Revisiting increasing roles of the Corporate Treasurer
The global financial crisis had a significant impact on the corporate treasurer in terms of responsibilities and expectations.
Before the crises the primary focus of the treasurer was to manage volatility and risk with regards to cash and liquidity, foreign exchange (FX) and interest rates.
Over the last couple of year this role evolved from purely risk management (execution) to being a ‘partner to the business’ and having a ‘seat at the table’ with regards to strategic decision-making.
This broader and more important responsibility of Corporate Treasurers has been reinforced by the financial crises and its impact on the corporate environment.
Next week Thursday, the Association of Corporate Treasurers of Nigeria (ACTN) and other stakeholders in the country’s financial market will hold a breakfast meeting with the theme: 2017 Economic Review and Prospects for 2018.
The ACTN with other stakeholder will at this breakfast meeting be evaluating the economic activities of the current year and highlight the impacts on the business environment and ways of restoring confidence in the Nigerian financial markets.
The Association is being positioned to define the corporate treasury function as well as create value for organizations and the Nigerian economy through advocacy, standards development and education/enlightenment.
The breakfast meeting will feature array of speakers including Emmanuel Ukeje, special adviser to the Governor of Central Bank of Nigeria (CBN) on finance and monitoring and Doyin Salami, a renowned economist and member, Monetary Policy Committee (MPC).
Also at the meeting scheduled other panel discussants made up of experienced professionals drawn from the academia, the corporates and the financial markets will also discuss the subject matter from various perspectives.
ACTN is a professional Association of Corporate Treasurers of the buy side and non- bank sell side (Oil and Gas sector, Telecommunications, Trading and Manufacturing, Service, Food and Beverages, Hospitality etc.) of the Nigerian financial markets.
The Association provides the platform for corporate Treasurers to regularly meet to discuss issues that border on the Nigerian financial markets as well as the economy as they impact the corporate treasury function.
In his recent view on treasury management, Riaan Bartlett, a treasury consultant said, “there are some key lessons for the corporate treasurer from the financial crisis”. The lessons are either operational lessons or strategic, he noted.
The Strategic lessons include: must have a group of strong, long-term, committed relationship banks; access to diversified funding sources is crucial that is bank debt, capital markets (different markets), money market, private placement, commercial paper etc.
Also, the expert sees other strategic lessons to include that of raising finance which can be challenging even for well-rated corporates; and having a large liquidity buffer. It is important that corporate treasurers know that safety of surplus cash is more important than the yield achieved; note the major shift in risk management especially credit risk management; and be forward looking and have an upfront plan to manage a downside (crisis) scenario.
The operational lessons are: management of counterparty risk, credit rating of bank below corporate’s credit ratings; as well as have stronger focus on cash and the accuracy of cash flow forecasting.
An increased focus to cut costs across the organisation including treasury (introduction of ‘do more with less’ principle meant fewer people have to do more) is also important lesson learnt while there is need for corporate treasurers to take control of the working capital cycle, something that has been neglected.
Big Read |