Corporate Treasury17 ways treasury can improve the CFO relationship

17 ways treasury can improve the CFO relationship

What do CFOs expect of treasury and how can treasurers become trusted advisors to CFOs, in the process building better CFO relationships?

A Global Treasurer survey last year discovered that the number one opportunity and challenge for treasurers is achieving greater recognition for treasury departments. For many, that means improving the CFO relationship.

At the recent Kyriba Live 2019 event in Las Vegas, a panel discussion aimed to address this issue by discussing what CFOs expect of treasury and how treasury can become trusted advisors to CFOs. Here are the top takeaways from that discussion.

Be proactive, have a purpose and be relevant…

1. The treasury function is ever changing. Treasurers must therefore never lose sight of their purpose – because without it the function will cease to be relevant.

2. Transformation of both treasury and the organisations in which they operate is going to happen. To remain relevant treasury must take proactive action. It’s a case of transform or be transformed – and the latter is much more painful.

3. Traditionally, the CFO was the custodian of finances. The numbers they shared needed to be accurate, well documented and trustworthy, which is where treasury helped. However, for the past five to 10 years the role has evolved to be more business transformation focused. Another layer was added on top of the historical disclosure of information. So, treasurers need to ask how they can assist with this. How do they help shape tomorrow? How do I partner with the CEO and the board and find the right types of funding to pay for the next acquisition or to invest in digital initiatives? Help your CFO to answer these questions by providing the right data analytics.

4. Issues occur! When they do, be proactive. For example, if you discover there’s a problem, whatever it may be and whatever the cause (especially if it’s an external problem), make it known to the CFO. Explain that you’ve spotted the issue, you’re working on it and will keep him/her updated. It’s about building trust.

Use technology to help…

5. Technology frees up time. It helps us get payments out of the door as quickly as possible and get the payments recorded on the ledger as quickly as possible, which is important because I think CFOs just assume that side of the house is working perfectly. In order to get that side of the house to run perfectly, you need to have appropriate technology so that you can use minimal resources, because treasury is really thinly staffed. We need to get the operational part of the treasury role up and running as quickly and efficiently as possible so that we can start to look to the future to where we can really add value to the organization.

6. Time is a great asset. If you think about what you’re doing, and how transactions are coming into your organization and how you’re handling them, you need to have a bias towards automation. Constantly ask yourself ‘How can I efficiently handle all of this data without using manual processes?’ That will free up the precious commodity of time to add value to the treasury role.

Understand your CFO…

7. The gap between treasurers and CFOs depend a lot on the CFO. Don’t assume you know what your CFO’s priorities are. Ask some basic questions such as why were you hired? What was it about your experience and skill set that the CFO valued? What is the CFO needing to achieve? These priorities might not always be what you think!

8. Make a distinction between the different parts of treasury – including corporate finance, capital markets and cash operations – and go through each and look at what the expectations are. Meet these expectations with purpose and you’ll become trusted – and your CFO relationship will develop.

Align treasury activities with those of the organisation as a whole…

9. CFOs need treasury to be more strategic. At the same time, treasury can have a profound impact on an organisation by cutting fixed expenses.

10. We have a unique opportunity in treasury to create metrics that say, ‘here’s what we need to operate today’. And, as the business grows, here’s what we’ll need to operate. At the same time as we create these metrics, we’re looking at opportunities to cut expenses. By, for example, getting a better handle on bank fees we can reach out to businesses and work out ways to reduce fees, push ACHs, look at new payment types and methods. Demonstrate how you’re doing this to the CFO and they’ll really welcome the effort.

11. It doesn’t really matter what you do, but Treasury can really help itself by anticipating business needs and setting up a measurement structure with KPIs. Implementing an initiative that you’re actually going to track and monitor and report to the CEO on an ongoing basis. It’s a great way to establish that partnership and getting more into what the CFO needs.

12. Get specific by function and really make sure you understand the objectives of the CFO. You might think that your job is to minimize the spread between debt and cash or revising investment activities to boost returns. But your CFO might be more concerned with other upstream issues and what’s reported in quarterly statements such as competitor analysis, market share or even just doing what you said you would do – even if that means borrowing more than you need to! It’s super important to understand what’s driving the other side of the business – and your CFO relationship will drive forward to.

The need to be agile and opportunistic…

13. It’s when you blend treasury as a data provider and treasury as a more transactional function within the enterprise that you get your recipe for why transformation is needed – to actually be able to better align with the CFO. And remember, the CFO role is transforming itself. So, it’s a bit like getting on a flight, getting in the air and realizing you need to change the tires. Flexibility and agility are going to be key components.

14. It’s important for the treasurer to really understand the business and seize opportunities that present themselves that the CFO may not be thinking about. When you listen and understand where the business is going, you can contribute in a way that the CFO may not have even thought about. For example, by questioning what currency an overseas purchase is made in – and finding the best value deal – which you pass on to the CFO, you change the character of something and bring relevance from the treasury side.

15. You need to figure out what the CFO thinks is important and do those things. And then you also need to be doing what he or she hasn’t thought about – that will build a two-way treasurer to CFO relationship.

16. To build a better CFO relationship it’s partly about implementing the CFO priorities and partly pointing out ways you can add value.

17. Volunteer your expertise. Offer to bring in you and your team’s knowledge and skills – it will be noticed. Of course, only do it if you have time because treasury is often only noticed if something goes wrong!

Whitepapers & Resources

2021 Transaction Banking Services Survey

Banking 2021 Transaction Banking Services Survey

CGI Transaction Banking Survey 2020

CGI Transaction Banking Survey 2020

TIS Sanction Screening Survey Report

Payments TIS Sanction Screening Survey Report

Enhancing your strategic position: Digitalization in Treasury

Payments Enhancing your strategic position: Digitalization in Treasury

Netting: An Immersive Guide to Global Reconciliation

Netting: An Immersive Guide to Global Reconciliation