Treasurers need new skills to tackle tech challenges
New treasury competencies will be needed to cope with future analytical demand after the unprecedented events of 2020
There has been growing recognition during the past few years of the value data scientists and business analysts can bring to treasury teams.
Corporates are now looking for finance staff with advanced data analytics capabilities and expertise in the use of data visualization tools and business intelligence platforms, as well as robotic process automation and machine learning.
“We need team members to move from focusing on the ‘what’ to the ‘why’ for treasury projects, focusing on the future instead of the past,” says Steven Krippner, treasurer at energy technology company Baker Hughes.
“These changes are requiring us to move to predictive and prescriptive analysis rather than the descriptive and diagnostic analysis we are familiar with.”
Treasury teams also have to respond quickly to changes in their company and the external financial environment, which requires a growth mindset and the perspective of a business analyst.
Given that few people will have all the skills required, the best treasuries employ a diverse mix of functional specialists, data scientists and business analysts.
The growth of the treasury analyst can partly be explained by treasurers with small teams being preoccupied with operations and leaving the analytical aspect of their job to one side, suggests François Masquelier, former senior vice-president and head of treasury and enterprise risk management at international media firm RTL Group and now CEO of Simply Treasury.
“The key issue will be to find the right balance between internal and external resources,” he says. “We don’t always need these new skills internally, but have to be able to acquire them or to find them when needed.”
The rapid increase in the technology available to treasury departments to help them manage their operations and the risks faced by their organization would suggest there is a growing role for data scientists and business analysts across all organizations.
However, Anil Khurmi, a manager at treasury consultant Zanders, observes that in practice the employment of these specialist personnel can rarely be accommodated within departmental budgets or the benefits justified against the increased cost.
“An emerging solution is to form a treasury-technology partnership with a third party that can provide specialist resources to complement the existing team and enable the organization to rapidly scale up or down,” he says.
Regardless of how the need for new competencies is addressed, soft skills remain important. In fact, the ability of a treasurer to communicate the commercial implications of data analysis to internal and external stakeholders has never been more valuable.
“The treasurer should be considered a representative of their company and must effectively communicate the company’s strategy and how it relates to financial outlook and performance,” explains Krippner at Baker Hughes. “Effective communication can vastly improve a treasurer’s relationships and effectiveness with credit-rating agencies and fixed-income investors.”
Treasurers need to provide reassurance that there is sufficient liquidity headroom to continue operations – even under worst-case scenarios – and that they have the ability to quantify the financial-impact fluctuations in market prices from an FX, interest rate and commodity price perspective.
“They must be able to assess the sources of any credit risk and justify the exposures in place at any given time or demonstrate that those risks have been mitigated to an acceptable level,” says Zanders’ Khurmi.
“Operationally, they need to provide confidence that the function is managed by people, processes and systems that are suitably robust and controlled, with appropriate continuity plans in place.”
He agrees that for publicly listed organizations or those reliant on access to debt capital markets, this role takes on even greater importance.
Even with a wide range of skills and talents, a treasurer needs to be an effective communicator – otherwise the knowledge and intelligence within their department will be of limited value to the broader organization.
“When I started my career, I thought treasury was about managing money,” says Fred Schacknies, former senior vice-president and treasurer at Hilton Worldwide and now a board member of the Association for Financial Professionals.
“I later thought it was about managing information. But I have since come to understand that it is actually about managing people – and that means communication.”
The need for clarity is also evident in written communication, where stakeholders are now demanding summarized reports and single-page dashboards.
“Respect from finance colleagues comes from the quality of output, and treasurers’ ability to properly package and format information for the C-level can be improved,” says Masquelier at Simply Treasury.
“CFOs want more immediate and accurate information, and we need tools to produce the enhanced reports expected by chief financial officers and develop the key performance indicators they need.”
This article was originally published by Euromoney on 13 January, 2020. For more, please visit https://www.euromoney.com/