Treasury management is a very practical discipline. Ask any non-finance professional to name the first corporate treasury tasks that come to mind and there is a good chance that he the treasurer’s role as a daily cash manager will come up. Many also believe investing and attracting short funds and the organisation of daily payments are the main tasks. However, I would argue that corporate finance and risk management are the core activities, more so than cash management. It could be argued that the collapse of the Bretton Woods fixed exchange rates system in 1973 was the most important driver for treasury as a discipline to develop further.

The treasury discipline can, then, be defined from several points of view. However, there is no doubt that cash management, corporate finance and risk management are vital tasks. New developments concerning the single euro payments area (SEPA), changing financial markets, the Basel agreement and the increasing role of ratings, for example, mean that all traditional fields of interest are still prominently on the agenda.

However, the role of a fully-fledged corporate treasurer of a large organisation is not just an operational one. He or she also runs a department, and has relationships with other functions such as regional treasuries and other decentralised entities. In addition, he or she is the main advisor to the board in financial markets and risk issues.

New Developments

In recent years, three interesting developments have occurred in the treasurer's remit. First, there is an increasing need for sufficient knowledge of the company’s business and organisational structure. Getting all relevant information for cash forecasting and a firm’s long-term finance needs is vital. The treasury must be familiar enough with its own company to taken seriously by senior management in strategic discussions concerning mergers, acquisitions and other board decisions that carry financial consequences.

Second, and by extension, the treasurer’s role is broadening. Tasks, such as investor relations, that originally only concerned the chief financial officer (CFO) are now often jointly fulfilled by treasurer and CFO in more and more companies. Companies with their own pension fund may also give the treasurer a role in managing or supervising the fund. In some cases, the role of the treasurer has encroached on that of the CFO.

The logical next step constitutes the third development. Today, many corporate treasurers and other financial professionals aspire to become CFO. For some, this is a simple progression. However, many other treasurers have to compete with financial controllers and accountants for this job. To gain a competitive edge, treasurers are becoming more interested in acquiring expertise on controllers’ typical issues, in addition to their existing financial knowledge.

Taking these developments together, the conclusion is obvious. Broadening the scope of postgraduate programmes for treasurers in such a way that the programme is also relevant to treasurers taking the next step towards financial management is crucial. In past years, these programmes, such as the postgraduate treasury management programme at VU University Amsterdam have indeed moved in such a direction and the expectation is that they will move further in the coming years. But let there be no misunderstanding: the discipline of core treasury will remain important too. Similar developments in treasury education can be seen all around the world. Comparable postgraduate programmes in other countries, wherever they have not already taken the first steps, will follow the same direction.

Article by Riskmatrix B.V. is an independent firm that offers support in treasury management and financial management to companies and non-profit organisations. The principal activities offered embrace training and consultancy. Riskmatrix also seeks to contribute to the development of the finance profession. To achieve this goal, Riskmatrix has a research and publishing arm.