Strategic Treasury

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Win-Win Partnerships between Banks and Treasurers According to a recent survey, treasurers are looking to banks for creative problem solving while things like ‘complex finance advisory’ check in at the very bottom of the list. Looking at it from a traditional banker’s view one would almost feel inclined to reverse the list.

Win-Win Partnerships between Banks and Treasurers

Win-Win Partnerships between Banks and Treasurers

by Julia Persson, Head of Cash Management, Swedbank

According to a major BCG survey [1], treasurers are looking to banks for creative problem solving while things like ‘complex finance advisory’ and ‘frequent visits’ check in at the very bottom of the most wanted list. Looking at it from a traditional banker’s view one would almost feel inclined to reverse the list. Around the world CFOs and treasurers wish for more proactive behaviour and business understanding from their banking partners. It’s about time to start listening.

In recent years the treasury role has expanded and everybody agrees that it will keep on doing so. Today a treasurer has to understand and take an active part in the company’s strategic work as well as the day-to-day problems and challenges, not only of the treasury but of the company as a whole. According to the recent AFP Strategic Role of Treasury Report [2] almost 50% of all treasuries act as internal consultants to other departments. Equally we all agree that we as bankers have to stop selling increasingly commoditised products and start to develop insights into our clients’ realities as well as understanding company strategy and deliver tailor-made solutions.

But how far have we come? All too often it ends up in a set of good intentions and some nice sounding phrases; be a financial business partner, value added services, customer centric culture, a holistic view etc. We all hear and use these buzz words but what do we really mean? How do we actually approach this: is there some sort of hands-on solution to really tackle this objective of establishing a true win-win partnership between a bank and a treasury?

As I have experience from both sides of the table, corporate treasury and corporate banking, I would like to use some of my personal experience as well as that of my peers, colleagues and friends to look at and to discuss these issues from different perspectives.

Get invited to the party

The treasurer has some of the most important tasks in a company. Primarily it’s to secure access to liquidity and to identify and mitigate financial risks. Liquidity, both short- and long-term, can easily be a decisive factor of corporate success or even survival in critical situations. But, looking at the proactive role of the treasurer, does the business side of the company tend to see business opportunities in early treasury involvement? Judging from my experience the answer has to be – not necessarily.

Traditionally treasury is seen as an internal function with little or no direct interaction with the company’s customers or market place. In turn, treasury often sees their internal counterparts as their principal customers. But these ‘customers’ may on the other hand feel more as if they are under strict supervision rather than being helped with their business challenges. This doesn’t leave much room for partnership or collaboration.

One of the professors at the IMD Business School used the phrase “Treasury (as well as finance in general), bring your bottle to the table and you will be invited to the party”. I think he has a point. I might, though, have phrased it a slightly differently: “Put your bottle on the table” – as in make your contribution visible to your business. And by this I don’t mean showing off with improved ratios or working capital numbers, but being there for the business and understanding the company customers’ needs and expectations. If the treasurer starts with the customer perspective, in this case the business side of the company, he or she will rarely go wrong. But as we all know it’s easier said than done.

The starting point of a partnership

More or less the same goes for the bankers but with one major difference. Treasurers are the bankers’ ‘real’ customers and to serve them is their core business. A lot is at stake, and the banker easily exaggerates his or her focus on the treasurer. This is to some point understandable. Meeting with bankers is an important, but for most part a rather routine event in the life of a treasurer. But for the banker, it might be the culmination of a long period of hard work and a turning point in the overall business arrangement. So, yes! It’s crucial to do it right!

But do we do it right? A banker’s presentation is all too often stuffed with banking organisational charts, banking finance numbers, geographical coverage, list of the products etc., primarily meant to impress the treasurer. And again looking at it from the other side of the table, the effect might be the opposite. Instead, the presentation should focus on the customer perspective, an obvious starting point for building a partnership. Again, put your bottle on the table and you will get invited to the party.

[1] Corporate Treasury Insights 2015
[2] TMI – The South African Treasurer 2014, ‘The Evolving Role of the Corporate Treasurer’ by Riaan Bartlett

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