Treasury Talent

Rise of the modern treasurer

Published: Nov 2021

The treasurer’s role has become more visible during the pandemic, with a greater focus on the importance of strategic partnership. With that in mind, what will the modern treasurer be focusing on in 2022, and how is the treasurer’s skillset evolving?

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.”

Recruiting the modern treasurer

Mike Richards, CEO of the Treasury Recruitment Company, discusses the evolving role of the treasurer and the impact of the pandemic on recruitment and working patterns.

In what ways have you seen the role of the treasurer and working patterns change during the past two years?

It’s very interesting. In some areas things have very much stayed the same. For many companies changes that would have been expected – updating systems or improving processes – have been put on hold. And that’s largely down to a change in priorities.

When the pandemic struck, the focus was on ensuring that everyone was able to work remotely. One of the consequences of this was that systems that should have been updated were not. As companies are coming out of the crisis, treasurers have had time to reflect, and they are questioning the need to spend extra sums of money on something that might be working perfectly well.

To what extent are companies still embracing remote working?

I would say that there is a marked difference between North America and Europe. In the US, the tendency at the moment is to bring everyone back into the office, even in those companies where remote working has been judged to be a success. In the UK and Europe, by contrast, there is much more sensitivity and flexibility in the matter. For example, I know of one service centre in Europe where the final candidates being interviewed for a position were all saying that they would only consider the job if it was full-time remote working.

Will it continue over the longer-term? There has been such a massive shift over a short period of time. It seems to be that what treasury professionals are seeking now is a balance between being office-based in their position and the working-from-home element – in other words, a blended working style.

In the US the market is really starting to take off. I think what has happened is that when people have left or been moved around, they haven’t been replaced. There has been a reluctance to on-board people remotely, so it has been a case of ‘make do and mend’.

There’s always been a high demand for people with technology skills and that continues. Five years ago it would have been usual to pay for external treasury systems consultants to help implement a system. Now, treasurers have added that to their skill set. They know what to look for in terms of what is a ‘nice to have’, and what is a ‘must have’. For some clients recruiting for a treasury analyst position, it is more important to have candidates with good systems skills than experience in – or knowledge of – treasury.

Recruiting has become much more of a challenge. The clients who are getting it wrong at the moment are the ones who assume that candidates are beating a path to their door. The pandemic has made people reticent to move. Why would someone who is happy working remotely in their current job want to move to a position requiring them to be in the office five days a week?

We’re coaching our clients about what they can do to make themselves more attractive. Employees have far greater power over their working life than they probably have ever had before. Five years ago, what candidates wanted to know about a vacancy was the nature of the job, its salary and its location. Now they want to know – what’s the remote flexible working policy? When do I have to be in the office?

What would you say to someone looking to change roles in the coming year?

It’s a great time to be looking for a new role. I think it’s important to ask the right questions and to be really curious about how the company survived the pandemic – not economically, but in terms of how their people got through it and what the company is going to do next.

Role of technology

Technology change, of course, continues to be an important opportunity but also a challenge for treasurers. “The treasury and cash technology market is evolving dramatically,” says Stebbings. “There are a lot of banks and vendors out there offering all sorts of products to cover myriad solutions. It’s not easy to make the right choice, and even more difficult to implement the product to meet your needs. So having a handle on what you want, and how you want to do it, is more important than ever.”

While using new technology tools should be intuitive, Stebbings points out the importance of treasures having a full appreciation of their data. “Treasury needs people who can understand and analyse data more than anything else – not necessarily the actual tools themselves, but the validity of the data and the reliance that can be placed on the analysis,” he says.

As Dole comments, “Treasuries have been on the digitisation journey for a few years now, and there is no doubt that technology is more important than ever. Nowadays, new technologies are able to string global processes together and analyse the data that comes out of it. Some companies have even started allowing operational treasury tasks to be performed in the background through AI and automation. We have embarked on this journey even at Vestas.”

Cash flow forecasting, which has long been a challenge for treasurers everywhere, is one area where technology can drive improvements. “Better forecasting and data visualisation tools are helping treasurers connect more to the business, as well as helping them provide consolidated reporting to the board,” says Young. He adds that other areas in which technology can drive benefits include in-house bank structures and the use of virtual accounts – all areas in which BofA has recently launched product enhancements.

The future treasurer needs to be a commercial partner who can keep up with the quick pace of the world while maintaining agility.

Mumtaz Dole, Director – Cash and Liquidity Management and Treasury Business Partner (APAC), Vestas

Sustainability and ESG

The growing focus on sustainability and Environmental, Social and Governance (ESG) factors is also likely to continue in 2022. From green bonds to ESG money market funds, there are more opportunities for treasurers to manage cash in a way that supports their companies’ sustainability goals. And companies are certainly becoming more focused on this topic: PwC’s survey found that 42% of companies had adopted formal policies around ESG principles, with one third saying ESG is incorporated into decision-making.

“The global health crisis has certainly got a lot of people thinking about organisational health and the future of work,” comments Young. “The ESG agenda is quickly becoming very important for our clients, and we are supporting them with integrating ESG into their own business objectives.” In particular, he notes that treasury has an important role to play in supporting business units and helping them identify opportunities for improvement.

This growing focus was also reflected in Treasury Today’s 2021 Global Sustainability Study. The survey found that almost a quarter of respondents were planning to issue a green bond, up from 12% in 2020. In addition, 47% noted that stakeholder pressure was driving their companies’ ESG strategy “to some extent” – and 57% said they now include ESG metrics in their annual reports.

Building the modern treasurer

Last but not least, modern treasurers will need additional skills at their fingertips in the year ahead. François Masquelier, CEO of Simply Treasury, explains that treasurers need to understand new technologies if they are to fulfil their “broader mission” effectively, and will need to onboard colleagues with broader and more tech-oriented skills in order to adapt to the changing environment. In particular, he says, “an open mindset and diverse skills will be an absolute necessity to cope with new duties and evolving tasks.”

Dole observes that in this environment, modern treasurers need to evolve and transform their skills so that alongside their treasury capabilities, they also know how to use data, technology and processes effectively. “Treasurers must also be able to understand people and be able to manage change,” she notes.

As Dole concludes: “All in all, the modern treasurer will evolve into a well experienced and multi-skilled finance professional with a broad experience and knowledge, acting as a treasury business partner who has a seat at the table. At Vestas this evolution started back in 2019, and now more than ever I believe we’re on the right track to build the modern treasurer.”

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