Asked what he does with his days, Damian Glendinning, treasurer of computer manufacturing giant Lenovo, joked: "Make sure there's enough cash in the bank accounts the day payroll arrives".
Of course, he was only partially kidding. While his role is much broader than just salary disbursement, keeping employees' bank accounts credited -- in other words keeping them happy -- is just as important to the overall success of the organisation as putting out a good product.
"The main responsibility is very simple," said Glendinning, on a more serious note. "It's to make sure that there is enough cash available at all times, and in the right places, to meet the needs of the business." And for a multi-billion dollar company, that is no small task.
Since buying IBM's personal computer (PC) unit in 2005, Beijing-based Lenovo has become one of corporate China's best-known brands. Previously a company that sold $3 billion of computers a year, the company reported turnover of $12.3 billion for just the nine months ending December 31, 2009; up 1.7% year-on-year. Today, Lenovo estimates that it sells about 9% of the world's PCs in more than 100 markets around the world. The company has a physical presence in 67 countries, including a treasury centre in Singapore and an operations and research and development hub outside Raleigh, North Carolina. All of which fall under Glendinning's treasury purview.
Based in Singapore, he joined Lenovo as treasurer from IBM when it bought the latter's PC unit. Glendinning has worked in various corporate finance roles, including accounting and internal audit, since 1984 when he joined Big Blue. He joined IBM's treasury team in 1994.
"I'm not sure I like it but I'm often referred to as a veteran," he joked. "Technically I can't argue with it."
Glendinning has myriad duties, or "missions", as he calls them. They include management of the company's cash, foreign exchange, bank relationships, pension funds, credit, business partner financing and balance sheet planning. To support him he has a team of 43 staff based in Singapore (20), Beijing (15), Hong Kong (three), and Raleigh (five), a global banking relationship with Citi, an online factoring solution from IBM, the foreign exchange management portal FXall and SunGard's reporting and tracking platform Integrity.
A day at Lenovo
"No two days are the same," said Glendinning, when prodded about his daily routine. After a moment's reflection, he elaborated: "One thing that happens every day, thanks to our simple and centralised structure, is that I have a detailed cash report of all the bank accounts outside China, and the total for China, on my desk every morning. I can see where we are versus where we expect to be."
The reports help identify problems be- fore they become crises, he explained. Typical issues faced by Lenovo's treasury include cash build-ups in individual countries - usually ones with capital restrictions - foreign exchange issues and receivables factoring.
Following cash balances, Glendinning said he turns to what is arguably the biggest part of his job - foreign exchange. "Our business has a significant underlying foreign currency mismatch. Most of the costs in the PC business are actually in US dollars. Because we are an assembler we buy components off other people and a very high percentage of those components are invoiced in US dollars whether or not they're made in the US. The US represents a little over 20% of our sales so that means the rest of it is in a different currency and therefore presents a currency exposure."
This exposure requires daily reports, monitoring and regular communication between Glendinning and his treasury staff as well as Lenovo's local subsidiaries. He said the company uses FXall, an online foreign exchange trading platform, to execute nearly all of its FX trades.
"Right now, given what's been going on in the currency markets, the traffic's been a little more intense," said Glendinning. "As long as the markets are quiet [foreign exchange] tends to run pretty smoothly but in periods of volatility, no matter how good the process is, there are areas of stress and strain. Those need to be monitored and they get a lot of attention. There's been a lot of volatility in the past months."
Surprisingly, the renminbi is not a pressing currency concern. Glendinning said that when the renminbi does appreciate -- something most specialists predict will start later this year -- it will be to Lenovo's advantage. For the time being, fluctuations in the value of the US dollar and euro take up the most of his time.
After foreign exchange, Glendinning's average day becomes unpredictable. Depending on the reports, he could move swiftly on to reviewing the company's working capital positions or discussing customers' credit lines with Lenovo's chief credit officer, James Loh. The other parts of his job, including managing enterprise risk and the company's banking relationships, reviewing its insurance policies and pension positions, and ensuring its receivables factoring is running smoothly, are not daily activities though they do occupy various amounts of time during the course of a month.
Smooth running
"My objective is to have a smooth life," said Glendinning. "A lot of my work is about managing risk in advance and making sure we have the processes and know where we are and what we're doing. It would be a very bad thing for the company if I was running from one crisis to the next."
Ensuring Lenovo has all the necessary systems and processes in place to manage its cash is, while not a daily concern, extremely important. Surprisingly, despite its billions of dollars in annual revenue and the overall trend towards centralised back office platforms during the past decade, the company does not have a central treasury system.
"One of the very powerful reasons for going with a single bank structure worldwide is that our bank has a good internet banking system," said Glendinning. "If you only have one bank account in a country, which is where we try to be, you don't need to worry about centralising the cash in that county. We do everything with the internet. In terms of the daily cash management, I don't need to centralise the information on the bank accounts because it's already in the same place." He explained that when Lenovo bought IBM's PC business, it did not inherit Big Blue's treasury system because it was not "appropriate" for the company.
Asked if he faced any issues using four separate online tools, Glendinning said: "The big issue is none of these systems are linked up to our main accounting or enterprise resource planning [ERP] system... [but] given the fact that the cash management and foreign exchange management are very simple, and that the online tools are linked to each other, that's not a big deal." He added that he would like to implement a central system but until the migration from IBM's legacy ERP platform is completed -- a process that still continues five years after the acquisition -- there is no point installing a treasury solution that may have to be replaced.
For all his missions, Glendinning makes his job sound relatively simple. You would be forgiven for coming to the conclusion that with just an online bank portal and a little knowledge of foreign exchange hedging, you could manage the cash for a global multinational. Of course it is not that easy, it is just his job to make it sound that way -- and he's certainly good at it
This story was first published in the Corporate Treasury Yearbook supplement to the April 2010 issue of FinanceAsia magazine.
