The challenge

The central tenet of the Hypertherm global treasury team’s risk mitigation strategy has always been an unwavering focus on controls and standardisation, from its treasury processes to the solutions employed globally and at country level, including the adoption of one-off solutions. Treasury management is centralised and considered a CoE at the company headquarters in New Hampshire, US. This CoE develops, owns and monitors these controls, which are perpetuated throughout its offices globally.

As Carolyn Maloney, Treasurer, who has shaped the company’s treasury vision of centralised oversight for over 16 years, says, “Everything we do as a company is around corporate standards – the perpetuation of the same processes and standards throughout the globe.”

The solution

The company was keen to capitalise on technology advances and its relationship with its primary global banking partner, Bank of America (BofA), to further eliminate inefficiencies and enhance visibility and control through several initiatives:

• A significant initiative in China this year is migrating to an e-tax solution by BofA that enables Hypertherm to reduce local bank accounts with a Chinese bank maintained specifically to facilitate local tax payments in China. It also allowed the global treasury team greater visibility into its transactions and account balances through BofA’s CashPro platform.
• An ongoing assessment of its FX risk and the benefits of FX management. To date, the decision remains not to hedge in China due to the relative stability of the RMB and a focus on short terms with customers here, which limits its FX exposure in RMB. As in all jurisdictions where Hypertherm operates, treasury works with operations and tax to assess this situation on a regular basis.
• The establishment of a sub-line in China, off the company’s primary credit facility with BofA, to manage liquidity risk in China.
• Establishment of host-to-host (H2H) connectivity to automate payments. This has been implemented throughout much of Hypertherm’s footprint, most recently in Singapore and is planned for China in the future.
• Other ongoing global initiatives to be addressed as timing and circumstances permit include:
  • The exploration of implementing a global corporate card programme for enhancing control and visibility of employees’ travel and other expenses in China. A global card has already been implemented throughout Europe, North and South America.
  • The use of artificial intelligence to facilitate cash application.

Best practice and innovation

A strict adherence to a corporate culture and policy of standardisation and controls, as well as ongoing assessments of current practices to ensure effective mitigation of risk. A significant goal of Hypertherm’s CoE is for treasury to own the treasury management controls globally and review them on an ongoing basis.

Key benefits

• Cost savings.
• Process efficiencies.
• Return on investment (ROI).
• Increased automation.
• Risk mitigated.
• Improved visibility.
• Errors reduced.
• Number of banking partners/bank accounts reduced.
• Manual intervention reduced.
• Increased system connectivity.
• Future proof solution.
• Exceptional implementation (budget/time).

Hypertherm is well on its way to achieving consistency and improved efficiencies across its treasury management practices due to its proactive risk monitoring and management strategy. This is an excellent example of how a company can amalgamate risk and treasury management and the rewards it can bring.