Managing the Treasury

The CFO’s role in managing the treasury department is wide and varied. On one hand, the treasury function has been set up like an internal bank and, on the other hand, we have organizations with little treasury activity and where their banks are the main provider of funds. Many costly mistakes can be made by the CFO as treasurer, such as not managing the relationship with your main banks, investing in instruments you do not fully understand, speculating on the foreign exchange market, borrowing short and investing long, and not managing your debt maturity profile.

An Open and Honest Relationship with Your Banks Will Pay Off

In many organizations, the CFO is responsible for managing borrowing requirements, maintaining an open and honest communication (resisting the internal pressure to be economical with the truth), obtaining a credit rating from one or more rating agencies and liaising with the regional loan officers of the banks. A wise CFO told me that a CFO has to make sure the organization delivers in line with expectations and treats their lenders like shareholders. The wise CFO pointed out that he even has a road-show for lenders on every result announcement.

One finance team I know invites representatives from their main bank to the organization’s annual awards. Naturally the bank is encouraged to sponsor a prize and come, as do all the other guests, in fancy dress. The night is a taxi-home event and is enjoyed by all and talked about for months ...

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