Although the economy, at least in the U.S., supposedly is getting better, the job of the corporate treasurer isn't getting any easier. Most face several critical challenges, including liquidity and access to financing (this seems like one challenge that just isn't going away), inadequate forecasting tools, and difficulty attracting qualified people. This is according to an Ernst & Young survey of 100 treasurers from around the globe, "Reflecting on the Future."
Some of the survey's highlights:
- Financing -- more specifically, access to financing -- remains the issue most keeping treasurers up at night. More than one-quarter of treasurers said it was their greatest concern, while 40 percent said it was one of the most important issues they have to deal with. The next most commonly cited concern, financial risk management, was mentioned by 21 percent of treasurers.
- Talent management also is a concern. In part, this may be because corporate treasurers are competing with financial services firm for qualified finance professionals, the survey notes.
- Cash forecasting is another area of focus for treasurers -- not surprising, given the worries about access to financing. About 40 percent of treasurers have considered ways to boost their forecasting abilities in light of the liquidity crunch.
- Liquidity management appears to be another area treasurers struggle with. Just one-third of treasurers said they have visibility to all (or nearly all) their firm's cash on a daily basis, while about eight percent have daily visibility to less than half their firm's cash.
The survey also pointed to a few areas in which treasurers could improve their operations. For instance, few treasurers made use of key performance indicators (KPIs). In addition, although more than half of treasurers said their risk management approaches weren't mature, one-fourth hadn't made any improvements. And, while almost all treasurers have a treasury management system, one-third aren't satisfied with theirs. In fact, about 80 percent named technology and data as areas needing improvement. The percentage indicating that their cash forecasting methods need improvement was even more pronounced -- about 85 percent.
What's keeping treasurers from making the changes they need? A lack of cooperation from the business units is an obstacle, according to about half of treasurers. About 40 percent of respondents said that attracting and retaining quality staff is an issue. Of the treasurers seeking new recruits, more than 75 percent ran into some difficulty due to a lack of qualified candidates.
Still, it's not as though the survey was all doom and gloom. In light of the continued tightness in the credit markets, a number of treasurers are looking at alternatives to bank financing. So, while nearly 60 percent of treasurers currently use bank facilities, about 50 percent plan to down the road. Instead, a greater number plan to turn to the capital markets or other financing mechanisms.
More than half the companies are implementing cash pooling structures, which can enhance liquidity management, for specific regions or divisions. Treasurers also are getting more involved in their organizations' strategic initiatives, including acquisitions and divestments and capital structuring. Similarly, more than three-quarters of treasurers are working to improve their cash forecasting capabilities.
These efforts are important, as respondents predict that the scope of treasurers' activities will continue to change over the next few years. One-third of respondents say treasury will continue to more closely work with the business units, while nearly 30 percent foresee an even greater focus on funding and liquidity. Increased regulation and the growing importance of emerging markets also were cited as drivers behind the changing role of corporate treasury.
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