Series: Treasurers' 5 Items Plan 2005

The five-items plan offers treasurers and treasury personnel guidelines and explanations to a variety of topics that are pertinent to any treasury department. We'll add a news topic each month.

 

Topics:

 

5 Issues of Concern in the Issuance of a Commercial Paper Programm, the Issuance of a Medium Term Note or the Accomplishment of a private placement of a bond

  • Choose one of the five largest specialists for CP/MTN as a knowledge transfer consultant.
  • Additionally, chose a small and independent English or American investment bank as a knowledge transfer consultant.
  • For a private bond issuance, talk to non-bank specialists who implemented the most innovative financing over the last 12 months, i.e. Unique Airport Zurich.
  • Settle for a placing bank or institution that is not only known for its issuances, but is also as a power in secondary market placements.
  • Try not to settle for the largest or cheapest offer, but choose someone who considers you to be more than just an assignment; you should enjoy the status of “significant client.”

 

5 Reasons for Incurring Debts in Euros rather than in US Dollars

  • If you are a company based in Euroland, your current shareholders and creditors should be allowed to subscribe for your share extensions in their own currency..

  • If you are based in the USA, you can achieve name recognition as a company and debtor in Europe by emitting your debt in Euros.

  • The IPO of your bonds in Europe is by far simpler than the processes expected of you by the SEC.

  • A potential redemption of the bonds as a whole or in part is cheaper at your local exchange, as you are positioned to your advantage in negotiations with your local banks..
  • A potential increase in volume is easier to handle.

 

5 Ways to Reduce the Risk of Fraud in Treasury

  • In addition to the established inspections of treasury activities by internal auditors, an unscheduled auditing has to take place.
  • The auditors running the internal audits of the treasury have to rotate and continue to study further all matter pertaining to the subject of treasury.
  • Additional audits by external auditing companies must be run.
  • Employees in trading locations must be rotated according to a random timetable.
  • All external contacts with banks and other financial service providers have to be authorized and written reports have to be given to the CFO and treasurer.

 

5 Reasons for Organizing the Treasury Decentrally

  • If part of the treasury is not used as a service center, but as a profit center, a separation of the two is imperative.
  • Legal prerequisites, i.e. China
  • Fiscal prerequisites
  • The head office is located outside the “currency area” of the most important production and distribution activities, i.e. IKEA in Villach.
  • If important credit lines are lost due to centralization.

 

5 Common Misunderstandings between the Treasurer and the CFO

  • Unclear allocation of tasks and responsibilities.
  • Compensation of the treasury team based on randomly allocated, performance-based criteria specified the CFO.
  • Lack of loyalty by the treasurer to the CFO due to personal reasons.
  • CFO’s fear to lose his position to an aspiring treasurer.
  • Mismanaged information flow down the hierarchy.

 

5 Common Misunderstandings in the Relationship between the Bank and the Treasurer

  • Banks often consider their customer relations as a one-way dependency and not as a mutual service relationship.
  • Banks often offer their most profitable services in favor of services that best fit the customers' needs.
  • Due to sales-orientated structures, banks’ treasury is too much concerned with the sale of its products rather than taking care of its potential customers’ needs.
  • Due to increased product specialization, the customer has too many counterparts within the bank.
  • Information on product innovation are channeled en masse to the customer from too many people instead of one responsible customer coordinator. This way, relevant information gets to the treasurer too late.

 

5 Skills a Treasurer Should Develop to Realize his Professional Plans

  • Rhetoric and interpersonal communication skills
  • Competence in delegation
  • Ability to assert the treasury team’s interests versus the CFO’s interests
  • Ability to accept critique that's objective and to make the necessary changes
  • The irrepressible willingness to continuously improve

 

5 Key Contacts a Treasurer Should Foster:

  • the head of the back-office and his co-workers
  • the head of revision
  • the head of treasury IT and his co-workers
  • the head of technology
  • the colleagues at the travel department and the travel expense reimbursement department