The Evolution of the Treasury Function and its Technology
In this episode of the Raise and Deploy podcast, Ashley interviews seasoned podcast hosts Guillaume and Hussam of the Corporate Treasury 101 podcast on the evolution of the Treasury Function.
In today’s rapidly changing business landscape, the role of corporate treasury has evolved significantly. Treasury departments are no longer seen as mere support functions but have become strategic partners in driving financial success. With the rise of technology and the increasing complexity of global markets, treasury teams are facing new challenges and opportunities. In this article, we will explore the key themes discussed in a recent podcast episode on treasury management and delve into the implications and potential impact of these themes.
Cash Management and Financial Risk Management
Corporate finance is a vital pillar of the treasury function. Treasurers play a crucial role in debt and capital structuring, helping the company secure funding for large projects and manage its long-term financial plans. Trade finance is also an essential aspect of corporate finance, enabling companies to optimize their working capital and manage international transactions.
Relationship management is the fourth pillar of treasury, extending beyond traditional bank relationships. Treasurers engage with banking partners, ratings agencies, and technology vendors to ensure effective cash management and financial risk mitigation. Jouvencel emphasizes the importance of counterparty risk management and technology integration, stating, “Talking to systems and vendors, ‘Hey, I need a new system or how do I improve the management of my cash and the overall financial use management within my company through systemization and technology?'”
The Evolution of Treasury Function
Over the years, the treasury function has undergone significant changes. One notable shift is the increasing strategic role of treasury. Treasurers are no longer confined to support functions but are becoming strategic partners in driving financial success. As Jouvencel explains, “With rising interest rates, inflation, and cash scarcity, the treasury role is becoming more strategic in financial risk management and cash management.”
Technology has played a crucial role in the evolution of treasury. The advent of APIs and cloud computing has allowed for the development of specialized fintech solutions tailored to the unique needs of treasury departments. Treasurers now have access to a wide range of tools and technologies that enable them to manage cash, analyze data, and make informed financial decisions. Jouvencel highlights the importance of data infrastructure and partnerships with technology providers to leverage the benefits of AI and advanced analytics.
Implications and Future Outlook
The evolving role of treasury and the advancements in technology have significant implications for businesses. Treasurers now have the opportunity to drive cost savings, optimize cash management, and mitigate financial risks. The ability to access real-time data and leverage AI-powered tools enables treasurers to make more informed decisions and provide valuable insights to the board and other stakeholders.
However, there are challenges to overcome. The complexity of global markets, rising interest rates, and the need for robust data infrastructure require treasurers to adapt and upskill. Collaboration between treasury departments, CFOs, and technology providers is crucial to harness the full potential of technology and drive financial success.
Conclusion
In conclusion, the treasury function has evolved from a support function to a strategic partner in driving financial success. Cash management, financial risk management, corporate finance, and relationship management are the key pillars of treasury. Technology has played a pivotal role in transforming treasury operations, enabling treasurers to optimize cash management, analyze data, and make informed financial decisions. The future of treasury lies in leveraging technology, building robust data infrastructure, and fostering collaboration to navigate the complexities of the global financial landscape.
