Cash is King

Photo: Chia Messina

Jane Casey’s no-nonsense guide to what it takes to be an effective treasurer in troubled times

When Jane Casey joined Blyth Inc. in 1996, the $330 million business was growing rapidly; however, the small executive team could not provide the support the company needed. Though CEO Robert Goergen initially questioned Casey’s fit, he formed a connection with the fellow Wharton graduate and offered her a position managing human resources. Now, 17 years later, Casey has evolved into Goergen’s trusted discussion partner and, after wearing many other hats along with way, holds the title of vice president and treasurer. Casey shares with Profile how she dispelled any doubts about her abilities and proved herself an asset to the company by leveraging several profitable lessons.

 

1. Cash is King

Casey believes in two golden rules for treasurers: ensure the right amount of cash is in the right place at the right time to support your company’s capital strategy, and know how much cash will be available at any given point so that your company is able to make business decisions in a timely manner and respond to market opportunities. “At Blyth, the CEO and CFO receive a daily liquidity report, and I meet with the CEO monthly to update him in detail on the company’s cash position,” Casey says. “I also brief the board of directors regularly on the cash position, forecast, and plans to fund the company going forward.”

Though a seemingly commonsense position for any treasurer, it’s not always the case that companies proceed with foresight. “Most companies need to improve cash forecasting—less than 25 percent can forecast cash three months out—because it is fundamental to managing liquidity,” Casey says. “Successful forecasting will test key assumptions, simulate likely outcomes of potential negative events, and engage cross-functional teams with operational involvement.”


“Most companies need to improve cash forecasting—less than 25% can forecast cash three months out.” —Jane Casey

2. Unlock Your Working Capital

According to Casey, research indicates that beyond the obvious benefits of tapping into hidden liquidity, companies with a higher degree of “organic funding” generate higher returns than those that do not.

“For example, Blyth reduced the amount of working capital needed to support our accounts-receivable function by focusing on optimizing its dating programs and collections,” Casey says. “One of our business units had two dated programs that drew far more cash than its sales and earnings warranted, so we took a hard look at the programs and came up with a dozen changes to implement.”

Once Casey optimized each program, she turned her focus on strengthening the collections process. First, sales personnel assumed collections duties, a move Casey considered a natural fit since they are persuasive, have an existing relationship with the customer, and are engaged in discussions about next season’s order. Second, Casey began requiring payment prior to accepting new orders, and, third, she championed utilizing automation to support the process. “In Blyth’s case, we achieved collections in excess of 98 percent on both initiatives, significantly reducing working capital needs while keeping the business we wanted to keep,” she says.

3. People Do What You Pay Them to Do

If you want something done correctly, make sure it ties to salary. That’s a lesson Casey learned while she worked at Merrill Lynch, and she uses it today at Blyth to leverage good results. “At Blyth, we observed at one of our business units that when the performance-bonus criteria focused on inventory levels, back orders and out-of-stocks got out of control; then, the next year, when back orders and out-of-stocks were measured, inventories got out of control—a whopping 49 percent over budget,” Casey says. “It was only when all three factors were measured and evaluated for bonus awards did all three areas remain within acceptable limits.”

4. Balance Ancillary Business

Casey advises that corporate treasurers take the time to understand how they work with the various banks that their company engages. “You must make sure each member of your bank group is being compensated adequately to retain their willingness to lend,” she says.

Casey’s approach focuses on taking an inventory of what ancillary services you have to offer, and then thinking outside the box. “In addition to the usual suspects—cash concentration, investments, insurance—ascertain which of your banks offer services that might fall outside, such as credit-card processing or equipment leasing,” she says. “The bigger your bank group, the more hungry mouths to feed, and it’s important to find the right balance when spreading ancillary business around.”

5. Never Let a Good Crisis Go to Waste

The most recent financial crisis brought many hardships for businesses, but Casey saw a silver lining in the dark, ominous cloud. “An effective corporate treasurer must be prepared to react when opportunities present themselves to effect permanent changes in the way their companies do business, by encouraging both financial and operating colleagues to consider the liquidity implications of the decisions they make,” she says.

For Blyth, the 2009 liquidity crisis put cash and liquidity management at the top of the company’s senior-management’s agenda, presenting an excellent opportunity for Casey to ensure she had a seat at the table to discuss the company’s future operating strategies. “While such dramatic opportunities don’t come around every day, the economic uncertainty that has prevailed over the past few years continues to present many opportunities to the treasurer who’s alert enough to recognize them,” she says.


“My experience tells me that, with the possible exception of golf, people are good at what they like, and like what they are good at.” —Jane Casey

6. Don’t Forget the Fun Factor

“My experience tells me that, with the possible exception of golf, people are good at what they like, and like what they are good at,” Casey says. “So, if you’d rather be
doing something else, go do something else. You’ll probably meet with greater success, or at the very least be happier doing it.”