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Treasury’s Strategic Role: Growing, and Fast

  • By Andrew Deichler
  • Published: 5/30/2017

During two separate forums within a couple weeks of each other, multiple treasury professionals reflected on the different ways their responsibilities have expanded in recent years. It was likely obvious to anyone present as to why the 2017 AFP Strategic Role of Treasury Survey found that treasury is playing a more central role in corporate decision-making.

Why treasury is becoming more strategic

Speaking at a panel session at the 2017 AFP Executive Forum, Johan Nystedt, vice president, treasury for IR Conagra Brands, discussed the reasons why so many organizations are looking to treasury to have a hand in other functions like risk, insurance, tax, real estate and acquisitions. “Treasury professionals tend to be quite good at quantifying what others find hard to measure,” he said. “In many ways, that’s our job. We are practical enough—we can get to some type of answer. And we tend to know enough about all the fancy macroeconomics to put some meat to the bone.”

Additionally, treasury tends to already have connectivity across the organization, Nystedt continued. “It has connectivity at the board level, but also on an operational level,” he said. “We deal with cash and that type of risk, so we have to know what going on at the top, but also operationally.”

Brian Begg, vice president and treasurer for WESCO International, agreed. “You as a treasurer have a unique perspective; you have the cash side of it but you also have insights into how the business works,” he said. “You have the insights to forge opportunities and those opportunities can become a source of revenue for your company.”

When he first started at WESCO, Begg made it a point to be involved with the entire business, which his CEO encouraged. “He connected me immediately with our equipment head; that gentleman runs all of our U.S. businesses,” he said. “So I get a seat at the table because we’ve built a relationship almost for nine years.”

Joel Campbell, vice president, treasurer and chief risk officer (CRO) for H&R Block, also works in an advisory capacity to other departments, providing them with a broader view of the organization. But that’s not a responsibility that treasurers can afford to take lightly. “The more you work across the organization, people will start to gravitate towards you,” he said. “So you’d better have answers for them.”

New responsibilities

At the tail end of the latest AFP Treasury Advisory Group meeting in Nashville, practitioners went around the room and listed the various responsibilities they’ve taken on. It was quite a variety.

One area that treasurers have become much more involved in is pension and retirement plans. “Principally, we have the investment of the pension plans, as well as the 401K programs that have been put in place,” said one assistant treasurer. “We also manage the investment hedge on the deferred compensation program.”

Treasurers have also become more involved in risk management than ever before, and one way of mitigating risk is through insurance. A practitioner revealed that he is on the board of his organization’s captive insurance company. “I attend all of the meetings just to make sure we have a treasury perspective and input into that,” he said.

However, some practitioners are not certain that nonfinancial insurance should necessarily be treasury’s responsibility. “At my former company, insurance was under the treasurer,” said a treasurer for a nonprofit organization. “But it’s one thing to buy the insurance. What happens when you get the call Sunday night that something happened? No treasury knows what to do next.”

As we all know, many treasurers aspire to be the CFO. However, some practitioners are already overseeing areas that the CFO typically would. “Our treasurer has responsibilities including FP&A, investor relations, standard corporate finance, equity programs, capital structure planning and support for mergers and acquisitions,” said the assistant treasurer.

For good or ill, treasury professionals are victims of their own success. They will continue to have more responsibilities thrust upon them, because senior leadership knows they are up to the task. “It just seems like now, treasury is going to go out and mow everybody’s lawn and change everybody’s oil,” said another treasurer. “We’re a very capable group overall in treasury. We get thrown all sorts of things, but we’ll see what happens.”

Branch out—or else

As for the future, Nystedt painted a grim outlook at the Executive Forum. As we see more and more, traditional treasury responsibilities are becoming increasingly automated. Thus treasury professionals should always strive to do what they can at the least possible cost, he said.

If the bulk of treasury’s work ultimately becomes handled by computers, then the treasurers who will survive will be the ones who have cemented themselves as critical pieces in the decision-making process. “In the future, it’s going to be less of us being treasury professionals and more of us being partners to the business,” Nystedt said.

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