments 227
Different Elements of Cash 227
Managing Operating Cash 228
Surplus Cash and Investments 230
Considerations and Aspects of Investment Decisions 230
Investment Process 237
Summary 237
Chapter 16: Credit Ratings and Bank Credit Assessment 239
Credit Ratings 239
Credit Rating Methodology 243
Bank Credit Assessment Process 247
Important Focus Areas and Discussion Points with Banks During Credit Reviews 252
Summary 253
Part Four: Markets and Risk Management 255
Chapter 17: Art and Science of Risk Management 257
Kinds of Risk 257
Classical Definitions 258
Why Manage Financial Risk? 266
Styles of Risk Management 269
Factors Impacting Risk 270
What Does Risk Management Do? 273
Objective of Risk Management 276
Summary 278
Chapter 18: Markets and Risk Aspects of Each Market 279
World of Markets 279
Movement of Markets 287
Summary 289
Chapter 19: Risk Management in Practice: Ensuring the Right IMAGE © 291
IMAGE © Methodology 291
Risk Identification 292
Risk Measurement 293
Risk Accounting and Reporting 314
Risk Governance 315
Risk Management Evaluation 320
Summary 321
Chapter 20: Products for Managing Risk 323
Forwards Family 324
Options Family 333
Swaps Family 346
Credit Family 351
Summary 353
Chapter 21: Combining the Products to Manage Risk: Risk Governance 355
Devising Risk Strategy Using Products 356
Using Products to Manage Risk 358
Credit Risk 362
Liquidity Risk: Balance Sheet and Asset-Liability Management 363
Use of Analysis 364
Operations and Technology Risk 367
Legal and Compliance Risk 367
Summary 374
Chapter 22: Risk Management Governance Strategies 375
Key Elements of the Governance Strategy 375
Sample Strategy A 377
Sample Strategy B 378
Sample Strategy c 381
Summary 386
Chapter 23: Operational Aspects: Documentation and Execution 387
Documentation 387
ISDA Framework of Documents 388
Execution 392
Summary 394
Part Five: the Toolkit 395
Chapter 24: Treasury Policy 397
Framework 397
Aspects of Policy Implementation That Need Closer Scrutiny 398
Review 399
Implementational Aspects 400
Summary 401
Chapter 25: Treasury Systems 403
Treasury Management System Background 403
Some System-Related Questions 410
TMS Establishment Process 411
Developments and Standards 417
Summary 423
Chapter 26: Centralisation 425
Rationale for Centralisation 425
Basic Model Design 427
Post-Model Design Stage 429
Barriers to Centralisation 429
Summary 430
Chapter 27: Key Performance Metrics for a Treasury 431
Introducing Performance Metrics 431
Some Criteria for Deciding Performance Metrics 432
Performance Metrics 434
Some Caveats on Metrics and Evaluation 437
Sample Treasury Performance Metrics 438
Treasury Fitness 441
Summary 441
Chapter 28: Banks and Service Relationships 443
Sample Bank Organisation Structure 443
Banking Services and Products for a Corporate Treasury 446
Bank Selection and RFP Process 449
Review Process 449
Service and Relationship Management 454
Summary 456
Chapter 29: Operations and Control Checklist 457
List of Processes 457
Right Control at Treasury 458
Control Checks and Reviews 459
Some Common Causes for Error and Control Lapses 461
Summary 468
Chapter 30: Outsourcing 469
Selection Stage 469
Pre-Implementation 471
Implementation 471
Post-Implementation 473
Summary 478
Chapter 31: Building and Sustaining a Treasury Culture 479
Evaluation 484
Summary 485
Chapter 32: Managing Treasury in Uncertain Times 487
Uncertainty and Its Impact on Treasury Management 487
Triggers and Events 490
Simple Method to Manage Treasury During Times of Uncertainty 491
Summary 493
Glossary 495
Further Reading 505
About the Author 507
About the Website 509
Index 511
