Blog – 2 Column

Starting a new job in Treasury: Best practices and expert advice

This Articles is a repost from an Article posted by our Content Partner Nomentia We recently interviewed treasury expert Patrick Kunz, who’s been working in treasury all his life. As he mentioned himself during the webinar, “Treasury is basically all I know.” Patrick has worked independently for the past 11 years. He founded his own company, Pecunia Treasury and Finance, and works with various companies, from scale-ups to large enterprises and anything in-between. Patrick provided interesting insights into what treasurers should prioritize during the first 180 days of a new job because of his longstanding experience and the many temporary assignments he’s had. In this article, we’ll discuss some of the main things we also covered during a recent webinar. These are the main topics that Patrick deems crucial during the first 180 days of starting a new job in Treasury: Let’s dive deeper into each one of these topics. 1. Starting with planning and prioritizing How planning and prioritizing are done in your first 180 days is highly dependent on each company. Suppose it’s a longstanding company with hardly any volatility. In that case, your priorities are different compared to an organization without a treasury department, where it has to be built from scratch, for example. Of course, these are both extremes, and many organizations have characteristics somewhere in between. In an established treasury department, every treasurer has their own style, working methods, and priorities. If you start a new job in such a team, it doesn’t automatically mean you can simply continue what the former treasurer did. It’s most important to recognize where the company’s priorities are. If the company focuses more on forecasting, it will likely receive more attention and become a priority.  Patrick suggests that it’s really up to the treasurer together with the CFO and the company to prioritize where to start. He also stresses that this should preferably be clear before starting a new job and become even more apparent during the first month or two. 2. Identifying main internal and external stakeholders Treasury can never work on its own. If you’re a stand-alone treasury, you’re doing something wrong. Treasury is at the company’s heart and should closely collaborate with other stakeholders. On the one hand, it gets cash in from the business and allocates cash out to other businesses. On the other hand, it also ensures that working capital runs smoothly by guaranteeing that there is sufficient risk-free cash available. Regarding internal stakeholders, Patrick mentioned that a crucial team to work with is procurement because they know how and when you will spend your money. In addition, sales are important because they generate your cash inflows, and any hick-ups in revenue will hurt your cash flows for the coming weeks. You should also always be in close contact with the CFO, who’s probably your boss (or FP&A depending on the organization). With these main internal stakeholders, you need to align at least every week.  Patrick also mentioned that other departments have the tendency to forget to invite treasury to a meeting or start involving them in a project at a later stage, which often brings in last-minute stress and dealing with tight deadlines. So, putting yourself on the map and explaining to stakeholders what treasury is all about is crucial to overcome such challenges.  Another main reason to keep other departments close is that there might be overlapping tasks or systems that other departments also benefit from. Therefore, aligning processes and systems to work most efficiently is critical. External stakeholders often consist of banks, liquidity providers, and hedging counterparties. But this also depends on the company and how advanced its treasury operations are. In the end, treasury sits on top of a lot of tasks but also needs to get away from the comfortable treasury chest and be out there as a business advisor. The business, in turn, should know what treasury does, where to find them, and for what purposes. 3. Achieving cash visibility and strategizing for excess cash or shortages There are two questions that a treasurer should be able to answer: The latter is often a lot harder to answer. Interestingly, on the other hand, companies often don’t have any issues knowing how much profit they will make for the year. They know exact P&L figures and current cash at hand yet forecasting remains a challenge. If you cannot answer both questions perfectly, you should be able to use some tools or techniques to get the response within at least an hour to half a day. In more straightforward treasury organizations, question one can be answered by accessing one, two, or three online banking portals. However, most multinationals have hundreds of banks because no bank can offer bank accounts anywhere in the world.  When treasury is more complex, answering how much cash you have or will have in the future becomes increasingly challenging. With today’s technologies, however, 90 or 95 percent of cash visibility should be available with the push of a button. There are many tools where you can login to view at least end-of-day balances, but you should preferably be able to see intraday balances and real-time balances too.  Moreover, as a treasurer, you should always be forward-looking. There’s always a cash starting position available from which you can calculate how much cash you need next week, for example, and whether the cash position goes up or down. Then you can take it one step further and do the same for a month. By analyzing shifts in cash positions over time, you can also determine whether there’s a financing need. If you are in need of financing, you may need to talk to your bank. But can they provide financing quick enough? Or do you already have a credit facility that you can use? Depending on the economic circumstances, it can be hard to get a loan if you don’t have a facility, especially when interest rates are higher and there is less cash in the market. On the contrary, if you…