The world has changed considerably in the last couple of years – and corporate treasurers have had to adapt. So what will treasurers be focusing on in 2022, and how are they expanding their skillsets to meet the needs of today’s landscape? From taking on a more strategic role within the organisation to stepping up in areas ranging from ESG to M&A, the remit of the modern treasurer has never been wider.
Strategic role
The last two years have brought numerous challenges for treasurers everywhere – but these challenges have also given treasurers an opportunity to step into the spotlight. “During the pandemic, the role of treasury became more visible, just like it did during the financial crisis,” says David Stebbings, Director, Head of Treasury Advisory at PwC. “So the question is – how do treasurers hang on to that and make the most of it?”
According to PwC’s 2021 Global Treasury Survey, most respondents say their departments operate as either a value-enhancing (50%) or strategic (33%) partner – results which the report argues “mark a firm reclassification of treasury’s role into one of business partnership.” In this evolving landscape, the survey identified strategic thinking as the most important skill for the treasurer of the future, cited by 76% of respondents – ahead of functional knowledge of treasury (74%), technology affinity (69%) and business partnering capabilities (63%).
“For some time now, we’ve seen treasury taking a far more strategic role – and particularly post-pandemic, the treasurer’s role will be viewed as more critical,” says Alex Young, head of Corporates for GTS EMEA at Bank of America. “There’s an enormous emphasis from the C-level on the company’s overall health, while business units across companies are all looking to treasury for guidance, knowledge and best practice.” As such, says Young, treasury has an integral role to play in discussions about the company’s strategy going forward, and the nature of the current marketplace.
Commercial partner
Mumtaz Dole, Director – Cash and Liquidity Management and Treasury Business Partner (APAC) at Vestas, reflects that one of the lessons she has learned during the pandemic is that it is “insufficient to be the traditional treasurer doing ‘treasury things’ such as FX and liquidity.” She adds, “The future treasurer needs to be a commercial partner who can keep up with the quick pace of the world while maintaining agility.”
As Dole explains, Vestas is a company that designs, manufactures, installs and services wind turbines around the world – projects that are large scale and long-dated, especially when service is taken into account. In order to be a modern global treasurer in this setting, she says, “We need to understand the business we are in from the commercial and operational side so that together with our existing knowledge around cash flows planning, credit, capital and risk we can facilitate the business to make good decisions, prioritise and mitigate risks.”
Supporting record M&A volumes
As 2022 approaches, another notable trend is the vibrant marketplace for deals against a backdrop of strong demand from private equity and the availability of cheap financing. KPMG, for example, has predicted that global M&A volumes could reach a record US$6trn in 2021, up from US$3.6trn in 2020.
As Stebbings notes, “The deals market is huge at the moment, which means many treasurers and their teams are heavily involved with such work. Of course, there may be direct deal effects on how treasury works if you lose half your team following a divestiture or gain a function following acquisition.”
Young observes that treasury has a fundamental role to play in supporting M&A activity, not only because of the impact of divestitures on treasury operations, but also due to the implications for capital commitments and the need to integrate new business models. “Treasurers need to consider how quickly they can get line of sight on how new acquisitions operate – does that fit within the existing architecture, or does it need to be adapted and integrated into the current business?”
Shifting payments landscape
The world of payments is undergoing significant changes, from SWIFT gpi to the rise of real-time payments and developments in the area of Central Bank Digital Currencies (CBDCs). The modern treasurer therefore needs to have a clear understanding of developments in this area.
“In the last 18 months, there has been an acceleration in the uptake of new payment tools,” explains Jennifer Wan, head of Corporates for UK, GTS at BofA. “So treasurers are not only talking about traditional high-value or low-value payments, or in-country versus cross-border payments – they are also now having discussions about e-commerce and instant payments.”
As Wan explains, the adoption of new online business models during the pandemic has made it more important than ever for companies to offer customers access to the right payment methods. For treasurers, it’s important to have a clear understanding of what is an increasingly fragmented landscape, as well as understanding what this means for treasury activities, and their banking partners can support with implementing the right tools. “For example, if you’re dealing with instant payments, does that now mean you have to do real-time funding?” she says. “Do you also need to mirror that with real-time reporting, and look at the use of AI to forecast seasonality and identify trends?”
In light of these developments, Wan points out that the modern treasurer “not only needs to have technical prowess in terms of how they navigate these different tools, but also a commercial awareness – because it’s so linked to the business and how you attract customers.”
