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Treasuring the Treasurer

Strategically minded treasurers are finding new ways to add value to their jobs and boost the bottom line.
Lisa Yoon, CFO.com | US
May 6, 2005

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.

At Home Depot Inc., treasurer Rebecca Flick's work with operations extends as far as the retail store itself. "I spend very little time in treasury," she says. "More of my time is with other parts of the business." Flick works with store employees to assess how efficiently employees prepare bank deposits for the store’s vault from each day’s sales.

The work with operations can beef up a treasurer's strategic role. As a result of Flick's effort, Home Depot executives are thinking about outsourcing the vault system to banks, enabling employees to spend less time at the cash register and more time with customers. Flick is also exploring payment options for people who don't have bank accounts. One product in development is a debit card that customers can load with funds.

In their new functions, treasurers are also teaming up with increasingly unusual bedfellows. One of Skerritt's current clients is involved in a joint project involving treasury and marketing. As marketers prospect for corporate customers, treasury works with them to develop various payment options to boost customer satisfaction and gain more customers, thereby increasing profitability.

Besides treasurers' expanded involvement with other parts of their companies, another cause of their emerging prominence might well be the rise in CFO and controller turnover. A recent study by search firm Russell Reynolds showed a sharp increase in turnover among finance chiefs and controllers at Fortune 500 companies in 2004 compared with 2003. CFO turnover among the 497 companies that replied was up 23 percent; controller turnover had risen 25 percent. Treasurers, on the other hand, showed no change in turnover – it held steady at 12 percent. That's significant, says Skerritt, because where there's CFO turnover, executive management increasingly looks to the treasurer to take on more responsibilities and serve as a source of consistency in finance operations.

That consistency, as well as their communications with creditors, bankers, and outside parties, is enabling more treasurers to venture into another unusual function for them: investor relations. "Treasurers are responsible for dealing with credit analysts, bankers, and other parties external to the company," Skerritt says. "Investor relations is a natural extension."


Despite all of its recent enhancements, however, the treasurer's job is likely to often remain a thankless one, Treasury Alliance Group's Blumen suggests. "For treasurers, if everything goes right, you get a ham at Christmas; if anything goes wrong, you get fired," he says.




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