Q: Let us know you, Sebastian. Tell us a little bit about yourself and your journey in treasury
I joined Finance & Treasury Services as a Corporate Treasury Manager after finishing my Master’s in “Finance & Accounting” at Leuphana University Lüneburg. While I was studying, I did several internships in corporate treasury departments, which helped me gain a lot of experience in treasury operations and currency management.
For example, I was involved in implementing a new global treasury management system and revising a hedging strategy. Before this, I spent a year in treasury consulting with one of the Big Four accounting firms, where I helped clients set up their treasury functions and improve their organizational, procedural, and methodological approaches. I also have a background in banking, having completed a banking apprenticeship.
Also Read: An Interview with Benjamin Defays, Board Member of Treasury Masterminds
Q: What specific skills do you believe are essential for success in treasury management, and how have you developed and utilized these skills throughout your career?
1. Corporate Banking: Hard Skills
Since specifically Treasury Management concepts, methods, or instruments are not widely taught in academics as an individual subject like Controlling or Accounting, a sound understanding of corporate banking and cash & risk management, as well as financing products, is important. Treasury really begins with the bank relationship, ergo bank account management, investing and lending cash, etc. Most payment products or banking services are not hard to understand but it’s an advantage to be familiar with the “slang” and environment before starting a job in treasury. “Learning on the job” (see below) or visiting specialized seminars is a common way to develop the necessary skills throughout your career, making sure that you gain the relevant knowledge for your daily operations.
2. Analytical Soft Skills
The fundamental tasks of a Treasury Manager are to create transparency, reduce financial risk, and ensure liquidity and solvency at all times. Where do I need cash, in what currency, and at what time? To answer these questions, you need to create sophisticated, comprehensive reports, that show data about your cash flow. There are many tools out there that help you visualize your cash flow in beautiful-looking tables and graphs. The real pain really starts at the beginning, though. No one likes to (a) collect, (b) save, and (c) clean the data, except you’re a real data wizard. The role of the Treasurer shouldn’t be about this data wrangling but the data analysis itself. You need to feel comfortable digging deep into the numbers and trying to figure out what story they tell.
3. The Rest: Learning on the job
Since every Treasury is different, the requirements of businesses’ cash and risk management and financing can vary a lot. No Treasurer deals with all banking products and services, so you will soon find out what is relevant to your organization and what is not. One of your Treasury fellows might work in a trading company and deal with letters of credit every day, whereas you never understood how to manage them. A second fellow prepares for a bond emission, whereas you are only dealing with simple bank loans. A third fellow is executing the cash status and forecast by the push of a button in their Treasury Management System, while you are still struggling with your manual Excel sheets. This is all completely normal and fine! Always try to improve your workflows and systems, automate processes where you can, and stay up-to-date with skills, trends, challenges, and regulations in Treasury.
Q: In your opinion, what are the most significant challenges facingTreasuryy departments in today’s business environment, and how do you approach addressing these challenges?
1. Resources
Labor market shortages plus the lack of sophisticated higher education, especially Treasury management, create a tight situation for corporations trying to fill their vacancies. Often, they demand experienced treasurers who are simply aging more and more and the young ones are not following fast enough. A temporary solution can be interim managers but in the long run, only universities can help increase the supply of recruits.
2. Budget
Treasury departments are fairly low-staffed compared to other finance departments like controlling or accounting. Many corporations prefer to stack up their technology, trying to make machines do the work more efficiently, rather than hiring for more FTE. Often, approval for these kinds of projects faces a bottleneck at the C-level and budget is the prevailing argument. A well-prepared business case with quantitative and qualitative value is key to winning their hearts on a project like this since the overall goal isn’t normally about gaining a profit from treasury activities.
3. Change Management
In the fast-paced environment of today, new digital skills are needed more than ever. Especially data literacy and agile working methods are promising to cope with new trends in technology and to overcome the old “we always did it this way” mentality. The younger generation knows that there are capabilities and solutions for “getting the job done”. They can be frustrated if the organization is not adapting to the new realities and continues business as usual. Integrating young people into the team brings new ideas to the table since they grow up with different views and approaches.
- Could you discuss a particularly complex treasury-related problem you’ve encountered in your career and how you navigated through it to achieve a successful outcome?
- How do you stay updated on changes and developments in the field of treasury management, and how do you incorporate this knowledge into your professional practice?
4. Embrace LinkedIn
Treasury management is a dark niche in the big pond of finance. Connecting to your peers helps you navigate these waters, not only on your own. Many treasurers got to their position where they are more or less my chance since the career path isn’t shown to them after university. Therefore, the feeling of working in a fairly unknown financial terrain should be more of the norm than the exception. A great place to start is connecting on social media platforms, especially on LinkedIn. Today everyone is happy to have a big online network of like-minded people and it’s not weird anymore if you haven’t met the person in real life yet.
5. Subscribe to Newsletters
There are good ways to stay up-to-date in treasury management, such as through online news portals. They offer a wide range of information and ways of presenting it. More and more publishers are even going into direct contact with their audience through webinars and live events. By subscribing to their newsletters, you won’t miss out on newly published articles, invitations for webinars, etc.
6. Attend Live events and join associations
The classic way of meeting people outside the online world never gets old. More and more treasury associations are organizing live events on their own, besides the well-established players. Being a member of an association connects you automatically to like-minded people who also live close to you, likely speak your language, and share the same passion as you.
Q: Can you walk me through your approach to cash flow forecasting and liquidity management? How do you ensure accuracy and reliability in your forecasts?
Setting up a liquidity forecast follows the following steps:
- Definition of planning method (direct planning, rolling planning, bottom-up, currency-differentiated): Cash flows are regularly planned directly by the subsidiary according to a predefined schedule and reported to Treasury. The actual availability (value date) is decisive.
- Definition of the data basis/origin: The data basis for cash flow forecasting and liquidity management typically includes historical cash flow data, sales forecasts, payment terms with customers and suppliers, budgeted expenses, debt obligations, and other relevant financial information sourced from internal accounting systems and external market data.
- Definition of planning categories: Planning is carried out at the level of categories across several accounts and not at the level of individual accounts.
- Definition of planning horizon/frequency: The planning horizon depends on the risk to be minimized (e.g., liquidity/credit risk) and the various business models. The frequency of planning depends on the liquidity situation, the company’s risk tolerance, and the general market situation. Legal conditions also influence the planning horizon. Restructuring and insolvency law best practices have to be taken into account (13 weeks / 24 months). It is also a question of the availability of planning data on which the planning should be based.
- Definition of responsibilities: Responsibilities are defined and documented within the companies, including defining responsibilities per planning category and outlining the tasks and responsibilities of corporate Treasury.
- Regular reporting and analysis of deviations: Continuous improvement of planning quality and informative value involves regular reporting and analysis of deviations. This process aims to increase planning discipline in the companies and allows for adjustments to be made based on observed discrepancies between forecasted and actual cash flows.
Q: How do you assess the effectiveness of a company’s treasury operations, and what metrics or key performance indicators (KPIs) do you consider most important in evaluating treasury performance?
Manual vs. Automated tasks
It may sound like a military drill but measuring the time that you need to finish a task can be eye-opening. Especially when it’s done manually and repetitively. Like a steady drop that will carve the stone, many small daily tasks quickly pile up. Some tools help you measure the time while you’re actually performing the tasks and also record your desktop clicks, etc. As cliché as it sounds, in many cases, time equals money in treasury operations, especially if your team is small or understaffed. Often, this comes as an opportunity cost where your limited time could be used on another, more value-generating task. A best practice is to identify all your tasks. List them in a table, measure the time to execute them, and distinguish between manual and automated tasks and administrative and analytical tasks. Ask yourself how the process could be made leaner, meaning more automated, faster, and more efficient.
Q: How do you prioritize competing demands and allocate resources within a treasury department, particularly when faced with limited budgets or staffing constraints?
In my current role, I get to know many small treasury teams and even one-person treasury departments. They only have two options, i.e. (1) make or (2) buy. Since their personnel is limited, they need to find support in adjacent departments like control, IT, or Accounting. You need to identify key treasury processes and build your treasury operating model with the help of these resources, even if the expertise is not primarily focused on treasury. The keyword is learning-on-the-job.
Q: Can you share an example of a successful treasury initiative or project you led or contributed to, highlighting the impact it had on the organization?
Implement IC Netting in a TMS
Primarily an accounting topic, it was funny to see that most of the resistance came from the accounting team. Their main concern was the adoption of new procedures and learning the tool. They felt uncomfortable abandoning their habits of doing intercompany clearing like they used to do for a long time. Even if the implementation meant straight-through-processing and therefore faster execution time and less manual work,. We wrote the IC Netting rule book and held several training sessions with the accounting team. Ultimately, they saw the benefits outweighing the doubts. In the end, it was more of a chance management process for their minds than for the technology itself – and good communication was key.
Q: How do you approach the selection and implementation of treasury management systems (TMS) or other financial technology solutions to streamline treasury processes?
I love and hate TMS selections. I love it since the value it brings to Treasury operations is massive and it saves you so many manual Excel headaches. I hate TMS selections because the standard RFP process feels like something from another century, takes ages, and overburdens many SMEs financially and in terms of personnel. Since almost all TMS vendors are very restrictive with letting you have a demo (look and feel) of your own on their website or social media, you do not have a chance to get to know their software without starting this cumbersome process and displaying genuine interest. My three pieces of advice from many TMS implementations are the following:
- Process improvement: Get your processes in order first. A TMS is not the solution for crappy workflows. Avoid garbage in, garbage out.
- Internal resources: Set up an implementation team. A TMS implementation needs internal resources and cannot be done solely by the TMS vendor. Your team is too busy to deal with the implementation in addition to their daily operations. Get external support.
- Future readiness: Think about tomorrow and not today. Since many TMS vendors want to negotiate long contract terms (3 years or more), think ahead about what processes and features might be relevant in the future. It would be a pity to find out that a feature that is not relevant today can’t be covered by the TMS tomorrow.
Q: What about AI, LLM, Machine Learning, RPA, and coding? What is the role of a treasurer in it? Should we know all about it and learn it or only know the basics? Do we even need it?
I get easily excited by the newer technologies being applied to the Treasury now (RPA, AI, ML/LLM). Since I taught myself the programming language R, Data Analytics, and a bit of UIPath (RPA), I know firsthand what huge benefits these technologies can bring to the table. As a treasurer, though, when it comes to liquidity, the basics matter first. Meaning, that you should first get your processes and data in order (speaking of effectiveness = doing the right thing) before even thinking about applying newer technologies to them (speaking of efficiency = doing things right).
Understanding the basics of these technologies is beneficial for treasurers, as they can help automate routine tasks, improve decision-making processes, and enhance efficiency. However, the level of expertise needed may vary depending on the complexity of treasury operations and the organization’s strategic objectives. As much as I enjoyed my R programming project in one job, my skills were not needed at another job because they didn’t need them. You need to apply your knowledge to keep it. The need is highly dependent on the cash flow data, business model, and economic situation the company finds itself in. If these technologies can bring high value and potentially save money, the business case and ROI are easier to prove. I would say that RPA is beneficial in most cases since all treasurers are doing repetitive tasks every day. The value of Machine Learning (predictive analytics, fraud detection, etc.) is not clear from the beginning and needs deeper analysis. Here, the help of external experts is advised since this domain is fairly new and normally exceeds the treasurer’s expertise.
Q: Finally, where do you see the future of treasury management heading, and how do you envision adapting your skills and expertise to meet evolving industry trends and challenges?
Automation
The future of treasury management lies in automation, data analytics, and AI-driven decision-making. Treasury Management Systems (TMS) were built to help you manage treasury processes. Hopefully, you will get rid of the manual, tedious, repetitive data administration work and can focus on value-bringing, analytical tasks that will be insightful for the financial decision-making process and provide value to the organization. In the future, I see the Treasurer more as the financial Data Analyst and the TMS as the most important tool to achieve “Management by Exception”. I think we will see generative AI embedded in the TMS, creating reports by just speaking to it (speech-to-task), e.g.:
“Hey TMS, show me the cash forecast for the next 12 months for the DACH Region” or
“Hey TMS, please sell 1 million USD at the end of the month via our Multi-Dealer Platform.”
“Don’t be afraid of technology. See it as a tool that helps you become a real Sparring partner on the board.”
Join our Treasury Community
Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information.
