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What is the aim, the purpose of a strategic corporate treasury department?To change the firm….

Greenwich Associates recent survey on the changing drivers in the corporate treasury department, Forward and Upward: Changing KPIs Force Treasurers to Improve, neatly defined what the corporate treasury department does:

Corporate treasury is the guardian and anchor of the financial health of the corporation.

So, we could say the corporate treasurer’s job is to be “the guardian and anchor of the financial health of the corporation.”

This is the job of the corporate treasurer, but what is the purpose of the corporate treasury department. In our post on the purpose of the corporate treasury department, see, we suggested that the purpose of corporate treasury is to: “To ensure the survival of the company sustainably.” Bruce Lynn queried the need to be sustainable, see.

What is a strategic corporate treasury department?

In their CTMfile post on 11 March - see, StrategicTreasurer wrote that are three ways that treasury can #GoStrategic in 2020 and beyond: 

  1. A Cadence for Planning
  2. Systematic Streamlining 
  3. Relentless Discipline.

Some commentators felt rather than being strategic, this is a rather mechanistic, efficiency-driven approach, e.g.: Nick Franck in his comment on LinkedIn on StrategicTreasurer’s post said:

    • There used to be a time when becoming ‘strategic’ was aspirational. This article suggests that doing the same work, with less, in a more automated way, is strategic.
    • Sad. I think they’re wrong, of course.
    • In most companies, treasury resources can be used to add value to procurement and sales contracts. Excess/short-term cash can be used intelligently to finance (strategic) business suppliers and customers.
    • If you’re a Facebook or Google, excess cash can be used to create completely new businesses. This is ‘strategic!”

In the Greenwich Associates’ survey, they found that “Corporate treasury departments are now seen as centres of analytic excellence and are being asked to play a role in transforming as well as securing the firm.” In other words, corporate treasury departments are moving from just running the firm to changing the firm. That is what being strategic corporate treasury is about: changing the firm, opening up new opportunities, e.g. by using a new payment system to open up a new market, releasing trapped cash to pay down borrowing or open up new markets as Nick wrote.

CTMfile take: Moving corporate treasury from being efficient to being strategic and opening up new business opportunities or solving business problems is not easy…. But it is where the focus is in many corporate treasury departments today.


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