Unlike financial items that cause a debit and a credit through a single transaction, operational items affect only one side of the balance sheet through a single transaction. Nowhere is this conflict in performance metrics more apparent than in the case of working capital. The volume of working capital is created primarily by the sales and manufacturing functions and is a major driver of financial expense - yet, it is the Treasury function that is measured on the level of financial expense. Of the 3 primary components of working capital, accounts receivable, inventory and accounts payable, the Treasurer really exerts considerable influence only over accounts receivable. To be fair, it must be noted here that volume of working capital is only a part of the equation.
Price is the other.
Here the Treasurer is more in control and is generally mandated to use financial instruments to manage price-related exposures in so far as the money and foreign exchange markets allow. Given that the majority of the working capital is beyond the Treasurer's control, the Treasurer should look to the accuracy of the forecasts to better estimate funding needs and alternatives. Unfortunately for the Treasurer there is a significant portion of the forecast that is dependent on the vagaries of the market and which is therefore extremely unpredictable. The treasurer should further sub-divide the controllable portion into that which are caused by process inefficiencies and that which can be managed via Money and Foreign Exchange markets. The latter is at the core of a Treasurer's job today.