A treasurer’s job used to be narrowly
defined and focused on managing daily
cash positions and liquidity. Today’s treasurer, however, is more involved with
devising business strategies and supporting
operational goals. In fact, forward-thinking
CEOs are giving treasurers a seat at the table
for strategy meetings and brainstorming sessions. Rapidly evolving technology, new
accounting standards and globalization are
just a few of the reasons why the treasurer’s
role is expanding to a more intensive management of working capital deployment and
business risk coordination.
Craig S. “Sandy” Saxer, senior vice president of sales development in PNC’s treasury
management group, talked to Smart
Business about how a strategic treasurer can
be an asset in a sluggish economy.
How has the treasurer’s job changed?
Historically, the treasurer’s job responsibilities consisted of short-term borrowing, banking relations, risk management and other
financial advisory functions. Rarely were
day-to-day treasury management tasks —
monitoring cash received or authorizing the
funding of checks presented for payment —
integrated with other business processes.
The modern-day treasurer supports all of
the different core business activities, such as
marketing, sales, production and procurement, in addition to overseeing daily financial
stability. Treasurers still provide timely cash
flow information to the CEO and other stake-holders, but are also becoming directly involved in the management of supporting systems such as accounts receivable, credit and
accounts payable as a way to improve flows.
Why has the role of treasurer evolved?
Technology has made the job of treasurer
much more efficient by uniting cash, payments, and trade and investment processes.
Adding speed and transparency to transactions like payables and receivables allows
treasurers to spend more time on strategic
activities like forecasting and risk management. In addition, the treasurer has timely
information with which to advise company
management on business decisions.
Legislative reforms, primarily the Sarbanes-Oxley Act of 2002, have forced corporations
to improve their financial disclosures to combat the accounting fraud that plagued certain
companies. The guidelines within Sarbanes-Oxley require tighter internal controls and
the appropriate segregation of duties to evaluate every aspect of a company’s financial
procedures. Companies have had to
strengthen their internal controls to comply
with this legislation, which means that the
controller has had to become much more
involved in establishing and overseeing the
financial functions. As a result, treasurers
have adopted the management of the daily
corporate financial functions from an operational viewpoint.
There has also been a fundamental shift in
how the United States conducts business
with other countries. Information and global
trade opportunities are changing traditional
international commercial practices. Open
trade credit is evolving as a practice and dynamic information systems are assisting the
movement of information to encourage more
of these transactions. The treasury function
is becoming more of an internal adviser in
this capacity because of its traditional links
with banks and its role managing the receivables component of working capital.
How can a more progressive treasurer affect
a company’s future financial viability?
Beyond making process improvements,
effective treasurers add value to the company by integrating treasury management functions into other business processes. For
example, a treasurer may work with marketers to develop various payment options
that appeal to a wider customer base or
become more actively involved in investments as a natural extension of his or her
interactions with external parties like
bankers and credit analysts.
Despite the institutional changes in the
treasury management function, managing
working capital remains the most important
aspect of any treasurer’s job. Effective treasury management practices that include
accounting for unforeseen events like market cycles and changes in customer base are
essential to a company’s financial viability.
The strategic treasurer that devises a comprehensive view across all of a company’s
operational disciplines and integrates sound
working capital management practices greatly increases the future success of the company and his or her own personal success. <<
This article was prepared for general information purposes only and is not intended as
legal, tax, accounting or financial advice or
recommendations to buy or sell currencies or
to engage in any specific transactions and
does not purport to be comprehensive. Under
no circumstances should any information
contained herein be used or considered as an
offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is
solely and exclusively at your own risk.
Please consult your own counsel, accountant
or other adviser regarding your specific situation. Any views expressed herein are subject to change without notice due to market
conditions and other factors.
©2008 The PNC Financial Services
Group, Inc. All rights reserved.
CRAIG S. “SANDY” SAXER is senior vice president, sales development, in PNC’s treasury management group. Reach him at (215) 585-6677 or [email protected]. To learn more about trends in treasury management, check out our webinar on this topic at pnc.com/joinus.
