• Blog
  • 6 Min Read
  • February 12, 2020

Industry Perspectives: Corporate Treasury 2020 with Cody Lott

As a senior solutions consultant at Clearwater Analytics, Cody Lott uses his market and system expertise to work with corporate treasury teams around the world.


Cody came to Clearwater from the treasury team at global semiconductor giant Micron Technology, where the Clearwater solution played an important role in investment accounting operations. He is uniquely qualified to assist corporate treasury teams in figuring out how they can use technology to be more efficient and take a proactive approach to their jobs.

We sat down with Cody to learn more about modern treasury teams, the impact of financial technology, and the trends he sees in the market today.

How did your time as a Clearwater user affect how you work with treasury professionals today?

Using Clearwater in my daily role helped me understand that it’s an incredibly valuable tool on the investment side of things. It was very eye opening to understand how the investment piece integrates with cash management, which integrates with capital markets, which integrates with financial planning and analysis, and other teams within finance and treasury.

I can take my experiences as a system user and share them with clients and others in the industry to explain how I used Clearwater and show a real-world application. I like to talk about how the investment piece feeds into the other treasury departments. I also try to gain an understanding of their political or internal capital and how that factors into pitching a new idea to a treasurer.

What trends do you see today in the corporate treasury investment space?

If you look at the general corporate treasury arena, we’re seeing a pretty sizable shift in investment strategies. People are taking a look at the investment landscape, the geopolitical landscape, and rates have been flat and inverted at times. There’s uncertainty in the marketplace, and it seems like people aren’t willing to take the risk further out in duration or out on the treasury curve. We’re seeing a lot of people just go into a cash equivalence and diversify on the front of the curve.

Last year on the Clearwater system alone, we saw over $100 billion move into money market funds and of that amount, over $30 billion went into prime money market funds. A lot of people have shortened duration out of SMEs for the time being, use deposit accounts and are diversifying by investing in government and prime money market funds.

Prime money market funds have been a big area of concern for a lot of treasury departments because it requires additional accounting. It’s essentially treated like a bond with the floating NAV that now goes out to four decimal places. So, if there’s a spread of 20 basis points between the government money market fund and a prime money market fund, Clearwater helps do all the underlying accounting and liquidity monitoring.

We can see the trends, the big names that people are investing in, help them identify the risks, provide data points like daily and weekly liquidity, gates and fees, those types of things that are a major concern. We help with compliance on that side of things. So, we’re essentially helping our clients pick up additional yield while taking on minimal risk, if not no risk.

Something simple like a 20 basis point pickup might not be that attractive considering the significance of liquidity and preservation of principal, but we’re seeing a lot more of an appetite for people moving into that given Clearwater’s ability to help them.

What is a challenge modern corporate treasuries face in managing their portfolios right now?

If you look back over 2018 and 2019, we’ve had some pretty major things happen from a macroeconomic perspective. We’ve had tax reform that has had impacts on repatriation, which means we saw a huge influx of cash come from offshore accounts. The interesting thing about what we’re seeing here is companies are incentivized to invest back in their business, whether that be additional CapEx, or investments into other areas of operations, or shareholder type activities such as share buy backs or declaring dividends.

Companies are actually investing a lot of their money back into the business, which has had an impact on portfolios, but that’s almost in line with what we were previously talking about, the shortening of the duration of their portfolios, and holding much more of a liquidity state in mind, because I think a lot of people don’t quite know what those incentives are going to hold.

So, they’re sitting on “dry powder,” or an opportunistic balance if that makes sense.

What other pervasive challenges do you see?

One of the major challenges treasury departments have today is reading the landscape and trying to structure the portfolio accordingly. And at what level that’s happening, if it’s the treasurer making those decisions or the analyst with the ear to the ground, and trying to provide recommendations upstream.
I think what you’re finding is there’s a little bit of uncertainty that creates some tension, if you will, some professional tension among treasury teams in FP&A teams and the whole company on how to structure their investments. This is putting a squeeze on the investment world in and of itself.

With that, if you’re going to go further out on the curve, or hire separately managed accounts, or whatever that is, a lot of people get a little antsy when they think about that because it requires a whole bunch of additional processes and procedures generally.

How key is an investment accounting and reporting solution like Clearwater?

I can give you an example. There was a scandal at a large global manufacturer a few years ago when I was working as a senior treasury analyst in the corporate sector. I got an email from our treasurer over the weekend asking for our exposure to this company and my recommendation. We were getting questions and we needed to understand our exposure because of the major headline risk.

So I thought, “OK, well, I left my work computer at the office but since I had Clearwater I could actually get this information using a browser on my phone.” I logged in and I ran an exposure report. I was able to reply to the treasurer with how many holdings of that company we had across so many managers.

Then, I could start to work through my recommendation on whether or not we should sell off those holdings, do we hold and what analysis takes place. By the time the treasurer came in on Monday, everything was well-suited to him. He could take it to the CFO or whoever he was getting questions from and show our exact exposure and recommendations.

Having that type of information at your fingertips, even on the weekend, wherever you can get internet, saves a lot of time and heartache in the long run.

Market discussions aside, how does your passion for the outdoors, and that entrepreneurial spirit that encouraged you to start your own foundation, drive what you do here at Clearwater?

I can relate it back to snowmobiling. When you get off trail and you’re kind of boondocking through the trees, you’ve got to figure out how get to the top, right? You really have to take a step back and evaluate how you’re going to navigate through this, and then along the way, sometimes you can’t stick to that path that you had kind of molded at the bottom of the hill.

So, you have to learn how to be agile, and maneuver with it, but having the end goal of reaching the top. In a business situation, you might think about it as trying to summit those mountains of opportunities.

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