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The Resource for the Global Finance Profession

Four Treasurers Talk Shop, and What They Say is Optimistic

  • By Jonathan Starkey
  • Published: 2011-04-01

"Cautiously optimistic."

For corporate treasurers, that has been the phrase to live by as the economic recovery has teetered and tottered over the last 18 months. But many are beginning to drop the caution, and place more hope in the sustainability of the financial upswing. A sense of real optimism is fueling growth plans.

On May 18 to 20, corporate treasurers will gather in Chicago for AFP’s Seventh Annual Global Corporate Treasurers Forum, appropriately themed “A Game Plan: Where do we go from here?” To offer a sneak preview, AFP recently sat down with a four corporate treasurers to learn how they are navigating the path forward.

Participants were:

  • Steven Klueg, Vice President and Treasurer of World Fuel Services
  • Sassan Parandeh, CTP, Global Treasurer of ChildFund International
  • Ferdinand Jahnel, Vice President and Treasurer, Henry Schein
  • George Zinn, Corporate Vice President and Treasurer, Microsoft

In this Q&A, our treasury roundtable participants offer a short-term economic outlook, explain what treasury project is currently capturing their attention and share their takes on borrowing even more in the capital markets.

AFP: How has your general economic outlook changed in the past year? What do you expect for the second half of 2011? 

Steven Klueg, Vice President and Treasurer, World Fuel Services: My outlook has not really changed. I still anticipate modest growth in business investment. However, consumer spending patterns will be interesting to monitor.

Sassan Parandeh, CTP, Global Treasurer, ChildFund International: I think, generally speaking, it’s a lot more optimistic. The feeling is that we hit the bottom and we’re turning up. We don’t sell any products; we are an international child development NGO that helps deprived, excluded and vulnerable children in 31 countries. Instead of product or services sales, our organization generates revenues via fundraising. On the government side, we feel the supply of grants will probably be smaller, given how the current political environment puts pressure on both parties to cut Federal spending. But, with the public being more optimistic, that will probably be good for us in terms of charitable giving. I think the general outlook is that next year is going to be a better year than this one.

Ferdinand Jahnel, Vice President and Treasurer, Henry Schein: Compared to 12 months back, overall, we are cautiously more optimistic looking into this year compared with last year. We have seen continued indicators of growth in our business and more activity at our customers businesses, which are dentists, physicians and veterinarians. They’re experiencing an uptick in traffic.

George Zinn, Corporate Vice President and Treasurer, Microsoft: We have consistently been positioned for a slow, low growth recovery since last year. We have been following the mantra of the Chair of our Investment Advisory Committee, Mohamed El Erian, who was the first to state last year that he thought the cyclical tailwinds were going to overcome the structural headwinds.

AFP: What investments is your business making to jumpstart growth post-financial crisis?  

Klueg: Our business at World Fuel has grown dramatically over the past few years despite the financial crisis. Our investments in acquisitions, technology, people and process are paying off as our income from operations has more than doubled since 2007. We will continue to invest through acquisition and in our business to drive organic growth and enhance returns.

Parandeh: For us, I think this is a good time for capital expenditures, in terms of computer system infrastructures, integrating systems, working smarter and increasing capacity. Prices are down due to both the economy and technological improvements and vendors have a great deal of idle capacity. In terms of cash, I think most companies have been holding back on spending for a few years, so cash is there for most companies. Therefore, these all create an opportunity for mid-size and small organizations to enter markets they had never ventured into before. In treasury, we’ve already started to upgrade our systems by implementing a Thomson Treasura web-based solution. We’re currently in the process of completing that. We’ve put four of the modules in place. Compared to five years ago, when you had to spend a half-million dollars on implementation and a quarter-million for software rights, now you get most of that for a tiny fraction, and the system still offers 80 percent of an installed treasury workstation system’s capabilities.

Jahnel: We continue to build our product and service portfolio and invest in supplier relationships that ultimately lead to a broader product offering that is meaningful to our customers. That has not fundamentally changed. We continue to have an active deal pipeline with respect to acquisitions, whether they happen domestically or overseas. About 40 percent of our business is now generated outside of North America.

Zinn: We have been making investments in our infrastructure in order to take people out of manual processing/reconciliation and have them spend more time on report/data analysis, thereby providing insights to management.

AFP: What treasury or finance project is currently commanding your attention?  

Klueg: We recently closed a number of acquisitions so are focused on integration activities such as consolidating banking operations and mitigating foreign exchange risk. Also our investment in working capital grows as the price of oil increases therefore we are working very closely with the business to monitor liquidity, collections and trade credit lines.

Parandeh: I think that’s it, the technology. For us it’s a great opportunity to expand on our technology platforms and automate and integrate our systems. That’s been the focus pretty much all of this year and it will remain all of next year. We selected the management system last year and began implementation approximately 10 months ago. It will be complete within the next four months.

Jahnel: Several things are going on. We established a multi-currency international and notional cash pool last year and we continue to ramp it up, in the sense that we’re adding additional geographies. We are a corporate member of SWIFT and continue to build up that functionality. Those are two big projects that obviously give us a lot of benefits in terms of cash management and efficient transaction flow. Both are very important for us and high on the list of priorities.

Zinn: Microsoft, with several hundred bank accounts at more than 80 banks, is deep into a project to switch bank statements to the new ISO 20022 XML bank reporting format. We’ve already achieved electronic visibility to 99 percent of our cash globally, but it is coming in a variety of proprietary bank reporting formats. We want to move to a technology that is consistent across all banks, so we can reduce our IT expenses, simplify our infrastructure by using one channel for all banks, get a more reliable platform, receive more detailed reports, and not have to deal with individual bank upgrades. When XML-formatted reports arrive at Microsoft via SWIFT, they will be fed through two Microsoft middleware products, BizTalk and the Accelerator for SWIFT, which will translate the XML data into the iDoc format used by Microsoft’s SAP system. Once the information is downloaded into SAP, it will automatically apply payments and populate report fields. In addition to standardization, XML offers greater detail. We’ll be getting more detail in the traditional fields, but also getting new fields. More remittance detail should lead to more auto-posting and free up resources for both us and our partner banks.

Read more: Four Treasurers Talk Shop - Performance Indicators, Expansion 

To hear the views of other corporate treasurers, attend the Global Corporate Treasurers Forum May 18-20 in Chicago. 

Copyright © 2015 Association for Financial Professionals, Inc.
All rights reserved.

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