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| 3 minutes read

The Treasurer's Role: A Dash for the Cash

“Cash is King” is both a common expression and a universal truth. Irrespective of industry, executive management and finance leadership teams are laser-focused on optimizing liquidity and working capital. Lingering inflation and rising interest rates have resulted in greater working capital needs and expensive debt. Simultaneously, the geopolitical environment has exacerbated the complexity of managing international banking relationships, foreign exchange, and supply chains. As a result, board members and sponsors are pounding the tables for well-defined strategies to generate cash flow and manage debt with improved efficiency.

Enter the treasurer!

The treasurer, whose responsibilities are intertwined with the most significant organizational priorities, has an opportunity to step into the spotlight and change the game. As internal and external stakeholders pile on the pressure to move faster, it is vital that the treasurer develops and implements an execution plan with speed and passion.

However, substantial management expectations, along with a scarcity of talent to deliver, require a treasurer to assess different focus areas and decide on how to best drive sustainable impact immediately. To facilitate this process, the treasurer should conduct a rapid diagnostic to quickly identify opportunities, prioritize them, and map out initiative implementation. In-demand focus areas include:

  • Liquidity Forecasting: 13-week and 52-week cash flow forecasts have become critical tools when managing working capital, informing strategic decisions, and operating the business. These forecasts arm leadership teams with forward-looking insights and enable them to manage cash with confidence. Proactive liquidity management is a requirement to assure stakeholders that organizations are meeting their financial obligations and mitigating risks.

  • Scenario Planning: Due to continued economic uncertainty, leadership must be nimble and prepared to adapt. Evaluating the impact of volatility of key business drivers on forecasted results will enable sustained operational and financial performance. Organizations with mature planning processes can push the innovation agenda even further by leveraging generative artificial intelligence (AI) for sensitivity and predictive analysis.

  • Working Capital Optimization: To establish a “cash culture,” accountability needs to come from the top, and cash discipline must be reinforced through managed metrics. The use of dynamic dashboards is an effective tactic to instill accountability and incent the right behaviors. With information at their fingertips, a treasurer can bolster their role as business partners by proactively pinpointing opportunities and advising stakeholders with a data-driven action plan. The treasurer can steer a holistic approach to improve the cash conversion cycle by engaging with vendors to extend payment terms, with customers to accelerate collections, and with management to optimize inventory levels.

  • Capital Allocation: As mentioned in Gartner Research’s 2023 Gartner CEO and Senior Business Executive Survey, it is no surprise that the CEO’s top strategic priority is profitable growth. This ambition becomes exceedingly difficult to achieve as rising inflation increases pricing and negatively impacts returns. With heavy scrutiny over the allocation of more expensive capital, a treasurer must operate with an activist mindset. This mentality requires tight collaboration with financial planning and analysis (FP&A) and the Chief Financial Officer (CFO) in order to be responsive to funding requirements and manage the portfolio with agility. Analytics are a necessary tool to determine where and when to deploy capital and how to understand trade-offs, risks, and rewards to dictate allocation decisions.

  • Debt Management: In an environment with higher rates, leadership needs real-time visibility into leverage to avoid exorbitant interest expense. Debt covenants need to be well understood to properly navigate strategic options, inform forecasts, and manage compliance. The costs of borrowing against other alternatives and the evaluation of where and when to draw on available credit should be clear and transparent.

  • Bank Account Management: The recent collapse of several large commercial banks has heightened awareness around banking, lending, and liquidity availability. Finance teams are scrambling to open and close accounts to create greater accessibility and visibility into cash. The banks have also responded with tighter restrictions and more cumbersome compliance, causing delays and bottlenecks for companies attempting to rationalize accounts or secure financing. Leveraging technology and ensuring trusted relationships with banking partners can remove some of these obstacles.

On top of juggling these priorities, managing stakeholder requirements, and attracting top talent, treasury is focused on training its people to deliver this high-value work. While this responsibility may seem daunting, especially for teams that are lean or understaffed, the treasurer’s ability to institute the right support model anchored to clear objectives is the key to empowering the organization to drive free cash flow and working capital improvement.

If you are curious about how to get started or want to learn more, please reach out to Ankura Office of the CFO® for additional information and insights.

© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.


treasury, liquidity management, working capital, office of the cfo, finance, financial services, article, f-transformation

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