It used to be that the treasurer’s duties were fairly straightforward. While the controllers counted the money, treasurers made sure the company had money to count by managing working capital. The treasurer’s job consisted mainly of transactional activities, like short-term borrowing, investing, and banking.
But just as CFOs have evolved from bean counters to strategic business partners – at many companies rising to a rank just below the chief executive – so have treasurers assumed more-strategic roles at many companies. Progressive treasurers are getting out of the treasury department and working with other business units to find ways to boost the bottom line.
They’re also expected to be more assertive in financing-strategy sessions. “You can’t just sit there anymore,” says Dan Blumen, a partner of Treasury Alliance Group. “For instance, you can’t just not hedge; you have to have a specific foreign-exchange policy.”
Treasurers are also getting a better handle on accounting — an area that many of them, particularly those with banking backgrounds, tended to leave to the controllers. The Sarbanes-Oxley Act requires “new, higher standards for financial reporting,” explains Katherine Abbott, who last month became vice president and treasurer of Bally Total Fitness Inc., “which have trickled down to the treasurer’s role.”
Indeed, Abbott knows of one recent search for a treasurer in which only candidates who were CPAs were considered. Further, more boards are looking to the treasurer for bench strength and are expressing a preference for finance chiefs with treasury backgrounds. “If someone in the treasurer position wants to be a CFO, they will want to hone their accounting issues,” she adds.
Another reason for the treasurer’s evolution is that the job itself has become more efficient, explains Susan Skerritt, a partner at Treasury Strategies Inc. Technological advances have made the tools treasurers use more sophisticated. For example, the latest treasury workstations make day-to-day activity more focused and aggregate risk data for better risk management. Such aids enable treasurers to spend less time executing tasks and more time on strategic activities.
In fact, a more strategic role has come to be expected, says Robert Vettoretti, a partner in PricewaterhouseCoopers’ corporate treasury solutions practice: “There’s only so much process improvement you can do within your own function.”
After that, the only way to add value is by working with other functions within the company. Sometimes, for instance, the treasurer must work with operations so that the company can obtain the right kind of financing. In an earlier treasurer job that Bally’s Abbott held at Budget Group, the car rental company, financing was directly affected by the kinds of vehicles the company had in its fleet. “You couldn’t just say, ‘I need to borrow x,’” says Abbott. Lenders might dictate the age of the vehicles they would fund or refuse funding based on a certain manufacturer’s buyback plan. In order to be able to secure financing, Abbott had to work with operations to grasp the fleet’s makeup.