Corporate treasurers face cash-management, structural hurdles, report says

Corporate treasurers are occupying enhanced roles since the financial crisis but are combating cash-management difficulties while using outdated technology and struggling to recruit qualified employees, a new survey suggests.

Forty per cent of respondents said financing was the biggest issue they dealt with in the past year, according to an Ernst & Young survey conducted in late 2011 of more than 100 treasurers from large corporations in 14 countries. Thirty per cent mentioned cash forecasting accuracy as a liquidity risk-management challenge, and 20% expressed concern about refinancing and access to funding.
The report said treasurers face four fundamental, operational issues in their current structures:

  • Monitoring operational risk and lack of change in risk-management approach;

  • Cash-management efficiency;

  • Talent development and recruitment challenges; and

  • Concerns about return on investment in systems and technology.

In a news release, Olivier Drion, Ernst & Young’s head of Treasury Advisory for the Europe, Middle East, India and Africa region, said the role of treasurers has changed as a result of the financial crisis. Drion said the treasury function traditionally has been involved with companies’ general financial issues, but the financial crisis and integration of business units and processes have enhanced treasurers’ capabilities.

He said inadequacy of cash forecasting systems, decentralised payment arrangements, lack of transparency and treasuries’ lack of access to business units’ cash are problems, though. He added that there may be pockets of funds across discrete areas of business that could be used as working capital by treasurers who are experiencing difficulty refinancing.

Risk management also is a problem for treasury executives, as a quarter of respondents had not made recent changes to their overall risk-management approach despite recognising shortcomings in their approach. Financial risks dominated treasurers’ concerns, but operational risk did not register as a concern despite the role that it can play in fraudulent activity.

With regard to technology, although the majority of respondents said they are far from using leading practices, fewer than half said technology and data improvements would help them achieve the operating model they desire.

Treasurers also reported being challenged in attracting talent. Fewer than 30% rated their talent development programmes as mature, and more than 60% reported difficulty in recruiting over the last two years.

Ken Tysiac ( is a CGMA Magazine senior editor.