Dow Corning managed to boost its cash visibility through a project that included moving from spreadsheets to an IT2 treasury management system and connecting with its banks via SWIFT.
The company went from having visibility into about 60% of its cash to having visibility into more than 98% for its 74 legal entities that are located in 34 countries and use 27 currencies.
John Coon, global treasury manager at Dow Corning, which is a joint venture of Dow Chemical and Corning that's based in Midland, Mich., noted that the company implemented the project in just nine months, "including joining Swift via a SWIFT service bureau and all the connectivity that goes with that, and onboarding all of our banks."
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The timing mostly came down to resources, Coon said. "Once you get those IT resources, there's usually a timeline on how long you can have them. So we tried to maximize the time we had."
Rationalizing the company's banking structure should be part of any project to improve visibility and forecasting, he said.
"Wherever you can partner with the large global banks and try to reduce the number of local banks, that's one of the earlier pieces of this puzzle," Coon said. "We really scrutinized our local banks and tried to exit those as much as possible and migrate that business to our global banks." The company began reassessing its banks a couple of years before it implemented the workstation, and he estimated it has reduced its number of bank accounts by about 20%.
The increase in visibility improved Dow Corning's cash forecasting, but Coon said there's room to do more.
"Where I see the most opportunity now is we are pulling in our outstanding payables and receivables into our TMS," he said. "What we plan to do is then, based on our daily cash position, we will take our expected disbursements and receipts and improve the quality of our cash forecast. We import those files daily from our ERP system."
"What will help on that is a recent restructuring of the organization in which accounts payable and accounts receivable now report to treasury," Coon added.
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Susan Kelly
Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.
