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The Resource for the Global Finance Profession

Enabling CFOs to See the Strategic Value of Treasury

  • By Andrew Deichler
  • Published: 2014-05-20

DALLAS -- Many CFOs are still unaware of the strategic value of treasury, members of AFP’s Treasury Advisory Group noted at their latest meeting. And because of the excessive turnover at the CFO level throughout the business world in recent years, treasury departments are striving to improve their communication with finance heads in order to demonstrate the value they bring to their organizations.

If CFOs do not understand what treasury brings to the table, new ideas are not considered, and entire companies could suffer as a result. “Some treasurers are having a really hard time getting their CFOs to buy into some really good propositions that could drive a lot of value for the company,” said one treasurer at the TAG meeting.

Gaining recognition

Tom Hunt, CTP, AFP’s Director of Treasury Services, noted that even though treasury’s status has clearly risen since the 2008-09 financial crisis, it still has trouble gaining recognition among the upper echelons of the company. “The events of the last five years and the focus on liquidity have certainly brought treasury into the limelight in some regards,” he said. “But there is this ongoing challenge of getting somebody with a controller’s hat on to understand what treasury really is.”

The treasurer responded that many of the recent challenges have not been ones that are typical for the treasury function. Instead, the problems have required innovation. “Firms are trying to implement innovative products and services and the CFOs are having a difficult time getting their heads around them,” he said.

Another treasurer at TAG noted that his company has recently undergone a shuffle across the top, though there wasn’t much of a shakeup because the moves were internal. “We’ve had different CFOs coming in from different paths—controllership versus true finance types,” he said. “So we had that shift and fortunately, both were in-house at the company so they already understood treasury’s role. Because there was continuity internally, they already knew some of the things that treasury was bringing to the table.”

Another treasurer noted that internal shifts like the aforementioned example are the “easy ones” to deal with. “We’ve seen a few CFOs be shown the door,” he said. “It’s one thing when you’re inside and you know the operation. But when you come from a different organization where there’s a completely different story, maybe in a different industry, there are unique elements to it that you have to adjust to.”

He added that many knowledgeable treasury professionals with innovative ideas are “running into a stone wall” because they’re not getting support from finance chiefs. “That’s a challenge,” he said. “They’re ready to go and they can’t get the sign-off. We’re talking about projects where there’s a tremendous payback—but it’s something that takes the CFO out of their comfort zone.

A third treasurer suggested that treasury functions should do some branding internally. It is essential to make other departments aware that treasury is not just cash management. “You have to constantly promote treasury and build power,” he said.

He explained that in his company, treasury is a “very powerful” department. “It actually has veto power on things to do. There are deliverables like currency exchange control. That’s one thing that really shakes up our CFO. He actually will not into a finance or audit committee meeting without treasury sitting next to him.”

Educating the CFO

The first treasurer suggested that AFP might want to consider reaching out to CFOs and educating them on treasury’s role. “How well do CFOs educate themselves on the strategic value of treasury?” he asked.

Given that AFP’s educational efforts generally target treasurers rather than the CFOs, another treasurer at meeting suggested that AFP train the treasurers on how to train their CFOs. “That’s what we did,” she said. “I think treasury needs to go out there and do the branding and say, ‘This is what we’ve done This is what we do.’”

Another treasurer agreed. “As treasury professionals, we need to make sure we sharpen our language,” he said.

Copyright © 2015 Association for Financial Professionals, Inc.
All rights reserved.

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