EuroFinance

Integration between treasury and the business is a prerequisite for an effective and efficient treasury organisation. The remit of the treasury function has changed over the last few years, and treasury is now expected to be much more of a proactive advisor to the company.

Traditionally, the added-value of the treasurer was primarily based around how to manage cash flows and risk effectively. This rather operational role of the treasury function has gradually evolved over the last decade towards treasury becoming more of a strategic partner to the business.

Different layers of treasury

Speaking at the 2022 EuroFinance International Treasury Management, Yang Xu, Senior Vice President, head of corporate development and global treasurer at the multinational food company, Kraft Heinz, told delegates about the essential prerequisites for establishing a partnership with different business functions to create a successful and best-in-class treasury department within a global organisation. 

The first  layer and a critical prerequisite for treasurers is “control and compliance” which ensures that governance and discipline within the treasury function isn’t sacrificed. The second layer is about “process automation” which provides the treasury team with the gift of time to focus on critical tasks. The third layer, which is often the focus point of the C-suite is “capital transactions” which are essential to ensure the company’s liquidity and capital needs. 

Xu explained  these three layers eventually lead to the aspect of “business partnering”, which is the fourth and the most important layer of a treasury function. 

“I purposely put [business partnering] into the last layer, because if my basics are falling apart, the control and compliance is not handled properly, I cannot get to the system automation and further not earn the right to do major transactions and therefore never become a business partner.” Xu further said.  

Differentiating treasury from general finance

However, it is essential for the corporate treasury to find opportunities linked with its core competencies in order to provide a solution for business segments. The 2020 pandemic was one such example wherein the treasury played a key role in managing its repercussions on cash, liquidity and risk and enabling emerging digital business models. Furthermore, treasurers also had to layer on the effects of the Russia-Ukraine conflict and soaring inflation.

Xu mentioned that: “Treasurers should see these opportunities and build upon them, because once they are at the centre of the stage, then the C-suite would want to have a dialogue and it is essential to continue to capitalise that credibility and goodwill.”

This has enabled the treasury team at Kraft Heinz to have a smooth conversation with the business and get them on the same side of the table rather than seeing treasury as another roadblock. 

Building a business oriented team 

However, in order to remain connected to business partners, it is essential that the treasury team has a mix of treasury technical staff and people with an external mindset who can speak the business language within the treasury team. This led Xu to initiate a rotational programme wherein treasury staff can explore projects within the broader finance function while also offering an opportunity for professionals outside the treasury team to work on treasury projects. 

“Over a period of time, we are able to create a nice balance of people speaking business and people with core treasury skills… Once this progression is made, the treasury becomes an  indispensable partner for all the other departments within the broader organisation.” Xu further said. 

Furthermore, by having open communication across the treasury department regarding why it is significant to move towards being a business partner, Xu has enabled treasury staff to gain operational autonomy and have a better understanding of the direction of the company. 

She added, “ultimately, you need to know where the company is going. But each step along the way from the very beginning to the final stage, understanding the business is absolutely necessary and that is what enables us to be successful.”

The world’s largest and most influential treasury event will return this September in Barcelona. Join more than 2000 senior-level professionals representing over from more than 50 countries to exchange experiences, learn best practices and meet best-in-class financial and technological partners. This year we will explore the theme “Navigating a new world,” empowering treasurers to manage today’s new and complex challenges and optimise treasury for the new economic cycle. Find out more.