ABSTRACT
Tore Bertilsson, Finance Director of the Swedish manufacturing firm SKF, was thinking about all the changes that he had introduced into the company’s finance. To cope with problems posed by globalization of the company’s activities, Tore introduced a financial reporting structure which closely scrutinizes costs and investments worldwide without hampering operational management or strangling local plant innovation. He called the new system the Twin Track Approach. The role of a Regional Treasurer is to calculate likely returns on the proposed investment and to find the most suitable sources of capital funding in a particular territory. At the regional offices of the treasury, the analysis of how and where to fund a project starts with an analysis of the relationship between spot, forward, and local and foreign interest rates. This exercise leads to the identification of possible foreign exchange market distortions which may help the company identify relatively low interest rate costs and find exchange rate instabilities.
