Spending Corporate Cash Piles Becomes Strategic Ground for Treasurers

In the aftermath of the financial crisis, corporate boards are paying close attention to liquidity and risk exposures, which have elevated the strategic role of corporate treasurers, a trend that is expected to continue in the next five years, according to a survey by the Association for Financial Professionals (AFP).

The AFP Strategic Role of Treasury Survey found that the role of corporate treasury, the subset of finance that assures that an organization has enough cash on hand to meet its needs, continues to grow in strategic importance as global commerce expands and as companies face business decisions about when and how to put historic cash piles to use.

Oliver Wyman provided insights and financial support to the 2014 AFP Strategic Role of Treasury Survey.

With critical financial insight, treasurers are uniquely positioned to evaluate strategic cash deployment, ranging from financial options such as share buy-backs, debt repayment or dividend increases, to operational alternatives such as capital expenditures, acquisitions or product development.

“Treasurers provide value at the highest levels of corporate decision making,” said Jim Kaitz, AFP’s president and CEO.  “They fireproof corporate finances, shore-up shareholder expectations, weigh in on global expansion, build bridges to business units, advise on shifts in payroll numbers, and make major decisions about financial technology.”

“Coupled with ensuring effective and efficient day-to-day treasury management, sound strategic input and strong leadership skills are critical for the ‘new’ treasurer in order to manage and optimize the results and impact of the treasury function,” said Elizabeth St-Onge, Partner at Oliver Wyman.

“The role of the treasurer will only become more strategic as more corporate leaders and Boards of Directors focus on optimizing the use of cash on their companies’ balance sheets and improving their performance in an increasingly uncertain business environment,” said Alex Wittenberg, Partner at Oliver Wyman and head of the firm’s Global Risk Center.

Key survey findings

84% - Corporate treasury’s role has expanded over the past five years.
83% – The role will continue to expand over the next five years.
69% – The enhanced strategic role is linked to the emphasis on cash management and liquidity in the current economic environment.
63% - Corporate treasury's expanded role is the result of the close attention that senior management and the board of directors now pay to liquidity and risk exposure.
94% - Treasurers take the lead role in bank relationship management.
75% - Corporate treasury has strong access and visibility to the organization’s Executive Committee/C-Suite.
37% - Treasurers are members of the Executive Committee/C-Suite.

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