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Why FP&A and Treasury Need to Collaborate

  • By Staff Writers
  • Published: 2/17/2016

andschertzAFP recently spoke with Dr. Andreas Schertzinger, head reinsurance FP&A, managing director, Swiss Re, on why FP&A and treasury need to collaborate.

AFP: Why is it so important for FP&A and treasury to collaborate? Can't you just order a counterpart to give you the data that you need?

Finance should be a strategic adviser to the CEO. One of the key tasks is that they truly drive performance. And especially for a balance sheet-driven business, having FP&A and treasury to collaborate on that is obviously very important.

Only FP&A and treasury together can advise on key trade-off decisions executive management may need to take—shall we do leverage, shall we pay extra dividends, shall we invest, or can we do a combination of those things and to what extent? And there are other examples, such as when you want to truly steer the balance sheet, you're going to make sure the business understands how their decisions impact balance sheets and, therefore, integrating balance sheet matters, liquidity, capital, funding into frontline decisions, into their performance metrics, into the transparency we provide, but also into planning, if you will, is very important. So I think there are many, many good examples why there's true value in the collaboration.

AFP: So, how much of this partnership is data-based and how much of it is simple persuasion and understanding of human behavior?

So, sharing data, sharing objectives, organizational choices you can make are technical prerequisites, right? For the collaboration to really work, a few things are especially important.  The first one is that the case for collaboration must be clearly understood—the value of the collaboration, how the teams jointly drive performance. So, the groups obviously need to understand it and enforce it, line management needs to understand how it helps them achieve their objectives and how they can interweave the teams so they work together.

Secondly, a good starting point I experienced was to simply do projects together. Say there is a performance initiative you're running where you want to increase performance of a certain business, so how do we want to position ourselves in the next three to five years? Mix in balance sheet effects, mix in treasury topics and that creates an opportunity for the teams to experience each other and also gain mutual respect.

Three, what you can also do is you can establish common data warehouses—other common infrastructure planning systems that would look at both perspectives—and then ultimately embed them into the corporate governance. So establish working teams, but then on a more senior management level, have committees with representatives of the two functions, so to make more holistic decisions.  

The people, even the juniors in the team, must understand when is the time to ask a question to treasury and to pick up the phone and call and vice versa. So, once that is achieved, I think we're there.

AFP: Looking back to when you started in treasury and finance, if you can give your younger self one piece of advice, what would it be?

One piece of advice? Well, I'd say one piece of advice I would give my younger self is work cross-functional where possible. And I would say this is well beyond finance. If there is a business project, try to get staff on the project and then not only do the numbers, really do work on the business side of it. And with that, in my experience you get two things. One is a much deeper understanding of how the business works, how really the frontline thinks. And secondly, simply much accelerated personal growth.

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