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What is the most important decision a corporate treasurer makes?


The world of corporate treasury is complex and multi-disciplinary at the interplay of  business, technology, policy, process, people, procedure, operations and systems. The decisions a treasurer makes determine the financial health, success and longevity of an enterprise. Hence it is important that the treasurer has the right tools, data and resources to make informed judgments.

In reality, there are several internal and external factors which add to the dynamics of everyday treasury operations. External factors include macro-economic issues, geo-political trends, global financial implications, industry trends, regulations and compliance, currency volatility and multi-dimensional risks.

Internal factors include the role definition of a corporate treasurer and the increasing and evolving expectations of the treasury office. Being a corporate level emtity, the treasury cuts across all enterprise functions, geographies and legal entities / business units, and hence it is imperative for the corporate treasury to know, understand and work closely with different (global) groups/ teams to ensure financial well-being of an enterprise. The other interesting aspect about the Treasury office is that treasury operations span across front-office, middle-office and back-office, with each office using different systems/ products, people and processes. Treasury functions typically span across Cash and Liquidity Management, Payments Management, Risk Management and next generation payments/ emerging technology solutions in some cases. Treasury technology/ systems typically involve integration/ interaction with banks software, market information systems and in-house technology landscape for data and information. All this makes it an interesting and existing space to be in.

Against this context - Many times, I wonder what is the most important decision a treasurer makes?

1) Is it what investments (short term, medium term and long term) have been made to secure the financial well being of the enterprise?

2) Is it how streamlined and effective are the treasury processes to deliver against the treasury KPI (Key Performance Indicators?)

3) Is it what treasury technology systems have been implemented to streamine, automate, consolidate and run the everyday treasury operations?

4) Is it what business / strategic decisions the treasury team can influence by virtue of their role and position in the enterprise?

5) Is it what holistic business risks they can forecast and with what level of confidence, and how they can draw actionable treasury insights to insulate the business from (un)known risks?

What do you think? Leave a comment to let me know..

As I sign-off, wishing you a very Happy New Year 2016 to everyone at the FinExtra community. Also a special thanks to everyone who has read / commented on my posts. It have been a great learning to be contribute here and read the views, insights and perspectives of other writers in the community...

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Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 January, 2016, 12:14Be the first to give this comment the thumbs up 0 likes

I once used to work in a multi-divisional conglomerate with diverse interests in IT, auto, consumer electronics, chemicals, and so on. All operating SBUs were very profitable. Despite that, the Treasurer made more profits for the company than all the SBUs put together. How? By deploying surplus cash from the operating SBUs in F/X trading and capturing profits from the spreads therefrom. Going by that experience, I'd think the most important decision for a Corporate Treasurer is: "In what asset class should I deploy surplus cash so that we maximize profit without endangering the enterprise's financial wellbeing?" I guess that comes closest to the #1 item on your list.