- By elevating the importance of liquidity and cash management, COVID-19 has underscored the key role of treasurers to their organizations, a survey conducted by the Association for Financial Professionals (AFP) shows.
- 83% of treasury professionals say they think greater value has been assigned to their work because they ensure their organization can pay its bills and finance its operations.
- The survey of 260 treasury executives also identified weak areas, starting with communications. Just over 95% say communication skills are crucial to their success, but only 81% think they do it well.
The treasury role differs by organization, but generally it takes the lead on long-term borrowing, long-term investing and setting a payment strategy.
It might also take the lead on counter-party risk analysis, capital planning, working capital management and insurance purchasing, but, more likely, it plays a supporting role for those functions.
At least for the duration of the pandemic, the treasury role has seen its focus on business continuity planning (BCP)-type work become more important strategically to the organization, but most treasury people think strategic importance will return to pre-pandemic levels over the next three years. BCP activities include cash management and forecasting, liquidity and cash planning and long-term borrowing.
"Interestingly, respondents do not believe this increased focus on BCP will continue three years from now," the survey report says.
The survey identified a number of areas alongside communications with a gap between the skills treasury leaders need and how well they're generally doing. Among them:
- Vision. Importance, 76%; effectiveness, 68%
- Change agency. Importance, 93%; effectiveness, 87%
- Collaboration. Importance, 93%; effectiveness, 88%
"Operating in a crisis environment requires sound business judgment, financial modeling, the ability to think strategically and build relationships with external agencies," the survey report says. "Leaders might want to prioritize and build these skills for staff members who might need them more than others on the team."
The survey was supported by Marsh & McLennan.