Every coin has its flip side. And when it comes to the finance and treasury functions of their organizations, businesses are increasingly calling both ‘heads’ and ‘tails’ to navigate today’s operational uncertainties.
This shift toward a greater convergence and potential synergies between the roles of finance and treasury is not merely a response to economic pressures or regulatory changes. Instead, it reflects a deeper strategic alignment aimed at enhancing financial and business success on both micro and macro levels by unlocking the digital transformation of previously siloed functions.
While both treasury and finance departments have historically shared a focus on financial management, their perspectives and approaches have traditionally been distinct.
Finance teams often operate with a long-term strategic view on their company’s overall financial health, including budgeting, forecasting and financial reporting; while treasury teams focus on cash management, liquidity planning and risk management. However, as the business environment grows more complex and interconnected, these roles are becoming increasingly intertwined.
According to the latest PYMNTS Intelligence, a full 77% of treasurers believe that at least one department in their organization would benefit from closer collaboration with them
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As companies prioritize growth and value creation, strategic capital allocation becomes paramount. Finance and treasury teams are increasingly collaborating so that firms are better able to align capital allocation with corporate strategy, balancing investments in growth initiatives with the need for liquidity and financial stability.
“Cash flow can be a blind spot for the finance team,” Noam Mills, CEO at Panax, told PYMNTS, explaining that traditional cash flow management can often be reliant on manual processes and reactive measures.
By sharing insights and data, finance and treasury teams can create more accurate and comprehensive financial plans, enhancing financial planning and analysis and ultimately boosting the company’s ability to anticipate cash flow needs, manage working capital and optimize investment strategies.
“CFOs need to understand the business, not just model it and visualize it … but work with teams as a partner not just a bookkeeper keeping things on track,” Provi CFO Kevin Price told PYMNTS. “There is a lot more financial partnership and analytical leadership that the finance department is providing now.”
With a more integrated approach, companies can better identify, assess and mitigate financial risks. For example, coordinated efforts in managing foreign exchange exposure, interest rate risks and counterparty risks lead to more robust risk management frameworks.
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The global economy’s interconnectedness means that companies are more exposed to currency fluctuations, geopolitical risks and other external factors. This requires a coordinated approach, with finance and treasury working together to hedge against adverse movements while being able to capitalize on favorable trends.
The ability to quickly respond to market changes is crucial in today’s fast-paced environment. A seamless partnership between finance and treasury allows companies to make informed decisions rapidly, whether that’s adjusting capital structures, renegotiating debt or reallocating resources.
“All that stuff only works well if we’re collaborating across the teams, working closely with other leaders to ensure that not only are our forecasts going well, but also to make future decisions on where to invest … the financial budget needs to be working toward the company’s goals in a very explicit way,” Jeff Bray, CFO at Semperis, told PYMNTS during a conversation for the series “A Day In The Life of a CFO.”
Still, PYMNTS Intelligence’s latest study finds that 79% of non-treasurer executives say that treasurers and CFOs are largely interchangeable in strategic decision-making — a clear misperception, but one that underscores the fact that the integration of treasurers into strategic roles may require a cultural shift within organizations.
To fully realize the benefits of greater collaboration between finance and treasury, businesses must invest in technology, foster a culture of cross-functional cooperation and ensure that their teams have the skills and knowledge to leverage data effectively. Moreover, leadership must recognize the value of this partnership and support initiatives that enhance integration and communication between finance and treasury.
As the boundaries between finance and treasury continue to blur, the organizations that embrace this integration will be better equipped to thrive in the face of uncertainty and capitalize on emerging opportunities.
Ultimately, treasurers with high levels of influence are far more likely to report that their companies have predictable cash flows, expect revenue to increase and are agile in responding to shifting marking conditions.
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