After Moore joined Dover in late 2011, he focused on streamlining treasury processes and reducing costs. “When we looked at the treasury processes done by the operating companies, we identified opportunities to decrease costs and we helped them improve those processes,” he said.

Treasury began to interview each of Dover's operating companies, starting with those in the United States, about their treasury processes and use of banking services.

Robert Chan, now the company's European treasurer, led the effort. He and his colleagues found that many of the U.S. operating companies were paying for banking services they no longer needed, said Chan, pictured at left. “When we went out and talked to the operating people and asked, 'Do you need this?' they often said, 'No, we don't.'”

They identified as superfluous services such as paper bank statements, whose contents now can be downloaded online, and paper confirmations of transactions, which arrived days after the company reconciled the transactions. “By turning those services off, we saved a significant amount of money and improved the efficiency of the operating companies,” he said.

Moore noted that the company had also been able to close “a rather significant number of bank accounts.” Treasury worked with the operating companies to refine a definitive list of bank accounts, which allowed them to track their progress.

Consolidation and Netting for Foreign Exchange

The interviews with the operating companies also looked at their foreign exchange transactions. “We wanted to get an aggregate amount of currency flows that were occurring for all of our operating companies worldwide,” said Moore, pictured at right, noting that treasury was looking at the potential risks of those flows and also assessing whether there was a way to improve the company's foreign exchange transactions.

In the summer of 2012, Dover's treasury embarked on a project to centralize FX trading and hedging, starting with a month-long pilot program in which it conducted transactions for one operating company to test the process.

The pilot produced “substantial savings,” so treasury moved ahead, said Garrett Jenks, the treasury risk manager. It selected a multibank electronic trading platform for foreign exchange, FXall, and began executing trades in September 2012. “At this point, a substantial majority of all material foreign exchange-related transactions from U.S.-based companies have been centralized,” Jenks said.

Treasury set up an FX email inbox to which operating companies send their transaction requests. Once a transaction has been executed, treasury emails the settlement details to the operating company.

Dover's operating companies have large intercompany trade flows, and treasury is now working on implementing netting across the operating companies, starting with a pilot that involves two companies. It plans to roll it out across the rest of its operating companies next year, using a netting program from Bank Mendes Gans.

The companies will input all their intercompany transactions into the program each month, either manually or using export files from their ERP systems. Then the bank will net the transactions and inform each operating company of its net position, positive or negative. Bank Mendes Gans will also facilitate trading the net currency positions and make the payments to each operating company with a positive position. If the operating company has a negative position, it will send a SWIFT message to the operating company's bank and debit the amount owed.

Chan said the netting program will eliminate a lot of wires that the operating companies are sending back and forth, as well as some foreign exchange transactions.

Making the Case

Moore noted the importance of making a strong case for treasury's proposals to the operating companies.

At the start, Moore said, he set four goals: improving the efficiency of processes around cash and financial transactions; strengthening internal controls around cash and financial transactions; lowering the cost of financial transactions; and managing Dover's financial risk profile. Treasury talks about those goals when it does internal presentations as part of its effort to ensure that Dover's operating companies understand what treasury is doing and understand that “our goals are aligned; we're not opposite,” Moore said.

He said that being able to demonstrate the savings that the FX pilot had produced was a key element in convincing the operating companies of the plan's value. “By doing a pilot, we got a lot of buy-in quickly,” Moore said.

“Much to our operating companies' credit, they saw the value that Garrett [Jenks] and Robert [Chan] can bring,” he added. “Our companies have been great to work with.”