Traditionally, corporate treasurers have stuck to purely treasury-related activities: that is, managing and forecasting liquidity, financing, risk management, and relationships with banks. What we’re seeing nowadays, however, is a broadening of these functions, as treasurers don bigger shoes within the company setting.
Traditionally, corporate treasurers have stuck to purely treasury-related activities: that is, managing and forecasting liquidity, financing, risk management, and relationships with banks. What we’re seeing nowadays, however, is a broadening of these functions, as treasurers don bigger shoes within the company setting.They’re making strategic decisions about their services like the geographical and operational coverage of their activities; they’re acting as business architects, managers, coaches, risk managers, and technical experts, all at the same time; overall, they’re negotiating their role as true business partners—at the danger of falling short by overextending themselves.
Rolling with new roles
A breakdown of the new waters that treasurers find themselves navigating:
As business architects, treasurers must define how their departments are organised, making sure their mission statements and strategies come through effectively.
As managers, treasurers must oversee their teams’ performance, task-completion, and development. They also have to make sure a back-up system is established.
As coaches, treasurers must be able to explain treasury activities to business managers and, conversely, understand from those managers how business decisions and initiatives will affect the treasury department. Thus, communication ranks high in importance: a whopping 77% of treasurers cite communication as a major problem.[1]
As risk managers, treasurers must implement a control framework for the mitigation of operational risks and of fraud. They must also retain the ability to foresee how business decisions and changes will affect the company’s overall cash-flow. All of this must be supported by a reliable information system, the functionalities of which must chime with increasingly heavy service and regulatory constraints.
As technical experts, treasurers must stay on top of their field: aspects of business like financial instruments and means of financing are always evolving, as are aspects of accounting (e.g. IFRS9).
As people, they have to do all this while staying sane!
Mountains and mountain-climbers
The challenge, of course, is threading all of these new responsibilities into a single garment for the company to wear. The duties have to be done sustainably and effectively, so as to transform the treasurer into a reliable business partner and value-adding member of the firm.
The danger would be for the treasurer to become too much of a one-man-band—someone who manages too many dimensions and responsibilities. Avoiding this is already difficult with the number of duties needing to be coordinated, but to make matters worse there will often be limited budgets undermining treasurers’ efforts.
And, let’s not forget, increasing regulatory constraints, which are a primary worry among 25% of treasurers.[2]
One third of the treasurers we surveyed in 2014 consider their top obstacle to be the lack of clearly-defined roles and responsibilities. Thus, the current crossroads are… evolve or dissolve.
[1] Source: KPMG Treasury Risk Management Survey 2014
[2] Source: KPMG Treasury Risk Management Survey 2014
