Wade Olsen - Just exactly what IS treasury? Pt. 1 - Cash Visibility

Definition- What is Treasury? 

• What areas of responsibility typically fall under treasury?
  • The most liquid parts of the balance sheet initially and over time, the entire balance sheet
  • Cash management, investments, debt/leverage, working capital, bank relationship management, receipts/payments processing, credit & collections, foreign exchange, hedging (commodities and/or currencies), risk management / insurance, employee stock programs, investor relations
• When should a company consider hiring dedicated treasury talent?
  • Depends on complexity treasury responsibilities / needs (debt, foreign exchange, payments, receipts, etc)
  • Companies typically look at hiring treasury talent when they reach revenues >$500 million and/or they expand internationally
• What are the fundamentals of Treasury 
  • Cash Visibility and Reporting
  • Cash forecasting and capital planning
    • Who are the players in your forecast who will put inputs into your forecast?
      • Receivables
      • Payables
      • Capital Planning, such as CapEx and financings
      • Distributions/dividends to shareholders based on their expectations for cash 
      • Debt Providers, including their covenant requirements 
    • How much detail do I need in my forecast? 
      • Balance between time required to gather, validate and input the data with reconciliation and other needs for details
      • Best practice is to at a minimum define your main inflow and outflow buckets needed to align with company goals/reporting and forecast to that level
      • Also segregate by entity and/or region depending on how your company is organized
      • Identify and work with consistent providers of information
    • How to build a usable forecast?
      • Define and seek information on a set schedule (weekly, monthly, quarterly) 
      • Identify forecasting participants and get their and their supervisor’s buy in, if possible include a metric in their annual employee review to their forecasting abilities
        • AP - Payments supervisor or delegate
        • AR - Credit and Collections supervisor or delegate
        • Payroll - HR supervisor or delegate
        • CapEx - FP&A/controller
        • Debt / Investments - treasury
        • Other - as needed
      • Communicate consistently and regularly with forecasting participants via email and/or other communication avenues within the forecasting tool you use
      • Build forecast using desired tool: Google Sheets, Excel (best when on a shared server), or a TMS
      • For Google Sheets and Excel:
        • Create templates for each forecasting participant with rows showing input and columns for dates (increments of daily, weekly, monthly or quarterly)
          • Keep the templates separate and restrict access to the person responsible and the person compiling the forecast. 
          • Be mindful when building template’s structure that participants will likely be pulling information from ERP systems and from items on their desk and in their emails; build the templates accordingly.
          • Place the templates on a shared drive and or email them out a few days/weeks before each cycle depending on what participants’ need.
        • Before kicking off a forecasting program, schedule training time with each person individually and walk through their input template and seek feedback on how to improve the template but be careful not to make it too flexible and thus unmanageable. Also clearly outline timing, level of detail needed, and ways for them to communicate any non-standard information (notes field on template, email, ect).
        • Run a test forecast process soliciting information via email or desired communication from each participant.
        • The consolidated report for each forecast cycle will typically be a unique workbook with a separate tab/sheet for:
          • Consolid