Prove your worth
European treasurers are under pressure to demonstrate that they provide value. This probably comes as no surprise to treasurers across Europe who – like many other groups of professionals – are being asked to do more with the same or even less resource. This added-value issue has been growing more pressing for some time but has been brought into sharp relief by the PricewaterhouseCoopers European Treasury Survey 2006, Measuring Value from Treasury.
The more positive note from the survey is to see a future where treasurers can move beyond their traditional remit. ‘Traditional’ treasury activities such as transaction processing should be increasingly viewed as a commodity. Instead, as has been demonstrated with treasurers’ involvement with pensions, the boundaries of treasury can be enlarged to look at areas such as working capital management, capital structure and customer financing and nascent topics such as IT integration and commodity risk management.
Such expansion sounds like good news for the treasury profession. However, caution is needed. The survey reveals a growing expectation gap. Treasurers see bank relationship management and decision support and supporting business activities as the main value-adds. On the other hand, treasurers believe shareholders overwhelmingly see treasury risk management as the key valueadding activity. Maybe the two aren’t that far apart but if there is not an expectation gap there is certainly a lack of communication. The biggest challenge for treasurers is in the field of treasury performance reporting, where some treasuries are incorporating key performance indicators (KPIs) and benchmarks which convert policy objectives into numerical measures. But for most, measurement is a patchy affair – for instance, in assessing the relationship between business units and treasury and the use of true treasury metrics as opposed to accounting measures.
No-one likes to be criticised and European treasurers could be forgiven for thinking that they are under scrutiny from those who know little or nothing about the job they do nor the pressures they work under. But true though this is, treasurers have to resist the temptation to dismiss the criticism. Instead, they have to find a way to engage in a constructive dialogue with their stakeholders, especially over the critical issue of treasury performance reporting. Stakeholders have to understand and appreciate the role of the treasurer, while treasurers need to demonstrate that they can meaningfully address their concerns.
PETER WILLIAMS
Editor
See Ask the Experts, page 09, Under Pressure, page 22, and Future Perfect page 28.
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