In recent years, the importance of the treasurer’s role within the organisation has continued to grow. For example, the PwC 2023 Global Treasury Survey found that 24% of treasury functions consider themselves to be strategic partners, with 53% citing strategic thinking as a key competency for the treasurer of the future.

“In recent times, treasurers’ roles have been well-recognised by the Executive and the Board, as treasurers provide vital strategic business and financial inputs, proactively manage liquidity and critical financial risks, including managing uncertainty, volatility, compliance, and stakeholders demands,” observes Gopul Shah, Director, Corporate Treasury and Structured Trade Finance at Golden Agri-Resources (GAR), which is headquartered in Singapore. In many corporations, he notes, “treasurers’ roles are also expanding to include risk management, insurance, structured finance and membership of the Executive Strategy and Risk Committee.”

So to what extent are treasurers engaging with the highest level of leadership within their organisations? As Marianna Polykrati, Group Treasurer of Greek aquaculture company AVRAMAR, explains: “Collaboration between the board, executive management, and financial experts is essential to navigate complex financial landscapes and maintain the company’s financial resilience and competitive edge.”

According to Polykrati, the boardroom’s involvement in treasury matters can be summarised in two key areas:

• Treasury policies and procedures. “Treasury policies are crafted to mitigate the financial risks and to maximise returns on investments,” says Polykrati. “Board oversight ensures transparency and accountability in treasury operations, safeguarding shareholder interests.”

• Financial strategies, risk management and liquidity. As Polykrati explains, “Board members deliberate on optimising cash flow, investments, and debt management to ensure the company’s financial health and stability. They assess market conditions, interest rates, and regulatory compliance to make informed decisions.”

But what this looks like in practice can vary significantly from company to company. “Most established companies have some form of delegated authority, whereby certain treasury matters are dealt with outside the boardroom,” says David Stebbings, Head of Treasury Advisory at PwC. “There’s a line of command whereby certain matters go up to the boardroom including the approval of policy, while others go to an audit committee or a finance committee. More routine aspects are delegated by the CFO to the treasurer.”

Other matters which will be handled at the board level often include significant debt matters and financing exercises. In many cases, topics which are covered by a board-approved treasury policy don’t need to be taken to the board, although treasurers will report regularly on compliance to the CFO and the audit committee.

“If you’ve got a FTSE 350 startup that’s growing quickly, most treasury matters go to the board, because it’s the only governance forum,” says Stebbings. “In other cases, people make decisions without taking them to the board, because they’re the owner of the business and there is really no board. There are many different models.”

Heightened focus

During periods of heightened risk or market turbulence, however, the treasurer is more likely to be asked to present directly to the board. As Stebbings points out, it’s a truism that treasurers often only need to go directly to the board if something has gone wrong, such as the loss of money due to a bank failure.

“During the LDI pensions turmoil in 2022, many businesses had to lend money to pension funds to meet short term margin requirements, meaning that the treasurer had to tell the board what was going on – either via the CFO, or with the CFO,” he says. “Likewise, during the Covid crisis, treasury became high on a lot of board agendas owing to the effect on financial markets.”

Anthony Buchanan, Group Treasurer of Asahi Europe & International, reports directly into the company’s CFO, who also chairs the Risk Management Committee. Buchanan explains that treasury has had a strong link with the boardroom for many years, spanning Covid and working capital discussions, as well as commodity volatility and hedging. Looking further back, other events that have been discussed at the board level include the 2008 financial crisis and the 2012 euro credit crisis. As Buchanan remarks, “‘Black swan’ events are no longer something that happen once every ten years, but can now happen every two or three years.”

Understanding exposures

Industry expert Jennifer Ceran agrees that the degree of interest in treasury at the board level tends to vary depending on the level of risk at a particular time. Ceran has a wealth of experience spanning treasury and finance: she has previously held a number of finance and treasury roles at eBay and PayPal, before becoming CFO of Smartsheet, a role that she held until 2021. She is currently a board member for a number of technology firms.

“If a company is facing more risk in the form of large debt renewals, or is planning to invest large amounts of cash in the market, the board will want to really understand what’s going on, and be there to help and support the company with those kinds of exposures,” she comments.

During last year’s banking turmoil around Silicon Valley Bank, for example, Ceran notes that many small and medium-sized companies were using SVB as their exclusive provider. “When that happens, the board obviously wants to understand the size of the exposure and the plan going forward to ensure that companies aren’t reliant on just one bank.”

In times of difficulty, boards also wanted frequent updates on what each company was doing to address that risk, Ceran adds. “First of all, it’s about making sure the company is covered in terms of paying vendors and salaries. Secondly, they want to know where excess cash balances are being held, and whether they are all with one bank.” While depositing $300m with a single bank used to be unremarkable, she notes that last year’s bank failures underlined the risk of “putting all of your eggs in one basket”.

But while board level attention on treasury can vary depending on market conditions, the profile of treasury within the organisation has broadly increased in recent years. “Since the 2008 financial crisis, there has been a transformation where you’re seeing more focus on treasury at the board level, and more requests for having treasury present to the board,” comments Ceran. “It’s becoming an increasingly important area for boards to understand, so that the company is able to control its own destiny.”

Building a tight relationship

In some cases, treasurers may play a proactive role in engaging with the board about the implications of market conditions. Looking back to the 2008 financial crisis, Ceran said she spent a lot of time presenting to the audit committee, and ensuring that the board understood how the company was affected by dramatic changes in the global financial markets.

“As Lehman Brothers was failing, we had exposure, we were taking action, we were very proactive – and that’s what the board wanted to see,” she says. “But if we hadn’t been doing those things, there were very experienced C-suite executives who were there to give us good advice about what more we could be doing, and what we needed to watch out for. So it was really important to have a tight relationship at that time.”

Once the crisis had subsided, the level of involvement from the board reduced, “because they knew we had the right policies in place to manage these exposures, and they knew we had the finance audit committee watching over us still. So they step in and out – but a critical role of the board is to make sure that treasury is focused on the right thing at the right time.”

Equally, Ceran notes the importance of making sure that treasury is equipped to handle any future crises that might occur. “As treasurer, I always lobbied for the appropriate amount of headcount,” she says. “I never wanted to have more people than the average group, but I also didn’t want to have too few. I felt that in a crisis, if you have too few people who aren’t strategic in understanding risk, that’s when you can find yourself in trouble.”

Bridging the knowledge gap

Some treasurers are more equipped than others to present effectively to the board. “Writing board papers, and not making them too complex about certain technical banking and treasury topics, is an art,” says Stebbings. “This doesn’t just apply to treasury matters, but to any technical risk topic the board might need to discuss, such as cybersecurity or key operational risks – when you’re talking to people who do not have a deep technical view, then it’s important to communicate effectively and make it relevant to them.”

Levels of treasury knowledge can also vary significantly between different boards. Stebbings notes that some treasurers have made their way onto the board via the CFO role, while many boards have members with banking experience “who have an understanding of treasury and financial instruments, but may look at it with a different lens.”

In some cases, there may be an opportunity for treasury to help bridge any knowledge gap that might exist. When she joined eBay, Ceran set up a Capital Markets Review Committee to build a greater understanding of treasury and risk within the business. “In any case, part of presenting is to educate everyone on the board about what the risks are and how you can or can’t manage them,” she adds.

But as Ceran points out, “Board members are very experienced and savvy, and in the last 15 years they have become more informed. They may not technically have worked in treasury operations, but at a high level they are well educated and understand the impact of changing interest rates, bank failures and significant movements in foreign currency. I haven’t seen a situation where these things are brought to the board, and somebody can’t contribute.”