A Once-in-a-Lifetime Opportunity for Treasury to Drive Growth
By 4 minute read• Published July 6, 2022 •
If I’m being honest, treasury and finance teams don’t always get the pat on the back they deserve for business growth. When people think of growth and the mechanics that drive it, they often think of a stellar sales team, strong R&D, a fearless visionary in the corner office, superior customer service, etc. Finance and treasury? Not so much.
Of course, those of us in the profession know differently. Growth requires fuel and that fuel is liquidity. How liquidity is managed is…well, it affects everything. Managing it strategically is the job we do every day and, for the most part, this work is behind the scenes. When it’s done well, the other stars in the show shine brighter.
But every now and then, treasury and finance have an opportunity to step out of the wings and into the spotlight. To visibly and materially drive growth and lasting change. These opportunities are few and far between, but they can be career-defining moments.
I was recently reminded of this when one of our customers, Boston Scientific, was awarded the 2022 Alexander Hamilton Award in Working Capital & Payments. Bob Castagna, vice president and treasurer at Boston Scientific, spoke at length to Treasury & Risk about how improving working capital has fueled corporate growth. What he had to share should be inspiration for any corporate treasury and finance team – particularly right now.
It Starts with Breaking Down Boundaries
Boston Scientific provides medical equipment and devices – critical items like pacemakers, stents and defibrillators. R&D is at the core of the company and keeping that core running is mission critical. As told to Treasury & Risk:
“One of our areas of responsibility is to increase cash flows to support Boston Scientific’s $1 billion in R&D. That means reaching beyond treasury’s boundaries. A few years ago, we evaluated our options for improving working capital. Any changes to our payables and sourcing agreements would be outside of our direct control, but we decided to explore the options available to the company.”
The company likened payables to the “Wild Wild West” – a metaphor we encounter regularly when we start working with clients. Supplier payment terms are often all over the place without any real justification. For companies that invest heavily in M&A, the unwieldiness of varying payment terms grows with every acquisition.
Boston Scientific realized there was a major working capital opportunity in fixing payables. But, like a lot of our clients, didn’t want to hurt suppliers as some of their competitors in the industry had done.
“Other companies were just telling suppliers that their terms were suddenly longer. They did it because they could—but that is aggressive toward the suppliers that are helping the business thrive. We wanted to take a more collaborative approach, which led us to supply chain finance.”
When Treasury and Finance Become Agents of Change
Great things can happen when companies empower their treasury and finance teams to proactively lead internal change – not just react to external factors. Boston Scientific is an example of this: “Our treasury team understands that we need to be change agents. We come up with ideas, then figure out how to get people to ‘yes.’…We are innovators.”
That perspective has led Boston Scientific’s supply chain finance program to exceed expectations and put its treasury team in the spotlight. The cash flow improvement opportunity was originally identified to be $100M. To date, the program has unlocked more than $230M in working capital. Over 140 suppliers have been onboarded.
“This was a once-in-a-lifetime opportunity because of the sheer scale of it,” says Castagna. “How many projects does a treasury team do that generate $200 million?”
At PrimeRevenue, we know the impact of supply chain finance goes far beyond financial metrics. That’s been especially true over the last few years as buyers and suppliers have had to problem solve for disruption. The long-tail impact that Boston Scientific’s treasury-led supply chain finance program has had on the business speaks squarely to this point.
And for Boston Scientific customers, the newly freed liquidity has made possible innovative product lines and acquisitions that enable the company to better serve its customers. “Our products touch more than 30 million patients around the world each year,” Castagna concludes. “We’re improving patients’ lives, and sometimes even saving their lives.” That’s made possible, in part, because treasury’s working capital improvements have funded the journey that fueled Boston Scientific’s growth.
Congratulations to the treasury team at Boston Scientific – the spotlight is well-deserved!