Treasury Function Optimisation Case Study
Treasury Function Optimisation Case Study
A rapidly growing oil company that was aggressively ramping up production.
- Funding conditions included pre-requisite hedging of commodity price risk
- The majority of income was in USD and the majority of costs were in AUD
- Balance sheet risk on a USD denominated bond
- No official/documented treasury or risk management policy in place
- Decision making was ad-hoc and often ’knee jerk’ reactions to the market.
Rochford was engaged to:
- Construct a treasury policy covering the multifaceted nature of the company’s financial risks
- Develop management reporting process and templates
- Create a process of weekly exposure reporting to a risk management committee
- Up-skill internal resources on treasury risk management
- Provide mark to market (MTM) reports of derivative positions
- Work with the finance function to develop a cash management policy and maximize returns of AUD and USD deposits while maintaining sufficient liquidity
- Work with the finance function to develop an FX risk management strategy aligned with the company’s pricing mechanism and invoice process
- Advise on the execution and structure of medium-term strategic hedges
- Provide monthly policy compliance board reporting
Outcomes:
- With Rochford’s expertise and support, management could focus on growing the business, confident in the knowledge that strategic objectives would not be compromised by market risks.
- The business went from having no official treasury function to a function that was equipped with the skills, resources, policies and processes to manage all the financial risks of business, and deliver a tangible result to the bottom line.