Treasury 4.0 – Thoughts at the beginning of the year

Treasury 4.0 – Thoughts at the beginning of the year

"The significance of treasury is not in dispute, it just shouldn't come as an inconvenience." (loosely based on J.W. von Goethe)

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"The significance of treasury is not in dispute, it just shouldn't come as an inconvenience."
(loosely based on J.W. von Goethe)

Our position paper Treasury 4.0 caused quite a stir last year. Many of the questions we received were about implementation and more details. But Treasury rarely changes in leaps and undergoes an evolutionary process instead. Thoughts drive actions and in our context long-term thinking: Which direction should Treasury take and what are the drivers to bring about that change? How can the organisation as a whole be brought along? What are the first steps? All these are questions, which if answered will show us the way.

If change is to become dynamic, then Treasury has to be given the importance it deserves within the company. If this is not the case, it is either driven to fulfil minimum requirements only or the relevant treasury issues gradually migrate to other corporate functions such as the Shared Services Centre, Controlling or Procurement. There are opinions, that certainly since the start of the financial crisis the status of Treasury has now improved to the point that it is in line with its significance for the company. If this is true, then Treasury is now perceived as being equal in importance to Accounting and Controlling and therefore has equal access to human and financial resources.

I do not share that opinion.

There are several indications that Treasury still lags far behind Accounting and Controlling in terms of its significance. I would like to address two of those today: the investment budget and the career development of treasurers.

There is a commercial rule that an investment which generates positive yields − taking into account all risks and secondary effects − is sensible and therefore should be undertaken. Why, therefore, are the investment budgets of Treasury so low compared to virtually all other areas of management? Here are my hypotheses: firstly, because Treasury is often not in a position to clearly define and communicate the benefits.

And not only that − there also frequently is no willingness to discuss this uncomfortable and thorny issue with the CFO (my second hypothesis): to provide counter arguments when there is a lack of understanding of the contribution to value of Treasury; and not to give in, if it can be expected that a lack of investment will have negative consequences for the company. Moreover, these discussions can only be successful when there is transparency about Treasury's actual contribution, both quantitatively and qualitatively. The Treasury black box, which still exists in some areas, acts as an impediment to necessary change and development.

Admittedly, it can be painful to step out of one's own shadow. Not every CFO appreciates being answered back. Nevertheless: those who argue unequivocally with sound professional expertise, and are able to demonstrate the benefits to the company (and the CFO!), will be heard. Not in one single discussion, but step by step.

Those who do not take this path for Treasury and for themselves will not succeed in their career at Treasury. This does not have to be a bad thing by the way, quite the opposite! But, the question often posed is why so few treasurers ever make it to CFO.

Let us envision a race in which the treasurer is already several paces behind his colleagues from Accounting and Controlling from the start. This is not because he is worse or slower, but because of the lower importance of Treasury. The one who will be promoted at the end of the race is the one who comes first. What does the treasurer have to do who had a disadvantage from the start? Run quicker? Work harder from the start? Increase his performance?

Not at all! He has to ensure that he is not at a disadvantage from the start. This brings us back to the status of Treasury in the CFO's view. Furthermore, Treasury and the treasurer should not operate in isolation to find solutions to their issues within the company. Treasury therefore has to strengthen its position, has to act as a proactive 'Centre of Excellence' with respect to all subsidiaries as well as other corporate divisions, such as Controlling, Accounting, Procurement and M&A. Additional operational experience in the above areas is of course more than conducive to one's further career.

Even if not everyone can become CFO, or may not even want to, Treasury is and remains one of the most exciting fields outside of production.

If you would like to know more, please write to us or discuss your issues with us at the Treasury Forum on 23 February 2016 in Munich (for information or registration send us an E-mail to

Source: KPMG Corporate Treasury News, Edition 51, January 2016

Author: Carsten Jäkel, Partner, 

Corporate Treasury

The KPMG team of experts knows the right way for finance and treasury management.

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