- Julia Persson
- Head of Cash Management, Swedbank
by Julia Persson, Head of Cash Management, Swedbank
According to a major BCG survey [1], treasurers are looking to banks for creative problem solving while things like ‘complex finance advisory’ and ‘frequent visits’ check in at the very bottom of the most wanted list. Looking at it from a traditional banker’s view one would almost feel inclined to reverse the list. Around the world CFOs and treasurers wish for more proactive behaviour and business understanding from their banking partners. It’s about time to start listening.
In recent years the treasury role has expanded and everybody agrees that it will keep on doing so. Today a treasurer has to understand and take an active part in the company’s strategic work as well as the day-to-day problems and challenges, not only of the treasury but of the company as a whole. According to the recent AFP Strategic Role of Treasury Report [2] almost 50% of all treasuries act as internal consultants to other departments. Equally we all agree that we as bankers have to stop selling increasingly commoditised products and start to develop insights into our clients’ realities as well as understanding company strategy and deliver tailor-made solutions.
But how far have we come? All too often it ends up in a set of good intentions and some nice sounding phrases; be a financial business partner, value added services, customer centric culture, a holistic view etc. We all hear and use these buzz words but what do we really mean? How do we actually approach this: is there some sort of hands-on solution to really tackle this objective of establishing a true win-win partnership between a bank and a treasury?
As I have experience from both sides of the table, corporate treasury and corporate banking, I would like to use some of my personal experience as well as that of my peers, colleagues and friends to look at and to discuss these issues from different perspectives.
Get invited to the party
The treasurer has some of the most important tasks in a company. Primarily it’s to secure access to liquidity and to identify and mitigate financial risks. Liquidity, both short- and long-term, can easily be a decisive factor of corporate success or even survival in critical situations. But, looking at the proactive role of the treasurer, does the business side of the company tend to see business opportunities in early treasury involvement? Judging from my experience the answer has to be – not necessarily.
Traditionally treasury is seen as an internal function with little or no direct interaction with the company’s customers or market place. In turn, treasury often sees their internal counterparts as their principal customers. But these ‘customers’ may on the other hand feel more as if they are under strict supervision rather than being helped with their business challenges. This doesn’t leave much room for partnership or collaboration.
One of the professors at the IMD Business School used the phrase “Treasury (as well as finance in general), bring your bottle to the table and you will be invited to the party”. I think he has a point. I might, though, have phrased it a slightly differently: “Put your bottle on the table” – as in make your contribution visible to your business. And by this I don’t mean showing off with improved ratios or working capital numbers, but being there for the business and understanding the company customers’ needs and expectations. If the treasurer starts with the customer perspective, in this case the business side of the company, he or she will rarely go wrong. But as we all know it’s easier said than done.
The starting point of a partnership
More or less the same goes for the bankers but with one major difference. Treasurers are the bankers’ ‘real’ customers and to serve them is their core business. A lot is at stake, and the banker easily exaggerates his or her focus on the treasurer. This is to some point understandable. Meeting with bankers is an important, but for most part a rather routine event in the life of a treasurer. But for the banker, it might be the culmination of a long period of hard work and a turning point in the overall business arrangement. So, yes! It’s crucial to do it right!
But do we do it right? A banker’s presentation is all too often stuffed with banking organisational charts, banking finance numbers, geographical coverage, list of the products etc., primarily meant to impress the treasurer. And again looking at it from the other side of the table, the effect might be the opposite. Instead, the presentation should focus on the customer perspective, an obvious starting point for building a partnership. Again, put your bottle on the table and you will get invited to the party.
Notes
[1] bcg.perspective.com Corporate Treasury Insights 2015
[2] TMI – The South African Treasurer 2014, ‘The Evolving Role of the Corporate Treasurer’ by Riaan Bartlett
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But seriously, why can’t we get it right?
From the banker’s point of view I think it all starts with us realising that we can’t do everything for everyone and, if we try, we will probably end up being irrelevant. The next step is to define our customers, based on our strengths and best fit, asking the right questions and listening very carefully to the answers. We need to comprehend our clients’ strategic and tactical agendas, look at both their financial supply chains and the overall value chain; where are the pains and possible gains?
Once you get the picture you arrive at the very foundation of a relationship – the infrastructure. Is the client’s cash management ‘machinery’ working as it should? Don’t just sell products; instead make it your mission to do a thorough check-up. As a very experienced banker told me once, “Don’t expect a patient to prescribe his own medicine, that’s why he needs a doctor”, meaning that it is not necessarily always obvious to a treasury what the problem is and which solution is the appropriate one. Secondly, is there a certainty that when trouble comes you know how to handle the incident swiftly and smoothly? This is an on-going process and a challenging one, but without it, it’s tough to build a true partnership.
Moving resources further up the value chain
The starting point for the final phase of forming a partnership is to step deeper into the client’s value chain. To really get to understand your client’s (and their clients’) challenges, goals and daily pains and endeavour to find solutions that help. Working together with a robust infrastructure and as few red flags as possible we learn what we can do to make the company more attractive for their clients, e.g., how we can help with new sales channels, payment methods, digitalisation, outsourcing, streamline purchase processes, reduce heavy administration and so on. Once you get to really know the company you can often quite easily identify areas where the treasurer spends too many resources on tasks that don’t add much value, and help the treasurer out with genuinely cost-efficient solutions. In this way you are assisting the treasurer to take a proactive role towards his/her stakeholders, moving the resources further up the value chain and in the long run participating in making the company more competitive.
Let’s step out of our ‘perfect’ universe
To summarise, all ‘partnership’ concepts, whether the treasurer’s internal business partnership with different departments or the banker-treasury partnership, are built on the ability to look at the problems through your partner’s eyes. They are supported by ongoing dialogue, an exchange of knowledge and experience that leads to true understanding of your client’s pains and gains and, bottom line, a strong will to help and support. It’s not rocket science, but it’s a demanding and diligent process that requires us all to step out of our own ‘perfect’ universe and start to focus on our clients’ reality – only then is it possible to become a creative problem solver. If you start with the customer you rarely go wrong.
