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Yes, treasury is more vital than ever to company strategy

Confirmation comes from the latest corporate treasury survey by the Association for Financial Professionals (AFP), which found that four out of five treasurers say they now play a more strategic role in their organisations.

It's not just that the traditional treasury areas of responsibility, from payments to cash management, are becoming more critical to the financial and strategic health of companies, but corporate treasurers are also taking on a far wider range of responsibilities than in the past. As a result their sphere of influence is expanding to investor relations, insurance risk management, integrating supply chain management and real estate, according to the Strategic Role of Treasury Survey, supported by Marsh & McLennan. The survey polled about 350 treasury and finance professionals. Its main findings include:

  • 80 per cent of respondents said that over the past three years, treasury has played a more strategic role in their organisations;
  • 80 per cent said the role of the treasury function will continue to grow and become even more strategic.
  • 73 per cent of respondents cite the close attention paid by senior leadership and the board to their organisation’s liquidity and risk exposure as the primary reason why treasury plays a more strategic role today;
  • 64 per cent cite cash management and forecasting as key areas of focus for their treasury departments over the next three years;
  • 63 per cent measure treasury’s success by its ability to reduce borrowing costs, while 62 per cent gauge the function’s performance by its ability to achieve liquidity targets;
  • 53 per cent of treasury leaders agrees that treasury is making very effective use of technology to manage risk and increase treasury’s contribution to the overall organization; and
  • over 90 per cent of respondents view soft skills such as communication and business judgment critical for an effective treasury team.

AFP president Jim Kaitz said: “With the extreme uncertainty and volatility in the economy, senior executives and boards increasingly demand more actionable insights from treasurers, at a faster rate than ever before, and treasurers have stepped up to the challenge. It’s up to treasurers to maintain their focus on liquidity management, forecasting and financial risk management, while also fulfilling a broader mandate to serve as strategic advisors to their organizations.”

The survey shed some light on the key areas of concern for corporate treasurers, which include loss of customers/revenue and currency/volatility risk, as shown in the AFP's graph below:

The survey also some insight into how treasury measures its own success and which metrics are most commonly used. The AFP's graph below shows borrowing and liquidity targets are the two most important activity-based metrics for corporate treasurers in the US.


CTMfile take: This survey confirms what we already knew about treasury: corporate directors are increasingly looking to their treasurers to provide hard data on cash positions, forecasts and risk exposures, which are of critical importance in the current volatile business environment.


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Best Practices & Benchmarking in Operations

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