Citi Perspectives 2024 E-commerce Edition

10 | Services Citi Perspectives Ultimately, by putting the right team, structures, and solutions in place early in the growth cycle, you cannot only help ensure a vital foundation for revenue growth and business expansion, but also deliver maximum value for shareholders. Acting as a revenue generator Treasury has traditionally been seen as a cost center which serves as a catalyst for revenue growth and international expansion. But there are several ways in which it can act as a revenue generator as well. The increase in interest rates in recent years has highlighted the importance of cash and liquidity management to a company’s financial well- being. Capitalizing on the high interest rate environment can generate significant yield from excess cash; this can then be applied to not only offset bank fees but also be invested into other areas of the business. Companies that optimize their cash conversion cycle (CCC) by negotiating with suppliers to extend payment terms and accelerating the pace of collecting receivables from customers can improve their working capital. This is also done via payables and receivables financing tools with bank partners. As a result, companies can free up cash for operational growth or sweep funds into products such as interest-bearing demand deposit accounts, money Ultimately, by putting the right team, structures, and solutions in place early in the growth cycle, you cannot only help ensure a vital foundation for revenue growth and business expansion, but also deliver maximum value for shareholders. Lessons from the U.S. regional bank crisis Many of the basic details that investors analyze during an IPO, such as risk and controls and accounting and disclosure policies, may fall under the day-to-day responsibility of both accounting and treasury functions. While they might seemmundane, the U.S. regional bank crisis in 2023 demonstrated why such policies — and therefore treasury — are pivotal. During the crisis, investor scrutiny of prospective IPO candidates’ C-suite narrowed down to the following: Where is the company’s cash held and is it secure? One company in the market at the time gained investor confidence solely because their treasurer was able to answer this question quickly and demonstrated how its surplus cash investments were diversified. Certainly, every senior executive in the IPOmarket that week became familiar with the name of the employee who oversaw their cash. Treasury proved to be a rock of stability during a crisis. The governance, transparency and accountability measures that the market, regulators and other stakeholders expect for a public company, differ significantly from those of a private company. Putting processes in place to file a 10-K annually in line with U.S. Securities and Exchange Commission requirements — detailing performance, organizational structure, executive compensation and much more — often begins at least a year before a company files for IPO. These processes need to be both robust and flawless: Treasury’s ability to deliver comprehensive, timely and accurate information once a company is listed is critical. A misstatement cannot only move the share price but have the potential to undermine investors’ long-term confidence. In other words, whether companies are meeting their compliance obligations, facing macro or market headwinds, or taking advantage of new opportunities, treasury is key.