A conversational roundtable on the role of treasury and the key trends impacting trends in treasury for the upcoming year and onwards featured four individuals who looked at how this management function and the challenges and opportunities are impacting that country. And Total Finance magazine thought it an interesting and insightful exercise to monitor these thoughts and lay them out for Canadian treasurers and CFOs to compare to their own situations and financial mandates. Pieter de Kiewit, Dennis Schmidt, Karen van den Driessche, and Hubert Rappold are the panelists who took part.
As we navigate the evolving landscape of treasury management in 2024, three key pillars emerge from the insightful discussions by industry experts. First and foremost, the pivotal role of technology takes centre stage, with an emphasis on automating data gathering, streamlining operations, and striking a balance between human expertise and technological advancements. Second, the strategic identification of Key Performance Indicators (KPIs) becomes paramount, urging businesses to focus on measurable factors, including efficiency KPIs, to enhance decision-making. Lastly, a strong call for ongoing education resonates, emphasizing the need for upskilling treasury teams and building a robust business case to navigate financial demands effectively.
In the ever-evolving landscape of treasury management, 2024 brings forth a pivotal shift in priorities and technologies. Recently, Treasury XL and Nomentia convened industry experts to discuss the trends shaping the future. Technology in treasury needs to be simpler.
Leveraging Technology: Streamlining Operations
The main focus identified by the panel is the growing recognition among treasury professionals regarding the importance of leveraging technology in their operations. While artificial intelligence (AI) holds potential in tasks such as cash forecasting, the primary emphasis is on automating data gathering, reducing manual work, and enabling data-driven decision-making.
Hubert Rappold, Chief of Sales at Nomentia, stressed the heightened significance of visibility over cash and exposure. In the current financial landscape, characterized by financial crises, pandemics, and increasing interest rates globally, accuracy in data is more crucial than ever. Hubert emphasized the necessity of automating data gathering in real-time, moving beyond the traditional monthly reporting of balances.
Karen van den Driessche, an Independent Treasury Expert, shared practical insights into budget considerations. In an ideal scenario with an unlimited budget, she would opt for a fully integrated Treasury Management System (TMS) with bank connectivity. However, the reality often calls for prioritizing tools that offer quick access to all banks, facilitating reporting, and supporting automated forecasting.
Dennis Schmidt, another Independent Treasury Expert, offered a perspective on the role of technology. While acknowledging technology as a supporting tool, he emphasized that it should not replace the human factor within a company. Striking a balance between what can be automated and the role of human decision-making is crucial.
“Less room for manual work, you need to have the data at your fingertips so that you can act on it”
Identifying Key Performance Indicators: A Strategic Approach
A hot topic discussed was the selection of key performance indicators (KPIs) for businesses. Beyond traditional metrics like cash and risk management, the panel suggested considering efficiency KPIs. These KPIs help determine if a business is spending the right amount of time on tasks and if the staff possesses the necessary skills.
Karen van den Driessche highlighted the importance of company-dependent KPIs, considering the type and maturity of the business. She suggested key concerns such as cash visibility, concentration, access to funds, and addressing risks like FX and commodity market volatility. Additionally, she advocated for efficiency KPIs, which the business can work on rather than traditional KPIs which the business just responds to. “Treasury is nothing if you don’t have clear processes.”
Education: A Cornerstone for Future-Ready Treasury Teams
The panel emphasized the significance of ongoing education and upskilling for both current and future treasury staff to adapt to the changing landscape. By investing in training programs, mentoring the next generation, and staying updated on industry best practices, businesses can ensure that their treasury teams have the skills needed to navigate financial demands.
The scarcity of treasury education in universities was discussed, with the panel calling on the treasury community to take responsibility. The community should make treasury more known and educate students before entering university about its excitement.
In New Zealand, there is a notable absence of a specific Treasury degree, with only a postgraduate diploma in treasury management and foundational treasury management papers incorporated within finance and/or accounting degrees. This educational gap frequently results in the leadership of treasury functions being assumed by individuals with an accounting or finance management background.
Building a Business Case: Strategic Planning for Treasury Success
Building a business case for funding and resources in treasury was discussed as a critical aspect of effective treasury management. The panel recommended identifying risks, needs, and requirements to gain a clear picture of what is necessary. It was suggested to quantify the cost and risks of not having essential tools/resources and clearly articulate the benefits.
“Non-compliance may result in fines (up to $50,000), litigation, or other consequences for the employing organization that may have a material effect on its financial statement and may also affect negatively investors, creditors, employees or general public.” – PwC
Treasury, often not well understood by CFOs/ CEOs until something goes wrong, was emphasized as the basis of an organization. It was stressed that businesses must understand the value added by treasury and the risks if the correct resources and skills are not allocated. Striking a balance between spending the right amount of time on tasks and having the right skill sets was highlighted throughout this discussion.
Courtesy Treasury XL
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