Published : 8 years ago, on 19/08/2016

Written by Kisandka Moses, Treasury Lead, FinTech Connect

Welcome to Treasury Insights

I was recently joined by Walter Cirillo, VP – Treasury at Aerosoles, John Engeman, Treasury Director at David Yurman, Yeshiva University’s Chief Treasury Officer, Michael Schreiber and Franz Gritsch, Treasurer at Rosenthal & Rosenthal to get their takes a variety of liquidity, operational and forward-thinking treasury technology matters amidst a storm of global banking regulation, macroeconomic uncertainty and advances in tech-ledtreasury transformation.

How far does macroeconomic activity influence day-to-day corporate treasury strategy on a ground-level and is it fair to assume that longer-term investments will have a greater role to play in prioritising liquidity, security and yield sooner rather then later? 

Michael Schreiber

Michael Schreiber, Yeshiva University: Treasurers must be keenly aware of the goings on in the macro economy [for instance] Fed policy, BREXIT, risk on and risk off events; which canhave a dramatic impact on currency and short term yield exposures.

Hedging your currency exposure against your sources and uses of cash and duration matching your cash needs will greatly minimize the effects of world economic events and allow your particular business to focus on its core strengths.Depending on your particular needs, prioritising liquidity, security and yield should always be the first item on any organizations agenda.

In this current environment of negative interest rates, major risk off events and a more challenging overall regulatory framework, the above priorities have become more challenging and you need to be that much more precise with your decision making and forecasting. Understanding your banks compensating balance policies and yield alternatives are a great place to start. 

Is there a difference between treasury management and cash management?

Franz Gritsch

Franz Gritsch, Rosenthal & Rosenthal: Absolutely, as a finance company we need a treasury system not only to manage cash flows but also to get the best rates on borrowings. This helps to maximize our margins on loans we make.

Michael Schreiber, Yeshiva University: I believe that cash management is part of the overall treasury management function. Whereas cash forecasting, risk management and understanding of yield curves are the essential responsibilities of cash management, the treasury process must also focus on payment systems, bank relationships, debt financing, and the understanding the “guts” of how your organization functions on a daily basis and properly communicating that information in real time.

John Engeman

John Engeman, David Yurman:Cash management is an essential function within treasury management. The daily cash position is established and the prior day’s activity is reconciled.  Bank accounts are managed to ensure appropriate balances and proper funds transfers, deposits, disbursements, etc.

Treasury management encompasses cash management, forecasting, managing debt, compliance, financial reporting, negotiation, foreign exchange, hedging, risk management, controls and policies and procedures.

[However] all treasury practitioners should be experienced in cash management [as] there are additional critical skills to be gained in global treasury management.

Walter Cirillo

Walter Cirillo, Aerosoles: Treasury management encompasses the management of the firm’s cash (inflows and outflows), investments, financial planning and forecasting, financial risks (FX and interest rates) and banking relationships.  Cash management is a sub-category of treasury management and the focus is to manage the cash (A/R, A/P) and the liquidity of the firm, including investments, to ensure the firm has the financial resources available when it needs them.

Can an automated cash and receivables management policy starve off poor corporate growth and revenue?

Franz Gritsch, Rosenthal & Rosenthal: It would certainly be a positive to the overall corporate health. Instituting a lockbox saved us about 2 to 3 days float, and the data files that we receive from our bank allows us to auto apply about half of our payments thus saving labour costs.

Michael Schreiber, Yeshiva University: I don’t believe automating in a vacuum helps, but rather needs to be used in the framework of proper forecasting and understanding risk and liquidity needs of your particular organization. If the automation is used properly, in the context of solid cash forecasting and risk management, then this tool is essential in helping any corporation through difficult times.

What is the real day-to-day value gained from implementing a treasury management system?

Franz Gritsch, Rosenthal & Rosenthal: I deal with over 30 banks, with receiving deposits, making payments and borrowing from each bank, a treasury system is critical to staying on top of your cash positions and making the most efficient use of cash flows. No matter how much technology you have, you still need human contact to maintain a healthy relationship with banks and I speak to many of my banks either on a weekly or monthly basis.

John Engeman, David Yurman: A treasury management system provides the real time global visibility and accuracy needed to make effective, informed decisions to better manage treasury and the business.  A treasurer partners with the business to manage risk, capital and liquidity.

Knowing the global cash position by currency and entity, combined with the investments and debt portfolios and dynamic cash and debt forecast, the treasurer has the necessary tools to act strategically and proactively.  The treasurer and treasury organization can focus on strategic initiatives and make timely, effective decisions, rather than spend time gathering information and entering into spreadsheets and documents risking errors and wasting resources. 

Walter Cirillo, Aerosoles: Treasury departments are tasked with protecting the assets of the corporation from various risks and at the core of their business function is the management of cash, financial risks (FX and interest rates), investments and banking relationships.

The implementation of a TMS provides companies many benefits such as: global risk visibility which allows for more effective and efficient hedging strategies, cash visibility which provides better cash forecasts, investment decisions and efficient funding opportunities and workflow automation with secure and efficient straight through processing of treasury processes.

[Additionally TMS provides] integration with ERP systems, banking platforms and FX dealing platforms which reduce errors and improve process efficiency and accuracy, cyber security which reduces risks and fraud, improved compliance as global rules and regulations become more complex, improved treasury resource utilization and process improvements by freeing treasury personnel from performing manual processes and allowing them to perform value added (strategic and analytical) tasks.

[From an operational aspect TMS also] supports corporate growth as companies expand globally and the need for a centralized treasury increases which will allow firms to provide subsidiaries the necessary treasury services and support. A TMS can prove to be a cost effective treasury automation solution which will reduce operational risks and errors and improve the speed and quality of treasury reporting.

Can you describe what the term ‘treasury transformation’ would look like to you?

Franz Gritsch, Rosenthal & Rosenthal: 15 years ago my company did everything manually. We received live checks, applied them manually and borrowed from banks manually. Now I have lockboxes, a treasury management system, and state of the art loan system, the only thing I still do manually is bank borrowings.

Michael Schreiber, Yeshiva University: Treasury transformation is all about understanding how commerce will be transacted in the future and staying ahead and/or ready for change as it is both needed and advantageous for your organization. The age of digital payment systems, smart phones, currency alternatives and the future of generic banking are all imperative components of defining how your treasury department will be transformed.

See all four speakers in action at the Cash and Liquidity Optimization USA Conference – 13^th& 14^th September at the New York Marriot Marquis.

If you would like to find out how to attend, please visit www.cashandliquidityamericas.com

Franz Gritschjoined Rosenthal & Rosenthal in 2003.  He received a BA in accounting from Queens College in 1981.  Franz was previously Vice President and Controller for domestic corporate lending at Bank of New York.  He was a Vice President of GMAC Commercial Credit responsible for portfolio acquisitions, Client Accounting and Trade Finance prior to which he was employed in the Financial Reporting area of Bank of New York where he was responsible for global monthly forecasts and variance analysis.  Additionally, Franz was employed in the area of Irving Commercial Corp. responsible for financial reporting for its asset based lending and factoring divisions.

John Engeman is the Director of Treasury for David Yurman, responsible for global treasury and insurance. Prior to joining the company in 2014, he was the Vice President, Assistant Treasurer of Kate Spade & Company (formerly Liz Claiborne) and the Treasurer of the Kate Spade Foundation. His primary responsibilities included managing global treasury operations, focusing on cash and risk management, investments, debt and liquidity management.  Prior to joining Kate Spade, he was the Treasurer of Agfa Corporation.  John is a Certified Treasury Professional, Certified Management Accountant, Certified Financial Manager and Distinguished Toastmaster.  He has a B.B.A. in finance from the University of Notre Dame and his M.B.A. from Hofstra University.

Michael Schreiberis the Chief Treasury Officer at Yeshiva University.  He works closely with the CFO, Controller and the investment office in directing the financial and accounting operations. Prior to joining the university in 2014, Michael spent over 20 years on Wall Street as a portfolio manager in the interest rate sector and then as a senior financial officer at a New York based hedge fund. He was recruited to manage the treasury operations, to include: enhancing bank relationships, cash and liquidity management, short term investment and debt management and he is solely responsible for all cash forecasting schedules and reports. Michael has returned to his alma mater where he first received a BS in Accounting. He went on to work at a public accounting firm where he earned his CPA and then received a Master’s in Business Administration from New York University.

Walter Crillio joined Aerosoles in 2010. Walter was previously an international treasury manager at PepsiCo, Henry Schein and associate director at Pfizer. His primary duties include responsibility for all treasury functions including cash and debt management, investments, global cash forecasting, liquidity and working capital management, banking relationships, insurance program & the administration of the 401(K) and ESOP plans. Walter has a MBA in finance from BaruchCollege, City University of New York.