A Strategic Challenge: Treasury, Technology and eCommerce

1
A Strategic ChallengeTreasury, Technology and
e-Commerce

• Susan E. Skerritt, PartnerTreasury Strategies,
  Inc.
• October 16, 2001

2
The Challenge

• Corporate Treasurers Must Make Better and Greater
  Use of Technology to Facilitate Liquidity and
  Risk Management and to Be Viewed As Strategic
  Business Advisors

3
Corporate Treasury Survey

• What types of treasury technology are used?

Source AFP Cyberconference
4
Corporate Treasury Survey

• What percentage use web-based banking products,
  such as information reporting and/or transaction
  initiation?

Source AFP Cyberconference
5
Corporate Treasury Survey

• What percentage have a firm-wide e-commerce
  initiative?

Source AFP Cyberconference
6
Corporate Treasury Survey

• For how many companies is treasury an integral
  part of the firm-wide e-commerce initiative?

Source AFP Cyberconference
7
Whats Wrong With These Pictures?

• E-commerce is vital to the success of future
  global commerce
• Treasury is vital to the success of corporate
  e-commerce initiatives
• Treasury requires tools made possible by the
  Internet and web-based technologies for its
  success
• Treasury must be integrated into corporate
  e-commerce initiatives, and e-tools must be
  integrated into Treasury to realize full
  e-commerce benefits

8
E-Commerce Vital for Successful Global Commerce
E-Commerce Could Account for 20 of Total Global
Commerce By 2005
9
Other E-Commerce Benefits

• Financial Benefits
• Reduced procurement costs
• Elimination of middle men
• Improved liquidity management with better access
  to cash, reduced borrowing and better investment
  returns
• Broader access to competitive investment and
  borrowing sources
• Improved gross margins

10
Other E-Commerce Benefits

• Control Benefits
• Straight-through-processing
• Broader access to electronic transaction
  processing alternatives
• Improved adherence to policies and procedures

11
But Everything Has A Cost
12
Treasury Vital to E-Commerce Success
Mission Critical Treasury Functions
Manage Liabilities
Treasury
Manage Assets
Manage Risks
Strategic Business Advisory
13
E-Commerce Challenges

• Making global procurement, production, sales,
  delivery and after market support for businesses
  of all sizes
• Managing new client/supplier relationships where
  counterparties may be unknown and traditional
  Trade Intermediaries have been eliminated
• Implementing E-commerce is a major challenge
  requiring total corporate commitment, the right
  resources and a willingness to change

14
E-Commerce ChallengesGlobalization of
Procurement, Production, Sales, Delivery

• Management of Assets and Liabilities
• Manage collections, disbursements and liquidity
  positions in cross-border, multi-currency
  environments.
• Implement forecasting tools, benchmarks and
  performance metrics to assure best-in-class
  access to investment, credit and financial
  operations services wherever required.

15
E-Commerce ChallengesGlobalization of
Procurement, Production, Sales, Delivery

• Management of Risks
• Standardize financial processes, procedures and
  controls globally.
• Identify security requirements related to
  financial communications and transaction making.
• Manage in-country and cross border credit, F/X,
  liquidity and other financial risks.
• Manage financial services provider relationships
  to best meet corporate objectives.

16
E-Commerce ChallengesGlobalization of
Procurement, Production, Sales, Delivery

• Strategic Business Advisory
• Provide information about legal, regulatory, tax
  and cultural environments as they relate to
  conducting business, especially e-business,
  around the world.

17
Corporate Treasury Survey

• What percentage use an intranet or the internet
  to share treasury information, policies and
  procedures across the firm?

Source AFP Cyberconference
18
A Clientor Maybe a Competitor, Con Artist, or
Crook
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E-Commerce ChallengesManaging New
Client/Supplier Relationships

• Management of Assets and Liabilities
• Improve client/supplier information through CRM
  and other technologies.
• Build relationships with trusted
  intermediaries.
• Implement technology solutions to automate
  confirmation, settlement and reconcilement of
  transactions and trades.

20
E-Commerce ChallengesManaging New
Client/Supplier Relationships

• Management of Risks
• Manage counterparty risks with improved
  procedures and technologies.
• Reduce transaction risks with straight-through-pro
  cessing.
• Reduce security risks with appropriate processes,
  controls and technologies

21
E-Commerce ChallengesManaging New
Client/Supplier Relationships

• Strategic Business Advisory
• Better information for client acquisition and
  retention.
• Improve access to cash and reduce receivables
  DSO.
• Improve information for client management,
  including credit extension, purchasing
  preferences and marketing communications/segmentat
  ion.

22
Corporate Treasury Survey

• What percentage use on-line trading tools for
  foreign exchange trading, investing or borrowing?

Source AFP Cyberconference
23
E-Commerce ChallengesImplementation Requires
Commitment, Resources, and Willingness to Change

• Management of Assets and Liabilities
• Identify and address payment system issues that
  will influence e-commerce implementation.
• Identify staffing, structure and training issues
  for successful e-commerce implementation, within
  and outside treasury.

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E-Commerce ChallengesImplementation Requires
Commitment, Resources, and Willingness to Change

• Management of Risks
• Centralize (or at least regionalize) global
  treasury management activities
• Establish straight-through-processing linkage
  between business processes and payment processes
• Involve the Information Technology group in your
  organization to address technological and
  security risks

25
E-Commerce ChallengesImplementation Requires
Commitment, Resources, and Willingness to Change

• Strategic Business Advisory
• Clarify treasurys role in the development of
  global e-commerce ventures
• Identify and address information management
  issues that will influence e-commerce
  implementation

26
Technology Is The ForceIt Creates Competitive
Advantage By...

• Enabling the Financial Supply Chain
• Optimizing Assets
• Reducing Cycle Times and Inventory
• Streamlining Process Costs
• Lowering Input Costs

27
Conclusions

• E-commerce is vital to the success of future
  global commerce
• Treasury is vital to the success of corporate
  e-commerce initiatives
• Treasury requires tools made possible by the
  Internet and web-based technologies for its
  success
• Treasury must be integrated into corporate
  e-commerce initiatives, and e-tools must be
  integrated into Treasury to realize full
  e-commerce benefits