The Role of Today's Corporate Treasurer

The Role of the Treasurer in Terms of Maximizing Peak Operating Efficiency

  • Redefine, pursue and realize the company's strategic advantages
  • Provide the best decision-making tools to successfully manage the entire operation
  • Optimize the use of corporate cash, not just in terms of bank accounts allocation but also its flow throughout corporate processes
  • Connect disparate systems into one to achieve a lean, accurate and cost-efficient operation

 


The Day-to-Day Role of the Treasurer

  • Classic cash management
  • Financial risk management
  • Currency risk
  • Interest-, credit-, financing risks
  • Capital market transactions

 

Overall Role of the Treasurer

  • Operational tasks
  • Liquidity management and forecasting
  • Payment processing
  • Treasury policy
  • Management of bank relationships (correspondent banking)
  • Implementation of new financial products just in time
  • Handling of financial guarantees, such as pre-payment and delivery-on-time guarantees
  • Comprehensive tax- and optimization of all group-internal finances and cash flows

 

Areas of Responsibility

Payment Processing

Payment processing has become easier due to new standards, the Euro and TARGET, the European cross-border payment system for Euro payments.

 

Evaluation if to Consolidate

Reinvoicing Center

Many companies consider centralizing payment processing and debit management in a subsidiary in the form of a Reinvoicing Center. 

Shared Service Center

If the reinvoicing center conducts additional operations such as financing, invoicing or other repetitive treasury activities, it becomes a Shared Service Center (SSC).

 

Evaluation if to Outsource

  • Drawback: Know-how gets lost
  • Outsource only recurring tasks such as liquidity planning, reporting, and standardized workflows
  • The treasurer retains the responsibility for financing, hedging strategies etc.
  • The outsourcing evaluation requires a detailed analysis by a specialist.

 

Implementation of IT Solutions

  • The treasurer must eliminate the need for manual payment processes wherever possible as they produce a high error rate, are costly and not scalable.
  • Business process re-engineering
  • Execution of financial transitions as well as Internet and Intranet solutions via high-capacity Treasury systems promise increased efficiency and cost reductions.
  • Online access to all relevant data for reporting and planning simplify and speed up liquidity planning, foreign exchange and bank credit management, netting and pooling.
  • Ideally, the results are time- and cost savings from simplifications and automation.

 

Bank Relationships

  • Financing in international capital markets
  • Bank credits for operations management only
  • Facilitates longer term credits at lower cost
  • The classic credit operations of banks lose importance
  • Investment banking keeps growing

 

Risk Management

  • The increased capital-market competency of companies requires in-depth understanding of company strategies and financial markets.
  • In-depth understanding of public relations and information requirements to banks and/or rating agencies is important as these are often the treasurer's responsibility.

 

Risk Management's Requirements to Comply to the Law

  • Requirements vary from country to country and change over time. Therefore, it is imperative that the treasurer obtains latest information on requirements and ensures compliance.

 

New Products by International Insurance Companies

  • Alternative risk transfer (ART) offer comprehensive risk management that involves financial as well as operational risks.
  • Requires a broad knowledge of the growing ART market

 

To Be Successful, a Treasurer Must:

  • Understand the company's business model including the tax and legal structure, customers and suppliers
  • Develop creative solutions that maintain control and visibility over the cash that is generated and or used in each department
  • Maximize value to the organization by accelerating the flow in Account Receivables and Account Payables
  • Learn how to leverage new technology
  • Ensure that the entire team is thoroughly trained in using the new technology.

 

This list of the treasurer's role is by no means complete. However, it offers a good overview and invites a comparison between the list and the actual activities in any treasury department.
Sources:

Financial Flow Management: Mehr Rendite durch aktives Steuern der Geldflüsse.
Martin Schneider, KMU Magazin März 2003 und GT-News 9. April

Receivable Management by Maria D'Alessandro, GT-News 25. Februar 2004 Die neue Rolle des Treasurer: Vom Liquiditätsmanagement zur Steuerungsverantwortung für die unternehmensweiten Finanzbereiche. Finanz und Wirtschaft: 20.02.2002, Ausgabe 14, Seite 28, Rubrik: PODIUM

Ceran, Jennifer: The Role of Today's Corporate Treasurer in Cash Management. The Euromoney International Cash Management Handbook 2001/02