Treasurer Spotlight10 Minutes With The TreasuryAligning corporate values for treasury success

Aligning corporate values for treasury success

At the Kyriba Live event in London earlier this month, we spoke to Ilona Roodt, Financial Director at the South Africa-based Trust for Urban Housing Finance Group, to get her very interesting take on how corporate values need to be aligned across the organization, treasury technology and HR if the treasury function is to thrive.

Please tell us more about your background and your role at the Urban Housing Finance Group (UHFG).

“The interesting thing is that I’m not a treasurer at all. I’m actually a chartered accountant through qualification, working in a private, non-banking financial services organization in South Africa. We started UHFG about 16 years ago, and a lot of the funding initially came from development finance institutions locally, such as development banks or National Housing Finance Corp, offering 15- or 20-year money. As we grew, we became larger than a lot of our funding organizations, which forced us to start thinking about restructuring.

“Our original parent company is a nonprofit, which obviously limits us from raising capital, while being in the public space forced us to come up with better ways to raise capital more cheaply and sustainably. That led us to introduce similar concepts to Basel, covering capital adequacy ratios and minimum debt to capital ratios to try and manage the business.

“As the organization has grown, we’ve had to evolve the wider finance function – and the treasury function in line with it. That’s not unusual – being able to manage the business off Excel spreadsheets has its limits, so we started to look at more sophisticated ways of managing risk and projections. We opted to work with Kyriba, who have helped us to automate all of our debt placements, for example.”

How are you utilizing technology to help you in this evolving treasury function?

“Moving away from longer term debt through the acquisition of more debt has created complexities around cash flow, ring-fencing, securitization and so on. This has necessitated us not relying on the human brain but being able to print out and present to our assets and liabilities committee and our board, information that makes sense and is understandable. That has been the single biggest use of the system.

“From my perspective, we’re not using a significant amount of the system at our disposal. I think there’s huge scope to explore, such as integrating our cash positions and look at bringing payments into the system as well. Currently we just use the debt and risk management modules.

“We work with the local service provider in South Africa called Treasury One. They’ve been incredibly patient with us in terms of understanding our business and just helping us. It’s been a project that has incrementally evolved over time. It’s taken about six years to get to the point that we’re at now.”

Do you think that approach has helped?

“It has, in a way, because as the business has changed, we’ve been able to move with the business rather than develop a whole load of things or try to integrate too many systems at the same time. However, I think we’re at a point now where we need to recruit a treasury specialist to take ownership and bring skills in-house. We’re on the cusp of bringing more in-house focus to the role. The building blocks are there, but we still need to have that specialist knowledge and focus.”

Is it a case then of finding a balance between being a strategic part of the finance function, but also having the specialisms of treasury?

“The dark skills, such as maths and being able to model data is vitally important. You need to be able to move quickly on your feet, rather than having meetings every couple of months. I think there’s a danger where you have the processes in place to produce reports, but not the skills to progress the role further. I think we’ve reached that point now.”

When you’re recruiting a treasurer, do you think the skills required today are very different to what they were five or ten years ago?

“I would say the knowledge of treasury and the technical knowledge is certainly a big component of what’s required today. The way the capital markets are evolving, is changing. I think securitization transactions, for example, are very, very specialized.

“We’ve had some high caliber candidates from the bigger banks with great CVs, but because that nuance of the role and specialization within treasury isn’t in there, they’re not suitable. It becomes such a small, core field, it’s difficult. I think you end up with a trade-off between the right character and the sort of person that’s going to fit into the business culture, knowing that they can gain some of those skills in time.”

Do you think the recruit has to fit with your chosen treasury platform?

“That’s a difficult one. I think if you’re in a multi-disciplinary organization, the high business performance culture has to translate into the system culture and the technology you choose. It’s about partnering as well. If you know your values, and you seek partners to partner with you that bring similar values, I think the alignment will happen naturally.

“Change, transformation, whatever you want to call it, is complex. And of course, the ease of change and the processes involved are very different from organization to organization. The big banks and corporate environment make it tougher to drive meaningful change than in a smaller, more entrepreneurial environment.

“Our success in driving the customer value proposition comes down, in so many ways, to aligning what funders want – the particular impact and/or return – we can look to the way we engage with them. And similarly, with our clients, if we can manage to understand what their needs are, we can integrate our services and align the way staff deal with those different propositions.

“And from a stakeholder relationship point of view, understanding what those nuances are, enable us to build those relationships. We’ve got one of the larger Asset Management organizations as a shareholder. When the financial crisis hit, they were a tremendous support because we had a strong track record of working together. Alignment of values is very important.”

With that in mind, for organizations of all types and sizes looking at technology platforms like Kyriba, what would you suggest they do when going through their procurement journey?

“I would say don’t limit yourself. Look at what the offering is, because I see a huge potential for us to expand what we use the system for. We’re busy with a business architecture and process review now, and I think the potential of what the system can do is huge. I just think you need an open mind in terms of what could be.”

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