Why Corporates Should Never Underestimate the Role of the Treasurer

Or why they need lots of love….

With a growing number of subjects which require their expertise, the role of the Treasurer is gaining higher visibility and becoming more in demand across corporate organisations. This was originally sparked by the financial crisis of 2008-9, but in the light of Brexit, it will become important to a new audience; possible shifts in business policy in the USA and Europe as well as increasing size, variety and complexity of M&A deals taking place across the developed world.

Changes in the types of finance being used by corporates with shifts away from traditional loan facilities towards either Asset Back Lending (”ABL”) such as Factoring, or new Fintech style produces such as ‘Supply Chain Finance’ as well as demands being placed by stakeholders to maximise working capital from the existing balance sheet all indicate a growing new area where treasury professionals are likely to be needed.  Facilities such as ABL have grown considerably in usage since 2009 but require close active management if they are to be maximised, this article by PWC sees this as a growing part of the Treasury ‘toolkit’.


It highlights research commissioned AIG and Prime Revenue that suggests some GBP29bn of working capital is ‘trapped’ in the UK economy – the chances are some of it belongs to businesses of this blog’s readers!!


Many banks are re-evaluating their customer relationships, either for whole product suites (such as RBS existing international cash management) or individual customer relationships where lending alone doesn’t justify the capital costs of maintaining certain relationships; the role of the Treasurer is to have close contact with current and potential partners, to know their organisational limitations, to help the relationship bankers to stay as partners, and to identify where banks may be reconsidering those relationships. Deutsche, HSBC, Barclays and Standard Chartered among others have all recently announced strategies to exit certain countries reduce clients and implement simplicity and efficiency initiatives which usually mean a shift in the customer proposition.  The DB press release is a good example, but faced with this the Treasurer may need an action plan that can bring in replacements should the unexpected happen.


Treasury has overlaps with nearly all aspects of their colleagues in other corporate departments, which is a key factor in their ability to influence working capital areas such as days payable outstanding (DPO); days sales outstanding (DSO) and days inventory outstanding (DIO); by educating colleagues, gathering data and building strategies, they can impact the cash implications of how these metrics and directly influence the liquidity available to the business from every existing £ / € or $ of operational purchase or sales.

TMI Magazine recently published an article from Standard Chartered Bank which is in no doubt about the importance of Treasury in the maximisation of working capital, not least because debt is less available and cash more restrictively controlled in many parts of the world. http://www.treasury-management.com/article/4/276/2321/working-capital-management-new-challenges-and-opportunities.html

With more pronounced foreign exchange volatilities likely to be with us for several years, there is also an increase in the role for Treasurers to provide as much knowledge about currency impacts to the CEO, CFO and major stakeholders in order to protect the profitability of the business.

The art of cash forecasting, (much of which is still non-automated) serves to identify the various actions needed to maintain and increase liquidity; a good forecast will highlight areas of working capital need and then provide measurements to highlight how successful those actions are as well as pinpointing critical ‘timing’ issues between inflows and outflows enabling management to take corrective actions.

As a treasurer, I remain convinced that the treasury function has a critical role to play in influencing all aspects of corporate finance, whether it be how a business is funded, how its operations use cash, how international trade drives risk that needs to be managed, and ultimately how banks are kept happy in their desire to work with a particular business.  However in order to do this the Treasurer needs to be part banker, part financial reporting, part sales, part procurement, part asset management and part diplomat, which is one of the things that makes this such a rewarding area of business to develop a career.