How Strategic Is Treasury?

Survey examines changing roles and responsibilities of treasury functions, and how some treasurers have come to be key decision-makers in areas like tax, investor relations, and M&A.

When the Association for Financial Professionals (AFP) surveyed corporate finance professionals in 2011, 81 percent of respondents said the treasury function’s role had become more strategic over the past five years. That trend shows no sign of abating. In the “2014 AFP Strategic Role of Treasury” survey report, released today by the AFP and Oliver Wyman, 84 percent said treasury’s role has expanded again. And 83 percent expect their treasury team to become even more strategic in the next half-decade.

The latest survey explored exactly what treasury is doing these days, and the answers to those questions—especially among large companies—indicate why more and more consider the word “strategic” to apply to the treasury function. The activities in which the largest proportion of respondents said their treasury function plays a lead role are fairly predictable: bank relationship management, borrowing, and investing (see Figure 1, below). More than half of treasury teams, and nearly two-thirds of those in large organizations, also have lead roles in financial risk management and counterparty risk analysis.

The result of all these trends: Treasurers are considered to be C-level executives in many organizations. Thirty-seven percent of all respondents said their company’s treasurer is a member of the executive committee or the C-suite. That number is higher for organizations with less than $1 billion in annual revenue (43 percent) than for organizations with more than $1 billion in revenue (32 percent). But even treasurers who aren’t in the C-suite have the attention of those who are.

When asked to rate the treasury team’s access and visibility to the executive committee/C-suite, on a scale of one to five where one is “poor” and five is “excellent,” nearly three-quarters of respondents selected either four or five. And in 55 percent of companies, and 58 percent of public companies, the treasury function formally measures—and communicates to executive management and the board about—its contribution to company performance.

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