Akey issue for any treasurer is dealing with a new finance director. Whatever the situation – whether it is the treasurer or the finance director who is joining the organisation – the two senior professionals need to build an effective working relationship in a bid to enhance shareholder value.
Turnover among senior financial professionals is rapid these days and like other senior positions in corporates, FDs and treasurers moving on to pastures new must build a good rapport and grasp how their new colleague works and the ideas they bring to the company.
At a recent ACT seminar, the former Chief Financial Officer and Treasurer of Allied Domecq – Graham Hetherington and Bob Williams, respectively – revealed the secrets of their successful working relationship and shed some light on the murky world of managing interaction between the treasurer and CFO.
For a treasurer weighing up how to handle the FD, the vital question is how much the latter knows about the treasury function. An FD with a treasury background will speak the treasurer’s language and will understand the challenges and the constraints. The downside may be a desire to be a little too hands on. A non-treasury-aware FD will need more coaching in the nuances and sensitivities.
Either way, communication is vital. Gone are the days when businesses are split into silos with each department operating independently. Keeping business processes separate does not aid communication and can stifle progress. That means the FD and treasurer must see eye to eye over company strategy. A clear corporate strategy that encompasses the whole business sends a strong message to the market.
A corporate’s strength in the market comes from strength within the company. A united front presented by the FD and treasurer over financing strategies that the market understands is key. As well as managing stakeholders, the treasurer and FD have to work together to manage the treasury and finance team. The overarching theme of a strong treasurer and FD relationship is creating, nurturing and maintaining a skilled team of people.
The skills of every person in the treasury team should be used to their full potential, and achievements should be recognised to create a professional environment.
Attitudes to risk management are an important part of any FD and treasurer relationship. Both need to understand the risk appetite of the board and to work together to decide how to manage and mitigate risk. For a company to succeed, it has to take risks but these must be controlled and consistent with the wider strategy. With a solid and welldefined risk strategy, the FD and treasurer can make appropriate decisions without complications.
Above all, a successful relationship requires a level of trust. Treasurers and FDs have to know the starting point for key decisions and where the boundaries lie. That meeting of minds is the hardest to define, yet is the vital ingredient for long-term harmony and success.
JULIA BERRIS
See In the right spirit, page 38
