The advent of 21st century technologies, combined with contemporary macroeconomic realities, has transformed enterprise operations.
And the greatest beneficiary has been the back office, with traditionally administrative functions like finance and treasury taking new prominence.
Historically, the role of a company’s treasurer has been seen as wholly operational: focused on managing liquidity, risk, and financial investments. However, as businesses navigate increasingly complex global markets and today’s higher-for-longer rate environment, the scope of the treasurer’s responsibilities has expanded.
But while involving treasurers in strategic decision-making is increasingly recognized as not just beneficial, but essential, for ensuring financial resilience and strategic agility, the latest PYMNTS Intelligence data reveals that over half (53%) of C-suite leaders misunderstand the role modern treasurers can play in standing up a sustainable, successful corporate strategy.
What they are missing is that the treasurer’s expertise in financial markets, risk management, and capital allocation are all areas crucial for the informed strategic decision-making necessary to navigating today’s operational uncertainty.
Read more: Why Treasurers’ Influence Matters
In the 20th century, treasurers were primarily responsible for safeguarding a company’s financial assets and ensuring adequate liquidity. Their focus was on the day-to-day financial operations, such as cash management, financing and mitigating financial risk.
But the realities of the today’s evolving business environment, characterized by rapid technological advancements, global interconnectedness and increasing regulatory scrutiny, have necessitated a broader role for the corporate treasury function.
PYMNTS Intelligence’s latest study finds that treasurers with high levels of influence are far more likely to report that their companies have predictable cash flows, expect revenue to increase and are agile in responding to shifting marking conditions.
Still, 79% of non-treasurer executives say that treasurers and CFOs are largely interchangeable in strategic decision-making — a clear misperception, but one that underscores the fact that the integration of treasurers into strategic roles may require a cultural shift within organizations.
After all, the benefits of an effective, organization-spanning treasury operation can be far reaching. Companies with highly influential treasurers are more likely to report positive revenue outlooks, predictable cash flows and adaptability to market pressures.
A cross-functional organizational structure can enable treasurers to have a high level of influence, and most treasurers think at least one department would benefit from closer collaboration with them.
Strategic initiatives often require significant financial resources, and poor cash flow management can jeopardize their success. Treasurers play a crucial role in forecasting cash flows and ensuring that sufficient liquidity is available to fund operations and investments.
See also: Real-Time Treasury Management Pays Off for Multinationals
“Treasurers today must be more agile in decision-making,” Claudia Villasis-Wallraff, head of data driven treasury at Deutsche Bank, told PYMNTS. “Companies need to adopt new technology, and with this, I not only mean adopting API connectivity, but also cloud functions and artificial intelligence (AI)… Shareholders and the C-level are going to start asking more and requesting more from their treasury teams.”
She added that, looking ahead, the ability to create operational cash flow forecasting without manual intervention will be a game changer for treasury teams. This automation can streamline treasury operations, allowing treasurers to focus on more strategic tasks.
“AI and ML are transforming everything treasury,” Jarrett Bruhn, managing director and head of data and AI in global transaction services at Bank of America, told PYMNTS last year. “It’s the equivalent of the Industrial Revolution 4.0. When you think of what a treasurer does, trying to find operational and cost efficiencies, these tools and technologies fundamentally change how they can do their daily job.”
And in an era where geopolitical, regulatory, and market risks are more pronounced, effective risk management is critical. Treasurers are adept at identifying and mitigating financial risks, including interest rate fluctuations, currency volatility and credit risks. By involving treasurers in strategic discussions, companies can better anticipate and prepare for potential financial disruptions, thereby protecting their assets and ensuring long-term stability.
At the same time, effective capital allocation is fundamental to a company’s growth and profitability. Treasurers, with their expertise in financing and capital markets, are well-positioned to advise on the most efficient use of capital. Whether it’s optimizing debt and equity financing, managing working capital or evaluating investment opportunities, treasurers help ensure that resources are allocated in a way that maximizes shareholder value.
For further reading, the PYMNTS Intelligence report “Navigating The Unexpected: Developing A Long-Term Treasury And Trade Risk Strategy,” a collaboration with Citi, reveals how treasurers seeking to support their organizations’ growth strategies can plan to manage risk exposure, support growth and implement digital innovations.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More