As banks have also become more risk adverse when loaning money to organisations, we have also seen the management of cash and fundraising gain importance in response to tighter controls.
This has meant that treasury has become more than a support function in finance. Instead, it is the key driver for businesses in the funding and fundraising functions. This is particularly essential within firms that require investment and upfront capital but face high barriers to entry – such as those in the property sector.
The role of treasurers in organisations depends on how the finance team uses the functions. Fundamentally, treasury is a key part of any business and treasurers typically work closely with the board of directors. If cash flow is an absolute critical part of the business, the position of the treasurer is therefore more important. This results from less cash being available in the market; hence the firm’s directors have to work out different ways, through private investors, to gain access to capital.
No Seat in the Boardroom
Treasury departments are becoming a more important part of the organisation. However, they will continue to be part of finance and report to the chief financial officer (CFO). Hence, in the near team it is unlikely that treasurers will start demanding a seat on the board, despite their strong presence within the organisation.
There are also relatively few other areas of finance which could fall under the treasury function. This is because of the particularly niche and specific nature of the role. It is possible to move a treasury professional to corporate finance. However, treasury is again such a specific skill set that it is a challenge to switch roles for a candidate who has spent too much time in that area. At the junior level, it is possible to for an employee in treasury to spend some time in tax. The closest position would be that of corporate finance, as both are tasked with raising funds.
Again, the extremely targeted nature of a treasurer’s role renders it unlikely for separate roles, such as that of a corporate treasurer and risk manager, to be combined into one. This is because treasury is primarily about cash flow and fund raising, while the area of risk management covers risk assessment and risk reviews, which can be operational or financial. Treasury is also a very specific and in-depth part of finance, whereas risk covers a broader landscape.
Treasury talent will always be in demand and a challenge to attract due to a very limited pool of suitable candidates. The function is typically part of a financial controller’s duties. However in large multinationals, due to the sheer size of the business, the company is likely to have a separate treasury function.
As these multinationals often establish their regional hubs for Asia in either Singapore or Hong Kong, the treasury function can consist of a team with up to 20 members. Strong talent will attract active demand due to the limited candidate pool.
The natural career progression is for treasury professionals to move into corporate finance. Junior level employees will gain strong grounding in finance if they choose to stay for at least a period of three years. Later on, diversifying into other finance functions will be critical in developing a broader portfolio.
The transferable skills which treasury professionals acquire include commercial analysis, corporate finance and most importantly funding for investment. This allows them mobility into any part of the larger finance function; hence treasury experience is a valuable addition to the resume.
The revised Payment Services Directive regulation, regarded as one of the most disruptive in Europe’s financial services sector, will begin to make an impact on January 13, 2018.
This year promises to further the regulatory compliance burden imposed on financial institutions. How are firms in the sector responding to the challenge?
The benefits of an in-house bank are increasingly evident, but some treasury departments still hesitate to take the plunge. This article offers a step-by-step guide.
While GDPR and Europe’s revised Payment Services Directive (PSD2) are not contradictory, the fact that the regulators and many banks work on them in silos is problematic, AccessPay executives argue.