Like it or not, the treasury function is constantly evolving. Major regulatory updates, a plethora of emerging risks and revolutionary fintech solutions are constantly pushing treasury teams to adapt and adopt new ways of working. Unfortunately, fast-paced, reactionary change isn’t always well-received at the C-level – which is one reason why the relationship between the CFO and corporate treasurer often tends to sour quite quickly.
No one disputes the critical contributions of an organisation’s treasury team, but trust is definitely an issue from a CFO’s point of view.
According to a recent Risk Management Survey conducted by HSBC, 87% of CFOs say their treasury function plays a key role in strategic decision-making. But on the flip-side, only 58% of those same CFOs told researchers they had complete confidence their treasury departments had all the skills necessary in order to meet the needs of this role. That means just under half of all CFOs seem to lack faith in the abilities of their respective treasurers – despite relying upon those individuals to help guide their corporate strategy and steer enterprise-wide processes.
The good news here is that treasurers are a lot more skilled and knowledgeable than CFOs often realise. More important still, research indicates both treasurers and CFOs generally appear to share the same values, ideas and concerns in relation to risk management and business development. Yet in order to address those concerns and move forward, treasury teams must first learn to better collaborate and build trust with their CFOs – and while that sounds a little easier said than done, there are actually plenty of ways treasurers can influence their CFOs in order to bridge gaps, improve relationships and cultivate new growth opportunities.
It’s time to get proactive
Everybody likes to think that an entire organisation revolves around their own department alone, but let’s face facts: CFOs are strapped for time and under a lot of pressure. It’s their responsibility to soak up vast amounts of complex information and then subsequently translate that to a board in order to generate bold, actionable business decisions. That unforgiving task is absolutely impossible without the help of a formidable treasury team – but the fact of the matter is that CFOs need treasurers to produce more for less. That’s not necessarily a bad thing.
In order to support a CFO and prove one’s ability to support and guide an organisation through waves of uncertainty, treasurers must assume the role of both risk manager and strategic analyst. CFOs want to know they can rely on treasury to protect their organisation from emerging risks and cut fixed expenses, which means treasurers must work to demonstrate their ability to be substantially more proactive and forward thinking.
Treasury has experienced a phenomenal transition in recent years from the keeper of historical disclosures to a driver of transformation and institutional change. Bearing that in mind, it’s often the treasury function which is better positioned to investigate and answer questions about how to fund new acquisitions, invest in digital products or leverage cash positions to consolidate an organisation’s foothold in a particular market using cold, hard analytics. Unfortunately, many CFOs don’t think (or don’t even know) to ask treasurers for that sort of information.
The solution for treasurers here is to bring that information forward without prompting. Don’t wait to be asked for an opinion – and if issues occur, make it known to the CFO as soon as possible. Treasurers should be able to clearly and concisely explain an issue, how it was spotted and how their team plans to tackle the problem. After all, proactivity is absolutely worthless without proper lines of communication.
That’s why another key element of building a CFO’s trust is to develop a mutually agreed regularity of contact. This could include a formal programme of recurring actions and meetings to agree on agendas and draft papers, as well as the critical pathways that both parties will be able to utilise in order to advance decisions and meet mutual goals. By agreeing all of these parameters for working together and communication preferences in advance, CFOs will then be able to rest easy knowing their treasury function is working efficiently and proactively without constant supervision or hounding.
It takes two
Above all else, treasurers hoping to gain influence have got to develop and exhibit more flexible policies and agreed parameters around various processes with strong KPIs that can regularly be reviewed and altered in order to meet shifting CFO priorities. Yet when it comes to managing the working relationship between a CFO and treasurer, there’s an inherent requirement for flexibility on both sides.
After all, it takes two to tango – and the strategic role and core responsibilities of a CFO can often evolve just as quickly.
That’s why treasurers must sometimes exercise agility and be more opportunistic when it comes to stepping in and exerting a bit more influence at the C-level. CFOs are desperate for pre-emptive assistance and support, and they’re more flexible around process and more willing to listen than treasurers may often expect. That being said, it’s up to treasurers to spot any existing gaps in support and provide CFOs with a trusted pair of eyes.
Simply put, the best way to understand what a CFO is looking for and proactively carve out a more expansive role for treasury is to find out exactly what it is a CFO is looking for in this relationship. There should be no assumptions where priorities are concerned, and so treasurers should be regularly asking basic questions about core business values, horizon scanning and goals for the future.
Likewise, practitioners should sit down with their CFO on a semi-regular basis in order to ensure the C-level comprehends the distinction between each treasury function and can offer insights as to their expectations for each area. By understanding a CFO’s expectations within each area, meeting expectations and delivering upon measurable goals inherently becomes a whole lot easier. Better yet, treasurers will be able to develop a clear picture of what a CFO thinks is important – and then subsequently spot any areas the C-level has failed to take into account on a particular process, movement or transaction.
This is where treasurers can add real value to their organisation, and it’s an easy way to build a two-way relationship that empowers treasurers with more say over how their organisation is run.
It should go without saying this is just the tip of the iceberg, here.
No two working relationships are identical, and so starkly contrasting organisations will often require very different relationship management tactics. Yet by developing clear lines of communication, exercising a degree of proactivity and understanding precisely where and how additional value can be delivered, any treasurer should be able to build trust and improve their organisation’s CFO-treasury relationship.