Treasury – at the front of mind for the boardroom

“A high performing Treasury can be a force multiplier for the entire organisation,” says Jonathan Denny, Director, Treasury Solutions Group, HSBC, while “a poorly performing Treasury cannot enhance or drive business performance.”

Treasury is critical to any organisation; it’s the oil that keeps the business running, the secret sauce that makes things happen. Yet a common challenge among treasury departments is how to increase their influence across the business and particularly to the C-suite. But how well does the C-suite - outside of the CFO - understand the impact and rate the Treasury function?

At a major panel session led by HSBC at the recent ACT Annual Conference held in Liverpool, the discussion focused on how treasury can build credibility and improve understanding of its function.

There are times when Treasury is front and centre of mind, such as a refinancing or M&A deal, or at times of financial stress. At these times, treasurers play a vital role in helping the full board to understand the key issues. “The treasury team is really important to making a successful deal,” says William Rix, Senior Director, Corporate Banking Origination, HSBC.” They are tasked with delivering what the board has mandated.”

It is evident that the situation is evolving. The new ACT Business of Treasury research shows an all-time high in the number of treasurers who see themselves as a strategic partner for their organisation and seven in ten (69%) indicated their board had engaged with them over business strategy.

The roles and responsibilities of today’s treasury teams are broadening which makes it even more important to be able to influence the C-suite about its strategic value and to enable investment into the future.

It is critical for treasurers to get out into the business, says Pete Towner. “Treasurers must understand the corporate strategy and the risks associated with it, which they can then take back to their treasury team and to inform your forecasting and understanding the funding that is required for the business."

You've got to get into your business units and understand your business because at the end of the day, they're the ones generating the cash ultimately for you, says Bob Williams, CFO of Fairview New Homes.

And that then needs to be communicated in a prompt and clear way to a busy CFO, he says. Keep it simple, stupid is an old adage, but it works. You have to earn the trust and respect of the CFO and board when you deliver your messages.

“Develop and maintain senior-level relationships with your banks,” says Nikki Walters, Vice President, Treasury, Wood Group. “A CFO can hold scores of equity investor and analyst meetings each year so don’t be shy in getting some bank meetings into their diary as well.”

She also emphasises that much of the treasury team’s work will go unnoticed by the rest of the organisation simply because it is being effective – such as FX hedging. But it is that very effectiveness that should be communicated.

She also recommends having a Treasury review committee as a governance tool. “This provides an opportunity for the treasury team to talk and present ideas to the CFO on a consistent basis and not just when there is a major topic to discuss.”

Her final point is for treasurers to identify others in the organisation with complementing or shared objectives.

It’s a point that is also emphasised by Sibel Sirmagul, Managing Director, UK Global Banking, Commodities & FIG Trade Finance Sales, HSBC. “Treasurers are developing partnerships with other parts of their organizations,” she says. “One example is with procurement teams, where they are working together on issues such as cashflow forecasting, ESG agenda or potential supply chain disruption. Treasurers sit in the centre and by connecting the dots within their corporation, they are helping to build a more resilient and successful operation.”

“Treasurers are always looking forward,” says Jonathan Denny, “and a high-performance Treasury team is a huge benefit for the entire business.”