Strategic Treasury

Head2Head: Agility and Flexibility in a Changing Landscape In this new TMI series, two global business solutions experts discuss their perspectives on how the role of corporate treasury is changing, with growing influence across the business and at an executive level.

Head2Head: Agility and Flexibility in a Changing Treasury Landscape

Agility and Flexibility in a Changing Treasury Landscape 

by Bruce Meuli and Jonathon Traer-Clark, Global Business Solutions executives, Global Transaction Services, Bank of America Merrill Lynch

In this new TMI series, leading global business solutions experts at Bank of America Merrill Lynch, Bruce Meuli and Jonathon Traer-Clark, discuss their perspectives on how the role of corporate treasury is changing, with growing influence both across the business and at an executive level. As they explain, treasury has a wealth of expertise and knowledge that can generate significant value for the organisation, but at the same time, need to maintain a growing range of skills to meet changing expectations and requirements.

Bruce MeuliBM The industry often starts with the concept of the treasurer as an individual. I think a better approach is to view treasury as a team or a functional unit, recognising that the various roles within treasury have been shaped by a whole host of factors. The traditional treasury function has evolved significantly over the last 10 or 20 years in response to changing internal and external demands. This means you need to look at treasury through a broader lens, rather than in isolation from other parts of the business.

Jonathon Traer-ClarkJTC I agree and for me, treasury breaks down into (a) the operational side and (b) the ability to provide strategic advice to the wider business. The trend in large organisations has been to centralise operations in a shared service centre, which immediately impacts on treasury’s role. A treasurer may design a cash management process with a set of policies and governance parameters, but as they don’t oversee it day to day, they actually become more of a customer of that service than an operations manager. Once these operations have been automated, at least some of the team can act in a more advisory capacity. I truly believe treasurers can act as strategic consultants but it’s a very different role to the one they’re used to. For instance, what are you judged on? If you are managing operations, you can be judged on standard industry performance indicators such as cash concentration efficiency, but if your role is to add business value, you have to find new measures. 

Bruce MeuliBM True, and you’ll hear many people talk about the strategic role of treasury, and it’s become something of a cliché because few define what that actually means. As a treasurer, however, you need to think carefully about exactly what skills you can bring to your job. Treasurers are naturally close to the payments and collections processes, for example, This provides great opportunities to share across the enterprise how transaction behaviour is changing, identify potential impacts, and explore whether there are new ways the sales organisation can deal with clients and the remittance of funds. Similarly, they can add value to the way the business interacts with its vendors and whether the balance sheet could be leveraged creatively to support the supply chain. But it’s also important to add value from the perspective and mindset of a treasury discipline.

Jonathon Traer-ClarkJTC Fraud prevention and cybersecurity are critical and represent new areas in which treasurers are able to offer advice, because of their experience in dealing with the secure transfer and storage of money and information, often across borders. Treasurers’ expertise in these areas makes the function a natural partner of legal and tax in an organisation, sitting beneath the chief financial officer – but where exactly treasury sits in a business today is a topic of real debate at the moment. 

Bruce MeuliBM Yes, and one of the biggest risks for treasury is that it becomes – or stays in some instances – a silo. For treasury to provide strategic value to the business in an effective way, and to extend across the enterprise and towards the board, it needs to build a relationship with finance based on credibility and value. Going further still, if you consider the evolving nature of the function, there’s a strong argument that group treasurers should come from a finance background and have experienced several areas of an organisation. The skills and knowledge you need now can’t be gained from working in a single discipline. 

Jonathon Traer-ClarkJTC From a personal perspective, having worked in sales, marketing and treasury roles, I know there are real benefits to having broader experience of how an organisation works. We’ve certainly seen treasurers in, for instance, the airline industry going out and studying how fuel is paid for, how aeroplanes are leased, because these are significant uses of capital and have ramifications on capital allocation strategy. It gives them a different perspective, alongside the core financial acumen they bring.

Bruce MeuliBM But it’s a question of skills as well as perspective isn’t it – the changing role of treasury alters the skills and knowledge that the job requires. Some of these changes are already a reality, such as the ability to have an influence beyond treasury and work within project teams or flat organisational structures to manage internal and external providers. Let’s also not forget how valuable global experience is. Increasingly, treasury roles and remits are global and being culturally aware and able to lead a diverse workforce is absolutely crucial. 

Jonathon Traer-ClarkJTC If there’s anything that defines treasury today, it’s agility and flexibility. Change has become a constant within organisations and in the external world. There’s no doubt that the ability to adapt will continue to be top of any treasurer’s job description. 

The TMI Verdict - by Helen Sanders, Editor

Head2Head GavelBruce and Jonathon correctly identify the significant evolution that has taken place in the role of treasury over the past two decades, as the profession has matured from an embryonic risk and liquidity function to a key value enabler from both an operational and strategic perspective. As corporations have expanded globally, with increasingly complex, multi-dimensional supply chains, combined with a market, technology and regulatory environment that is almost unrecognisable from the early days of corporate treasury, the onus on treasurers is to navigate complexity, increase transparency and create certainty.

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