Published: 26 October 2023
Many thanks to the experienced practitioners who share their 19 top tips for efficiency in smaller treasury teams. Their full qualifications, job titles and relevant organisations are listed at the end of this article. Our practitioners’ tips range from risk mandates and treasury policies, to simplification and networking outside the organisation. Many of these tips are also relevant for colleagues working in larger teams.
1. Get a clear risk mandate
Smaller treasury teams in particular should secure a clear policy mandate regarding their response to risk. For example to either act as (a) a cost centre, that only supports the needs of the organisation, or (b) a profit centre that permits risk taking beyond such needs or (c) a value adding treasury that is a hybrid of the first two. All too often, I see clarity lacking among smaller client organisations resulting in costly risk taking, notably when hedging risk exposures using derivatives.
(Raj Gandhi FCT)
2. Get full and clear treasury policies
I agree with Raj that clear risk mandates are fundamentally important. The smaller or newer your team, the greater the need for clear, concise, complete and up to date treasury policies.
(Ganesh Melatur FCT)
3. Ensure clear segregation of duties
Segregation of functions can be a particular challenge in smaller teams. Use process flow diagrams, which incorporate initiating, approval and reporting authorities and responsibilities. Identify limits, numbers, and seniority of people to approve and authorise.
(GM)
4. Standardise forms for requests
In the absence of full enterprise resource planning (ERP) or treasury management system (TMS) system controls, use specific forms for payment approvals and for sale or purchase of FX or risk products. Never proceed on the basis of a phone call or email alone. A specific form, filled in and signed can be attached to an email, as the details on the form focus everyone's attention on what they want treasury to carry out, saving potential confusion and improving efficiency.
(GM)
5. Tailor treasury KPIs to demonstrate added value
Smaller treasury teams should consider formulating specific treasury KPIs for reporting to their senior management, thereby enabling treasury to stand out as the unique important function that it is. These KPIs should be chosen in such a way that they demonstrate treasury’s added value to the business.
For example, the KPIs could be oriented to cost savings made or revenue generated and/or net profit added for the business. Demonstrating efficiency in this way supports treasury in requesting further necessary resources in the future.
(GM)
6. State all your meetings’ purposes in writing in advance
My number one efficiency tip for every size of organisation is purposeful meetings. Every meeting request is backed up by a purpose and an agenda which includes responsibilities and timelines. If not included in the invite or referenced to send out later - but still as a pre-read - people have every right to decline to attend.
Such a structure makes meetings effective and efficient. Sadly, it is still not embedded in many organisations’ processes, no matter how small or big they are.
(Carol Thurnheer FCT)
7. Only invite the key people to your meetings
I agree with Carol about clear written purposes for every meeting. Always extract maximum value from meetings with the minimum necessary time cost. Only invite people who are key to the purpose of your meeting.
Don’t burn up other people’s time which could be better deployed elsewhere. In the meeting itself, I aim to give a visual focus point, for example a screen share. This helps engagement and ensures everyone is aligned on the same topic, and less likely to talk at cross purposes.
(Sarpreet Gill AMCT)
8. Think IPO
Following on from Carol and Sarpreet’s tips for meetings, I recommend the 'IPO' structure. It’s short for input, process and output. Prepare your agenda and allocate time accordingly for each phase of the meeting. For example, for a 30-minute meeting I might allocate 10 minutes to inputs, 15 minutes to process and 5 minutes to outputs.
(Dee Kothari FCT)
9. Automate, automate, automate
For me, the key to efficiency is automation and standardisation. For example, formatting of procedures or filing structures on shared drives. If they all look the same, you'll save time by not having to hunt for things. Automation is a huge efficiency driver, whether by coding or even a simple Outlook rule to automatically file, delete or flag certain emails. Also, proactive customer service. Instead of reacting to requests, learn what people ask regularly, and either automate or help them help themselves.
Finally, I think it's important for colleagues to remember that efficiency is not a one-time thing. It's a continuous process that always needs tweaking. You can probably tell that I'm a fan of the Kaizen mentality!
In a nutshell, I'd say "automate, automate, automate". The short-term pain of setting up automated processes will save lots of time long term and often also reduce user errors, which in turn saves further time and effort.
(Anu Mensah FCT)
10. Beware a new digital divide
Treasury technology infrastructure has rapidly been adding new risk management and compliance solutions leading to visibly more efficient performance. However, it is also leading to noticeable costs. Treasurers have traditionally struggled to get IT budgets, thus getting access to modern treasury tools is already becoming a challenge for smaller organisations in the current environment.
Overall IT budgets for most organisations have been expanding significantly due to increased e-commerce security costs and in many ways are going in the reverse direction to where the CFO would like. Whilst vendors are pitching cloud subscription options, total cost of ownership (TCO) could even be higher because of system changes needed over the technology’s lifetime. Adopting emerging new technologies like APIs and generative AI is already appearing prohibitive for many organisations, so practitioners are bracing for a new digital divide to emerge.
(Rahul Daswani FCT)
11. If possible, hire someone who can code
I agree with Anu about automating. Take out manual tasks to focus on analysis, judgement and decision making. And - picking up on Rahul’s comments about the rapid developments in technology - having a dedicated IT person in treasury who can write code is also extremely useful. This may not be possible for very small teams, but having as many treasurers as possible being IT literate is increasingly important.
(Jonathan Cohen FCT)
12. Always hire competent modellers
Competent financial modelling drives value for organisations of all sizes. At National Grid, I developed a model to calculate all our requirements in the US across eight operating companies. This model used all the traditional treasury KPIs including liquidity, short term debt, long term debt, cash balances and interest costs. It also incorporated other KPIs from across the business.
We then input multiple scenarios and forecast forward to determine which KPIs drove the most value. It's added $50m to National Grid's bottom line in the US, and this happens each year continuously now.
I've always valued the ability to do scenario analysis to answer 'what if' questions. Having a model or system where you can input multiple scenarios - and then compare and contrast - supports better decisions. It can also provide precious insights into the value of the data you already have, and how to drive even more value by using your data more effectively or bringing additional data into the analytics.
(JC)
13. Train appropriate staff adequately for every task
With a lack of resources in a particular organisation, secretarial staff with no prior treasury training or experience were tasked to assist treasury by keeping an Excel spreadsheet and recording the future FX exposures that business units reported. FX front office dealers blindly transacted FX derivatives to hedge the reported exposures per the spreadsheet.
To their dismay, they discovered many months later that the Excel file was not an accurate record of the FX exposures reported by the business units. By that stage there were already numerous open derivatives in place that were significantly out of the money. It cost the organisation several million pounds to close out the derivative positions.
Always train staff appropriately to ensure they understand the reasons for the task they’re carrying out.
(Dino Nicolaides FCT)
14. Never trust data without checking it first
The second lesson from this unhappy and costly case study is to make sure you always understand and sense-check any data you’re given. Never assume it is correct.
(DN)
15. Communicate with the business constantly, in jargon-free language
Constantly speak with the business and understand the cash flows by currency, liquidity requirements and financing needs.
We had an exposure in the physical market that we wanted to hedge. The hedge was put in place. Then, without our knowledge, the physical exposure was closed out. We were left with a naked derivative position that was no longer hedging anything. The market moved against us and we lost a lot of money. The key lesson is to communicate constantly with the business. Let them know what you are doing - and why - in simple jargon-free terms.
(Jake Storey FCT)
16. Get the business to tell you about problems before they hit
I agree with Jake. I would stress the importance of (a) 13-week rolling cash flow forecasts and their accuracy (b) understanding risk exposures, particularly FX as it can move by the minute, and (c) open dialogue with the relevant functions to break down silos. Ensure you have a joined-up view of treasury issues across the business and foster open communication so people come and tell you about emerging issues in time for you to do something about them before they hit hard.
On accuracy around 13-week cash flows, I have found that sitting down with representatives from various functions (i.e., procurement, manufacturing, sales) all in the same room to understand any variances can be helpful more broadly. The functions gain a better understanding of how the actions they take impact others elsewhere in the organisation.
(David Tilston FCT)
17. Be disciplined, personally accountable and collectively accountable
Agility and a growth mindset are key to being part of a leading treasury function. A clear vision, personal and collective accountability, alongside solid disciplined execution, are essential factors to scaling up successfully. Treasury is a core finance function and strategic strength for small or big enterprises. Doing the job well ensures finance and treasury always have a seat at the table, to drive the continued growth of the company and shape its future trajectory.
(Andre Khor FCT)
18. Simplify for scalability
At Renewi we put in place a number of framework agreements to make future changes and additions easier. Set things up like you’re not always going to be small. Invest in areas that are scalable for growth. Make investments now ahead of future needs where possible. Make routine tasks simple and potentially outsource them.
As an example, we established a simple hedging policy for diesel. We buy 25% at 18 months, 12 months, 6 months, and spot respectively. We trade once a quarter. We use Chatham Financial to run the auction process with our relationship banks. Simple.
(Adam Richford FCT)
19. Network
Talk to others outside your organisation to hear what they’re doing. Networking and learning are important to understanding what is done elsewhere, and to spark thoughts on what to do within your own function.
(AR)
In summary
- Get a clear risk mandate
- Get full and clear treasury policies
- Ensure clear segregation of duties
- Standardise forms for requests
- Tailor treasury KPIs to demonstrate added value
- State all your meetings’ purposes in writing in advance
- Only invite the key people to your meetings
- Think IPO
- Automate, automate, automate
- Beware a new digital divide
- If possible, hire someone who can code
- Always hire competent modellers
- Train appropriate staff adequately for every task
- Never trust data without checking it first
- Communicate with the business constantly, in jargon-free language
- Get the business to tell you about problems before they hit
- Be disciplined, personally accountable and collectively accountable
- Simplify for scalability
- Network
__________________________
Author: Doug Williamson, FCT
__________________________
With many thanks to:
Raj Gandhi FCCA FCT FHEA MIoD, GGV London, specialists in finance and treasury consulting and mentoring.
Ganesh Melatur MBA FCMA CGMA FCT PMP M.Tech, Professor of Management, INSEEC University.
Carol Thurnheer FCT Int. Dip (FinCrime), Manager International Treasury APAC, Haleon.
Sarpreet Gill CIMA AMCT, Financial Modeller, Aldermore Bank.
Dee Kothari FCCA FCT FCMI CFI FRSA, Senior Partner & Founder, Kothari Partners.
Anu Mensah CGMA FCT, UK Treasurer.
Rahul Daswani ACA FCT, Consultant in Digital Transformation, Financing & Treasury.
Jonathan Cohen FCT, formerly VP Treasury, Risk and Insurance at Pearson.
Dino Nicolaides FCA FCT, Managing Director, Head of Treasury Advisory, UK & Ireland at Redbridge Debt & Treasury Advisory, Immediate Past President of the ACT.
Jake Storey FCA FCT MBA, Executive Director of Haven Dredging and CFO of Harwich Haven Authority.
David Tilston FCA FCT, Senior Independent Director, SDI Group plc.
Andre Khor FCMA CGMA FCT, CFO of Chandra Asri, Indonesia’s leading chemical and infrastructure solutions company.
Adam Richford FCA FCT, Director of Investor Relations, Treasury and Insurance, Renewi plc.
Are you ready to start learning?
Choose from:
• eLearning courses: 45-90 minutes to complete, available online 24/7.
• training courses: live skills-based training sessions.
• Treasury and Cash Management qualifications: internationally recognised courses from entry to master level. All our courses will provide you with valuable knowledge as well as easy-to-share digital credentials to demonstrate your learning achievements.
More resources
If you found this article helpful, you might also be interested in some of our other resources.