CFOs have always had the following primary tasks: to reduce risk and make sure the company is compliant with regulatory requirements.
These responsibilities form the basis of corporate financial health. However, sometimes companies may have unintentionally incentivised their CFOs to behave in a way that makes it very difficult for colleagues from the treasury to optimise liquidity performance of the company.
Beware of a blind spot
Traditionally, leaders of corporate finance have always put a lot of effort into preparing financial audits, fulfilling regulatory requirements, and complying with tax laws.
Now there is another, highly strategic opportunity for CFOs. Financial health is nowadays very much dependent on the ability to gain capital. Today increasing the cash flow when it is needed is crucial as many businesses are expanding and growing, according to an article on the cfo.com website.
New role for the treasury
The role of the treasury should evolve. In terms of handling cash at any given point in time, the treasury should take on more strategic and expansive mandate. It should be charged with managing liquidity across its full life cycle. The treasury should become a strategic partner in the field of funding growth.
The treasury team should prepare to leverage the vast financial data it holds in order better to inform strategic decision-making at the top executive level. Digital transformation will enable treasurers to manage risk of payment frauds and improve visibility of available cash reserves. These can be mobilised to finance new projects and better manage working capital (the funds needed for meeting day-to-day operations).
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