The modified treasurer

Ben Walters is Deputy Treasurer for Compass Group. His career is marked by a deep fascination for his subject, a genuine love of what he does, and a desire to spread the word about treasury’s vital role in business.

Rising up the treasury ranks is something Ben Walters, Deputy Treasurer at FTSE 30 company, Compass Group, has managed rather well over the years. Stepping up twice as Interim Group Treasurer for the business did not faze him, but then he has made a point throughout his career of knowing precisely what he is doing, and skillfully blending an academic interest in the profession with a thoroughly practical outlook, to make things happen.

Today, his responsibilities include funding and risk management, managing external relationships with banks, credit ratings agencies and auditors, and interaction with the Compass tax, finance and internal audit teams. With the challenge of Interim Group Treasurer having been taken up on two occasions, Walters has been able to seize “really useful” opportunities to take his game to a higher level. In fact, he adds, the chance for any treasurer to step up to the number one position, albeit temporarily, is one that helps resolve a potentially intractable but common career progression difficulty. If the opportunity presents itself, “take it”, he advises. It’s an excellent opportunity to gain experience in managing a team and learning to navigate the upper echelons of the business.

Early spark

Having kicked off his professional life in auditing and accountancy, Walters knew almost from the outset that he wanted more. Having qualified professionally, he moved into the head office of a FTSE 250 business, taking on central finance duties. This provided his formative interaction with treasury, engaging with the function on a European cash-pooling project. The mix of practical finance and technical know-how “sparked an interest”.

Continuing to explore his options, Walters exploited an opening at the larger FTSE organisation. Once again, this was a central finance role, but this time with a focus on writing accounting policy, allowing him to progressively build on his reputation as the go-to technical expert.

Despite the increased level of responsibility assumed in this position, this was still viewed as a transitional role. “It was a way in to a bigger business where I was hoping there would be more opportunity to specialise,” he recalls. At this point treasury was “now very much on the radar”. Indeed, it was fast becoming the right direction to take.

One of the defining moments of realisation followed the introduction of IFRS, in particular, IAS 39. This set out new principles for recognising and measuring financial instruments, demanding mark-to-market on all derivatives. The widespread sense of corporate disquiet that ensued – “it was the one that had everyone panicking at the time” – saw Walters, with his accounting experience and ever-enquiring mind, volunteer for implementation duties.

Undertaking a task of this complexity was, for many, a step too far. But Walters refuses to back away from projects “just because they are going to be challenging”. In this instance, the need to work closely with, and understand treasury and the make-up of its debts and derivatives, gave him the necessary “foot in the door”. He needed no second bidding.

Clear progress

From Group Policy and Technical Accountant to Assistant Treasurer to Deputy Treasurer, with fully leveraged opportunities as Interim Group Treasurer, there has been a clear and steady rise up the ladder for Walters. Progress had not been achieved in isolation though. “I was very lucky to have had a very good mentor in the Group Treasurer at that time,” he recalls.

He describes this “highly experienced and respected professional” as a “very approachable individual who genuinely wanted to bring his team along with him”. But treasury is like that. “Perhaps it is function of being part of a small specialised team,” he muses, “but I have rarely come across another treasurer who doesn’t have this approach.”

That said, success in treasury is no easy ride. “You have to be prepared to work extremely hard,” asserts Walters. “You also have to develop a flexible mindset; you need to be able to switch seamlessly between talking about cash management issues in multiple locations, to thinking about Group interest rate policy, to explaining a complex issue in layman’s terms to non-treasury colleagues.” However, although he jokes that the required level of mental agility “is still a work-in-progress for me”, he declares that the capacity to quickly and easily shift modes – from the everyday, to the deeply technical, to the relatively simplistic – “is part of the beauty of the role”.

Modern skills

In addition to being able to take complex ideas and practices and shape them for a specific audience, Walters believes today’s treasurer needs to be an excellent networker. “Few will have all the resources within the department to accomplish all that they need to, so they have to be able to work across teams, internally and externally,” he states.

“At the outset of a career, few appreciate this. But anyone arriving at a senior level today has to be good at it; it’s certainly a skill I’ve appreciated as Deputy Treasurer, but it’s now something that needs to be developed by everyone entering the profession.”

Unquestionably, treasury is a meeting point for many different skills, he continues. Being good at the job requires the individual to maintain a broad understanding of forward-looking risks, and elements such as the impact of strategy and the effects of global economics. Whilst it’s common ground shared with senior financial management, Walters believes that the critical nature of their work means other finance functions could benefit greatly from some of the training undertaken by treasurers. Indeed, he argues, doing so would instill in all “a more rounded view”, to the benefit of all.

Making choices

Into the everyday life of the treasurer come elements that cannot be ignored. Walters points in particular to the frustration created by having to deal with wave upon wave of regulation “It just seems to be cranking up year-on-year,” he notes. He also points a finger at the inescapable “noise” accompanying the fintech revolution in treasury.

On the rise and rise of digitisation, he feels that current levels of speculation and hype can make it extremely difficult to know “where the dust will settle”. Admitting that it may not be the ideal stance, he nonetheless appreciates that “no one wants to be a first mover”. As such, amongst “usually conservative” treasurers, there is a strong element of ‘wait-and-see’. The benefits being attributed to advanced tools such as AI and blockchain, are a case in point; there is much talk but a lot less action. That said, Walters also accepts that there are plenty of new, maybe less fully formed treasury environments “where it would be quite correct to try to take advantage of these developments”.

Within this rapidly changing environment, there are many such decisions to be made. Allied with its broad commercial perspective, its technical know-how and its realistic appreciation of risk, Walters believes treasury is now perfectly positioned to become the strategic voice within the finance function. Whilst he asserts his right not to be passionate about technology nor regulation, what does get him excited is “trying to raise finance into a mainstream strategic discipline”.

Strategic viewpoint

Business strategy tends to be thought of as a separate discipline, sometimes sitting outside finance, says Walters. Because he believes that “effective strategising demands a significant merging of ground”, it comes as no surprise that he makes a point of challenging the way finance and business strategy teams interact.

Finance is a vast resource within every business, producing valuable quantitative data, painting an accurate view of the health of the business. Strategy teams, meanwhile, draw heavily upon qualitative information, exploring and making judgments as to whether the company is, for example, producing the right products or operating in the right markets. Bringing the two together can create a whole more powerful than the sum of its parts, explains Walters. “And treasurers, with their broad perspective, are very well placed to bridge that gap.”

One practical bridging idea that Walters is currently putting forward focuses on the strategic use of hurdle rates – the minimum rate that a company expects to earn when investing in a project. He notes that it can be challenging for a firm to make an informed decision about where to draw the line on new projects it takes on. Treasurers can help. “Companies operate in the real economy where some of the assumptions behind weighted average cost of capital (WACC) break down,” he says. As a solution, when making investments in its own business, a company could use what he calls modified weighted average cost of capital (MWACC) metrics (an idea he has now trademarked).

MWACC is the result of analysing the marginal opportunities on either side of current levels of reinvestment. This alerts the firm as to whether it can increase its worth to its shareholders by changing the amount of capital it reinvests. From here it can determine whether it has set its level of re-investment correctly.

“Many treasurers work in companies which employ a higher hurdle rate for investment decisions than their WACC,” he says. “Intuitively, I’m sure this feels right.” The justification might be a combination of factors such as a better reflection of the risk, acceptance that only the best projects can be taken on, or a desire to push the operations harder. “These reasons are all valid, and MWACC reflects them, but in a more transparent and scientific manner,” he explains. “Firms simply taking on investments that create returns equal to WACC will probably not meet next year’s profit targets.”

“What really excites me about financial strategy though,” says Walters, “is the vast opportunity out there to think differently about the way data is used to manage the business. Traditional finance centre around the profit and loss account, but we have the tools and wherewithal to genuinely cut and slice the data to see where the value in any business really lies. The treasury profession, by the very nature of the experience, training and broad perspective it engenders, is ideally placed to bridge this gap. When people talk about the strategic role of the treasurer this to me is the crux of the matter.”

The way businesses have traditionally structured themselves means there are now many such opportunities for treasurers with ambition to bring about change and to advance their careers. “Technology is enabling a lot of mundane processes to be automated,” says Walters. “The future of treasury lies in bridging the gap between finance and strategy, creating insight to better direct the business.” He sees this as an evolutionary process.

Keep moving

It took decades before corporate finance theory developed in the 1960’s came into the mainstream corporate world. Now that it is accepted, Walters wants to see it moving further ahead. Indeed, he is a champion of bringing academic thought into the real world of treasury, allowing elevated concepts to become robust practical solutions. Treasurers now have an opportunity to grasp the theory, explaining to business partners how such ideas translate into the cold reality of business.

As an MCT qualified treasurer, Walters is well-grounded in the profession’s own academic canon. His work towards the qualification, which saw him simultaneously facing up to the long-term illness and later sad loss of his wife, nonetheless saw him achieve formal acknowledgment from the ACT as their Student of the Year.

Given the circumstances, he is justly proud of his achievement. There have been some strong drivers here though, Walters attributing his success to two key factors: “I was very lucky to have an excellent mentor, but I also love treasury.” His will to continue the work is testament to his commitment to the profession. Except for him, it isn’t work: “it is something I genuinely enjoy doing”.

Despite the scepticism that his statement may induce in others, Walters points out (and many Treasury Today Corporate View articles confirm) that it is quite common for people working in treasury to honestly enjoy the field in which they work. “I like to keep learning and constantly be challenged. In combining a strong technical element with the need for an extremely broad perspective, and a set of finely-tuned soft skills, treasury covers a lot of bases.”

Life beyond

As might be expected from someone who has a keen interest in life, Walters takes great pleasure in activities outside of treasury. He professes a strong fondness for cricket but admits that, now in his forties, its practice is becoming more challenging. Having become a dad again over the summer, cricket might be on hold for a while, but with his partner, a former professional sailor, he hopes to do some sailing in the future. Not one to miss an opportunity to learn, he is now setting his sights on taming the ocean waves, or at least the Solent as a starting point.

Alongside a genuine passion for treasury, the idea of giving back to the community is another recurring theme in Corporate View interviews. Walters’ involvement with the UK’s National Health Service (NHS) during his wife’s illness was such that he is now determined to pass on his experience as her carer to people within that organisation. He has to date done this through a series of presentations that help staff better prepare for their role in helping others. “If I see something that I think can be improved, I try to get involved,” he says of his motivation.

However, he is adamant that his is not a campaign to transform the NHS, but a way of quietly offering his support to something in which he firmly believes. It is his way of “trying to make a difference”. As one who has used his natural curiosity, intellect and flexibility to make improvements throughout his career, who could expect anything else.