The Expanding Role of the Corporate Treasury

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5 June 2017
Patricia Hines

The Association for Financial Professionals (AFP) recently published its 2017 AFP Strategic Role of Treasury Survey supported by Marsh & McLennan Companies’ Global Risk Center. The survey confirms that treasurers’ roles in most organizations are expanding, with their departments increasingly called on to support the execution of corporate strategy. Many now serve as strategic advisors across their organizations, taking on diverse responsibilities such as long-term borrowing, investing, payments strategy and execution, and counterparty risk analysis and enterprise risk management. The key reason behind treasury’s strategic role? Senior management’s focus on liquidity and risk exposures, along with the call to improve cash management and forecasting.

The report analyses how treasury’s level of maturity impacts how well it can serve as a strategic partner to an organization, the C-suite and Board. To help organizations gauge the level of maturity of their treasury function, AFP and other treasury experts developed a treasury maturity model which defines five stages of maturity:

Technology and automation are enabling treasurers to focus on higher value-added work. But nearly half of respondents either disagree or are noncommittal about whether technology is being used effectively by their organization’s treasury to manage risk and increase its contribution to an organization overall. Organizations positioned on the farther (more mature) end of the maturity spectrum are using technology more effectively than are those at the other end.

Strategic banking partners can help companies ensure they have the treasury technology tools to accurately forecast cash positions, assess capital allocation, and manage financial risk. Banks that provide integrated liquidity and investment platforms can also help treasurers reduce borrowing costs, hit liquidity targets, and increase risk management effectiveness through automation and digitization.

The road to an advanced treasury operation is a journey and these survey results can help develop a roadmap for treasury’s continued evolution. If you are a corporate banker or treasury management professional, I highly recommend a reading of the The 2017 AFP Strategic Role of Treasury Survey.

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