What do CFOs look for in their treasurers? We asked them, and this is what they said:
If there is one thing that CFOs are craving right now, it’s the security that a well-organised balance sheet can offer. Chris Astle, CFO of US biotech group Zymeworks, says: “Given these extremely turbulent markets where capital is extremely challenging to access and security threats are greater than ever, my number one priority is security over our cash.
“With higher than usual staff turnover – have we updated access to bank accounts, approval pathways over expenditure, are we keeping on top of vetting vendors, how concentrated is the cash (spread over which banks)?
“Finally, with low rates it is tempting to seek out higher rates, which comes with longer lock-in time periods, but with volatile business conditions I foresee rapid access to capital and forgoing the higher rates offered by longer-term deposits. In many ways, it’s back to basics,” he says.
Peter Williams, former CFO of Selfridges and now chairman of opticians Mister Spex, says: “I look for safety in a treasurer. The activity of the business is where risks are taken and while you can profit from the treasury function you should not put the business in danger.”
Being able to make good decisions based on sound evidence is another desired attribute that CFOs seek in treasurers. In an uncertain business environment, being decisive could prove vital when strategy needs to change quickly.
Mike Clark, VP Finance Strategy & Transformation at drinks giant Coca-Cola Europacific Partners, says: “When treasurers are making decisions, you want the decisions to be based on the right information. So, you don't want your cost of capital or your discount rate to be incorrect.
“You don't want that because otherwise you're making potentially the wrong decision. On the other hand, you don't want to change it frequently because that will confuse the business and shareholders. If what your shareholders are expecting is reasonably consistent, and what you're paying for debt is consistent, it provides a stable environment upon which to make long-term business decisions.
“If you need to make a significant capital investment, that means you're going to need to leverage; you are going to do that more confidently. In essence, you want a stable playing field for the business to operate on and for making long-term investment decisions as a result.”
Given challenges thrust at business leaders by the pandemic, and the uncertain landscape ahead, communication between the CFO and treasury has never been more important, according to many CFOs.
In a global report last year, HSBC said the vast majority (80%) of CFOs overall believe that dialogue with the executive committee/C-suite has become more important during this period. “However, our data also shows that there is a large gap between CFOs and treasurers in terms of their view of the importance of these open lines of communication. Only 45% of treasurers surveyed, overall, say that dialogue with the C-suite has become a more important part of treasury operations in the past three years, significantly below the 80% of CFOs who say the same. This suggests that, while progress has been made, treasurers must continue to actively seek this dialogue as part of their enhanced strategic profile.”
It may seem obvious that treasurers know their organisations inside out, but many could still benefit from going out and ‘kicking the tyres’.
Coca-Cola Europacific Partners’ Clark says: “You want a treasurer to be as much as possible a businessperson who is looking at the benefits of treasury conveyed from a business perspective as opposed to just delivering what the business is asking for.
“It’s not a necessity, but if you want to be at the top end of treasurers, you need to do that. Even if you stick to treasury, you're a better treasurer if you master a broader range of skills and have a good understanding of the business.
“That can mean going out with the field sales team, visit factories or understand when they look at the capex flow, they understand why it's being spent,” adds Clark.
In order to achieve all of the above, treasurers may be required to ensure their functions are better resourced. Almost two-thirds (64%) of CFOs polled in last year’s HSBC report said there has been an increase in resources, in terms of employees and technology, made available to their treasury department in the past three years. But, to weather the storm ahead, CFOs may require an even better treasury, with greater resources.
Lawrie Holmes is a freelance business journalist
