Treasury Today Country Profiles in association with Citi

Treasury Insider: the good and bad of treasury

Two apples next to each other, one good, one bad

With a lifetime of treasury experience behind him, the former Australian Broadcasting Corporation Treasurer, Fulvio Barbuio, reflects on what he sees as the opportunities and challenges in treasury.

Fulvio Barbuio

Board Director
Finance and Treasury Association
Fulvio Barbuio is the former Head Corporate Treasury & Risk at the Australia Broadcasting Corporation. He has also worked for Esso Australia (Exxon), IBM and Energy Australia in various treasury and corporate finance roles. Today, Fulvio is a Board Director at the Finance and Treasury Association (FTA) in Australia, continuing a role he has held for several years. The opinions of the author are his own and do not represent those of the FTA.

Like any profession or area of study, one can allude to aspects of treasury that are valuable and a source of advantage for its stakeholders and customers. One can also point out aspects which deflect and hamstring the value that it can bring.

The good and the bad can even sometimes be seen as opposite sides of the same coin. An exploration of these can help illuminate opportunities and challenges for the profession to overcome and improve its value proposition and effectiveness.

The Good (opportunities)

Cash is the organisation’s lifeblood: treasury is the only function that manages and monitors cash flow which is the ultimate lifeblood of an organisation.

Ability to have an overview of the whole business: to be able to monitor and manage cash flow, treasury needs to be across the profit & loss and balance sheet. Doing so requires treasury to monitor broad aspects of the organisation and its underlying cash, unlike any other function.

Internal and external focus: to undertake its functions, treasury requires access and oversight of information both internal to an organisation (revenue, costs, taxes, assets, liabilities and equity), and also information about financial and capital markets and economic conditions. This helps treasury to manage financial risk and cash flows to support an organisation’s operations.

Data and facts: treasury uses fact-based decision-making in going about its business and so minimises the use of subjective information which prima facie leads to more grounded decisions. While not eliminating the need for and benefit of judgement calls, treasury grounds these in objective data and facts.

Organisation growth and strategy: as a custodian of an organisation’s cash, treasury has the prime responsibility to ensure there are sufficient financial resources at a cost and quality to support organisational growth and activities wherever they may be undertaken.

Organisation value accretion: through its management of financial risk, liquidity and capital, as well as its custodianship of weighted average cost of capital (WACC), treasury plays a valuable role in helping the organisation accrete enterprise value.

Technology solutions: given its data/fact-based character, the treasury is ideally suited to adopt technological solutions to automate repetitive and voluminous tasks, freeing resources for higher value-adding activities.

Business intelligence for an organisation: as treasury operations touch every corner of the business it has the opportunity to utilise related information and, coupled with external information and technological solutions, to provide valuable business intelligence to the key decision makers of the organisation.

The Bad (challenges)

Back office: given treasury is not customer-facing, it is often seen as just another support or back office function. This creates challenges when it comes to access, influence and resources.

Organisation buy-in: given its tendency to being seen as back office, this can lead to treasury having a limited voice within an organisation.

A ‘silent’ activity: if the treasury is doing its job well it is somewhat invisible to the rest of the organisation in most cases, with the corollary that jobs not well done can be highly visible and attract the wrong attention.

Transaction focus: being data-driven leaves treasury susceptible to primarily being transaction-focused. This blunts its ability to breakout and highlights its broader strategic credentials.

Soft skills: treasury professionals typically come from a finance background and thus tend to focus on analytical skills to marry their data/fact-based focus on cash and the like. This downplays the critical role that soft skills can have in supporting treasury as an influencer in the organisation.

Marketing/branding: with soft skills downplayed, treasury tends not to value the benefits of marketing or branding its value-add and services, which can limit its influence in the organisation.

Technology utilisation: while technology and automation have been infused into the treasury, the use of spreadsheets and the like continue, thus providing more scope for automation to help in those repetitive and voluminous tasks, and so allow for more value-adding work. In addition, treasury could use technology to boost its use of analytics to power predictive forecasting and related solutions – this is still an area which is way underutilised.

Accounting information and detail: the predilection of treasury to use accounting information and the like to track liquidity, financial risks and capital management, can create a narrow focus, thus missing broader trends which can illicit insights for the organisation – striking a balance between the detail and big picture is crucial.

Internal data quality: treasury management of financial risk, liquidity and capital need quality and reliable internal information and this can be compromised by the back-office view of the profession.

Function appropriation: the same back office and transactional and accounting data focus has the potential to see the appropriation of certain high-value tasks by other players in the organisation. This has already started.

Automation: while automation is an opportunity to tackle repetitive and voluminous tasks, this also poses the threat of taking away work. This is especially true if manual work is not replaced with treasury taking part in higher-value-adding activities across the enterprise.

Like many professions, treasury has its share of opportunities and challenges. How it uses its strengths but also adapts to the changing business and technology landscape will determine whether it thrives or struggles.

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