Current treasury management organization

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Reference no: EM134020354

Question

About the company:

One-Cloud is a cloud-based software headquarters in San Francisco and founded in 2017. The company provides identity services in the cloud. Third quarter earnings were $234 million, representing a 23% annual growth. The company has over 1,500 clients, 23% outside of the U.S. in Europe and Asia. Sales model is subscription based and clients are invoiced in their local currency.

One-Cloud has 180 employees distributed across its main office in San Francisco, the R&D unit in Bangalore, India, as well as in the sales offices in Boston and Austin in the US, Vancouver in Canada, London, Paris, Frankfurt, Amsterdam and Switzerland in Europe, and Brisbane in Australia.

Banking relations:

One-Cloud main bank is a large U.S. bank with no presence outside of the U.S. and no international expertise. The bank has been a very helpful to One-Cloud during the first years of the company but as the company grows and expands internationally the Treasurer can no longer rely on the bank's expertise to assist with the expansion. The Treasurer has also delegated the bank selection overseas to the local controllers as he also lacks international knowledge.

As a result of this banking strategy the company has now 7 banks in the European Union, 1 bank in Switzerland, 1 bank in India, 1 bank in Canada and 1 bank in Australia. The company has also collection accounts for Asian clients in Hong Kong and Singapore with 1 bank. The total number of bank accounts outside of the U.S. is 23.

FX exposure:

On-Cloud functional currency is the USD, sales contracts are denominated in local currency in the following currencies: USD, EUR, GBP, CHF, INR, CAD, AUD, HKD, SGD. The Company has expenses in the following currencies: USD, EUR, GBP, CHF, CAD y AUD.

Once a month controllers send their excess liquidity to a USD account in London. Local banks are responsible to convert the local currency into USD.

Technology: Excel and on-line banking tools provided by the different banks supports treasury management activities.

Questions:

One-Cloud Treasurer hire you to advise him on the current treasury management organization and the on-going international expansion.

1. What are the risk associated with the current treasury management organization.

2. What will be your recommendations and areas of improvement?

3. The company is expanding in Latin America, which areas the Treasurer should focus/pay attention to prepare for the expansion?

Reference no: EM134020354

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