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Study: Treasury’s Role is Expanding, Transcending

  • By Andrew Deichler
  • Published: 2012-12-20

The following story was one of the most read articles of 2012, as determined by you, the AFP members.

A new report from AFP’s Corporate Treasurers Council (CTC) reaffirms trends observed during the 2011 Strategic Role of Treasury Survey: treasury is growing in importance within the organization, and is transcending its traditional functions.

Between January and February of 2012, AFP interviewed a number of executive-level treasury and finance professionals on treasury’s role in the current business environment. Information also was collected at several roundtables for the CTC and the Society of Canadian Treasurers (SCT). Members agreed with the majority of survey respondents, who concluded that treasury is playing a more strategic role within the organization than it did five years ago (80 percent), and that the role is expanding (84 percent).

Executives also agreed with most respondents that core treasury activities such as liquidity management and cash management are growing in importance, and that senior management and the board are demanding greater visibility into liquidity. Referring to previous AFP studies from 2011 and 2012, Craig Martin, Executive Director, Corporate Treasurers Council, said, “What we found in the Liquidity Survey, the Risk Survey and the Strategic Role of Treasury Survey, is that liquidity is still at the top of the list in terms of companies’ priorities and therefore, treasury.”

Treasury’s core competencies are becoming more critical to organizations, executives say, and this has lead to treasurers moving directly into operations. Treasurers are becoming directly involved in many activities, such as contract negotiation, legal-entity structuring, enterprise risk management, working capital management, and more.

Nilly Essaides, the author of the report, noted that it was important to get the perspective of executive-level treasury and finance professionals because they can provide a much broader perspective of treasury’s role. “They are the ones truly involved in some of the higher-level functions, such as M&A, procurement, etc. A lot of them are the ones, personally, sitting in on ERM meetings and contract negotiations. So they play a critical role in the various non-traditional areas that treasury gets involved in,” she said.

But it is not all smooth sailing for treasury, as departments still face tough challenges managing the various problems in the global markets today, as well as limited time and resources. Due to increasing demand, treasury departments are looking for cost-effective ways to automate traditional activities to free up the staff to do more value-added activities. “There are many opportunities for treasury to add even more value to the organization as business grows,” said Martin. “It will become even more incumbent for treasury to do more and it will require more resources if companies expand globally.”

View the full report, Research Perspectives: Strategic Insight in AFP Survey Results, on the CTC Essentials site here.

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