“Treasury is never effective when it acts in an insular manner–disconnected from the organization’s business. Treasury needs to be proactive in seeking to help the organization fulfill its mission and to help specific departments achieve their goals efficiently and thoughtfully”, says Craig Jeffery, Managing Partner of Strategic Treasurer, in the first chapter of The Strategic Treasurer: A Partnership for Corporate Growth.* “Treasury brings a unique set of skills to the organization, skills that need to be brought to the table and put to use.”

This idea is echoed in a recent article from The Treasurer, the official magazine of the Association of Corporate Treasurers (ACT). Citing the ACT’s 2022 research, the article argues that treasury is now being expected to carry out a more strategic role and should embrace this. “According to this year’s Business of Treasury report from the Association of Corporate Treasurers (ACT), treasury professionals are providing more and more input on strategy rather than simply responding to events. To do that effectively, they need traction with their banks and other external stakeholders such as credit rating agencies, as well as within their own organisations.”

In 2022, treasurers were presented with impactful events and concerns that have shown little sign of abating. Treasurers are considered as the stewards of an organization’s financial risk management and are well-placed for managing risks, but given that they face a full agenda of priorities and challenges, responding to business needs and optimising their corporation’s cash and liquidity position will require them to not only focus on real-time visibility over cash flow and financial data, but also on enhancing their presence and visibility across all levels of the organization.

Growing influence of treasurers: need to continue with strategy-defining prominence

Earlier this year, we discussed the Business of Treasury report from the ACT. It shows that now, while treasurers’ skills and expertise have long been in demand, “treasury professionals are providing more and more input on strategy rather than simply responding to events.”

Source: ACT survey, Business of Treasury 2022 report

“We can now say with confidence that treasurers have become more influential as a result of the pandemic. For the first time in nine years treasurers are weighing in more on defining strategy rather than just providing information to contribute to it”, the report states.

It appears that there has been a real shift that has helped treasury transition from reactive to proactive and take on the role as adviser to the board.

With boards, CEOs and CFOs showing greater interest in capital and liquidity management, corporate and business strategy, and risk management compared with previous years, it is an opportune moment to bring out the potential of treasury’s expertise, skills and perspectives in boardroom and upper management discussions. To do so, treasury must develop meaningful and sustainable relationships with the C-suite and the board as well as provide more support on critical areas such as cash flow, payments, cybersecurity and risk management.

Build strong internal connections at all organizational levels

Access to real-time inflow of data into treasury is crucial, as it helps treasurers focus on cash optimisation and effective working capital management. Being able to garner information from employees across the business is equally important.

This is best achieved by building strong internal connections throughout the organisation, which involves moving beyond the C-suite, the divisional heads and the board and reaching out to people at all levels to gather their perspectives and inputs.

“Treasury teams are often quite naturally external facing, but internal relationship building often requires little more than a willingness to be curious about other areas of the business and to conduct open conversations”, notes the article. As one potential first step, it recommends setting up meetings with others across the organization with the clear and simple goal of “understanding each other’s roles better.”

Treasurers who are deeply connected within their companies and can elicit staff insights through organisation-wide employee interactions will not only harness collective employee expertise and knowledge, but will also gather business intelligence, helping treasury to fulfil its role as a strategic partner.

While engaging with suppliers, banks and credit rating agencies is essential for the smooth functioning of the corporate treasury, internal networking can uncover vital insights to help treasurers drive financial conversations. Boosting their visibility within the organizations they serve gives treasurers the information, influence and positioning to proactively help their companies.

This is especially vital in times of volatility. Quoting Alexandra Lewis, group treasurer at National Grid, the ACT articles says, “When things are just handle-turning and business as usual, it’s much less of an issue. But when there is some turmoil in the financial markets and there’s lots of change happening, which could impact you in ways you don’t realise, treasury has to be one of the people at the table”.

Conclusion

In light of the challenges that corporate treasurers will have to face in 2023, it is imperative for them to improve their internal and external networking and act as a partner to the company. “Now more than ever, treasurers’ close relationships across the business and with external contacts will stand them in good stead”, advises Loxton.

Developing professional ties with external and internal stakeholders will help treasurers keep their finger on the pulse during times of uncertainty and aid in building transparency and risk resilience throughout a period of economic downturn. It will also help in leveraging conversational intelligence and actionable insights to make better decisions for the business as a whole.

*Disclaimer: Strategic Treasurer owns CTMfile.