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At what level of sales should a company consider breaking out the Treasury function from the domain of Accounting?

We have grown considerably over the past couple of years, with continued growth projected (currently at $120MM/yr with the possibility of going to up to $200MM/yr over the next 3 years). I am considering creating a "Director of Treasury" position to oversee treasury functions in the company currently handled by the controller and myself. Thoughts?

Answers

Topic Expert
Doug Thompson
Title: Director of Revenue
Company: Castlight Health
(Director of Revenue, Castlight Health) |

At that size, in my experience you would see a dedicated treasury function only if a) there are a lot of internal funding transfers related to having multiple entities, particularly overseas entities, b) there is a lot of excess cash to be invested and you don't want to just park it somewhere.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Aside from Doug's excellent answer, I would also look at it from the other side.

Is the function taking time away from you or the Controller that you'd rather have you two focusing on some other function that adds more value to the firm? What is that time and the opportunity cost worth? Is it worth the addition of a full time Director that can provide focus (and maybe strategy) on the function?

With that in mind, now it is not only a question of size (level of sales) or business complexity.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Adding to Emerson's and Doug's excellent answers...

What will be the benefit to you and your controller. Forget about ROI or cost of the individual.

What are the real benefits?

For example:

Someone who knows the job function better?
The added time to you and/or your controller will enable you to do....

Etc...

David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Dear CFO:

Rather than respond directly, I suggest you take the following into consideration:

1) What do you consider "Treasury" responsibilities?
Daily cash management, cash flow forecasting, foreign exchange, investments, debt, coordinating working capital activities?

2) How complex is your company in terms of cross border trading? The more off-shore the more complex.

3) How much time do you and the Controller devote to "Treasury" responsibilities? What would you rather be doing? What would you like done better?

Think not in terms of the cost of staffing but rather the "value add".

Best wishes,

David L. O'Brien, CTP
Consultant in Treasury

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