by Orlando Lyomu, Chief Financial Officer, Gulf Energy Ltd
Gulf Energy has a small treasury function in terms of staff numbers, but the department is responsible for managing large cash balances. Treasury uses spreadsheets to manage its activities, but Oracle Financials was recently installed, and the intention is to use this for cash flow reporting in the future. In addition, we have some experience of treasury management systems (TMS) so this is a possible route going forward.
Gulf Energy has successfully centralised 90-95% of its cash flow. As a net borrower, the company has limited cash surpluses; when these arise, they tend to be short-term. In these instances, we either place cash on deposit for a few days with one or more of our key partner banks or enter into currency swap transactions, unless there are borrowings that can be offset. Our key partner bank, BNP Paribas, pays some interest on credit balances on our accounts, which makes surplus cash management straightforward.
In addition to our counterparties looking at Gulf Energy more closely from a risk perspective, we are also scrutinising our own counterparties. We have always been conservative in our choice of banking relationships, but we are putting more emphasis now on long-term relationships with stable partners. In addition to our key international banking partner, we also work closely with several local banks.