As a CFO, you’re responsible for overseeing the financial health and stability of your organisation. One critical aspect of this responsibility is managing liquidity, cash flow, and financial risks effectively. While smaller businesses may allow CFOs to manage this on the side of their desk, there comes a point when the complexity of operations demands a dedicated treasury team or expert. But how do you know when you’ve reached that stage?
Growing Complexity in Financial Operations:
- As your business expands, so do the complexities associated with cash management, financing, and risk mitigation. If you find yourself spending an increasing amount of time on treasury-related tasks, at the expense of others or encountering challenges in managing liquidity across multiple accounts or currencies, it may be time to seek treasury expertise.
Exposure to Financial Risks:
- With growth comes exposure to financial risks such as interest rate fluctuations, foreign exchange volatility, credit risks, and commodity price fluctuations. A treasury team can identify, quantify, and manage these risks more effectively, ensuring that your business remains resilient and protected if these were to arise.
Need for Strategic Financial Planning:
- As a CFO, your role extends beyond day-to-day financial operations to strategic financial planning and decision-making. A treasury expert can craft financial strategies, to optimise capital structure, evaluate investment opportunities, and ensure alignment with overall business objectives.
Compliance and Regulatory Requirements:
- Compliance with regulatory standards and reporting requirements is non-negotiable for many businesses. A treasury expert with regulatory experience can ensure adherence to regulatory guidelines, manage compliance risks, and streamline reporting processes. Which may help you sleep easier at night knowing your reg reporting is up to date.
Optimising Cash and Working Capital Management:
- Efficient cash and working capital management are essential for sustaining a successful business and fuelling growth. A treasury team can implement best practices for cash forecasting, working capital optimisation, and liquidity management, enabling your organisation to make informed decisions from good data.
Investor Relations and Stakeholder Management:
- As your business attracts investors and stakeholders, maintaining transparent communication becomes essential. A treasury team can serve as a liaison between the finance function and external stakeholders, providing timely updates on financial performance, capital allocation strategies, and risk management practices.
In Summary
Establishing a treasury team is not just about adding headcount; it’s about investing in the capabilities and infrastructure needed to support your organisation’s growth and resilience. By recognising the signs indicating the need for a dedicated treasury function and giving enough time to source or hire the right person, you are saving yourself from the additional workload and protecting the business growth.