The Relationship Manager Role of Modern Treasurers

Are you a strategic business partner inside your organisation? The modern treasurer is moving away from being a mere transactional player and instead is acting as a relationship manager of sorts. In our latest interview with Sean O'Connor (SO), Director of Treasury at MongoDB, he explained why treasurers are taking a more strategic role and how technology is helping.

In this blog, we will go over some of the key topics Agustin Mackinlay (AM), host of CurrencyCast podcast, discussed with him around API automation, pricing with an FX rate for efficient risk management, FX centralisation and more. Read on to learn more.

API Automation

AM: Explain the role of API technology in Treasury operations.
SO: When it comes to the operational side of the business, such as Treasury, and Finance, and Marketing or Legal, which are usually the "support functions" at tech companies, how businesses decide to invest in technology, I think is very important.

Within Treasury, getting the foundation of your bank account structures when you look at your geographies and your individual operations and how you manage that side of the business, is a core move that may set you up for success. I think getting that foundation moving places when you look at a Treasury management system or any of the bulking products that we see, from cash forecasting tools to other analytics, and being able to scale from those, is the right route.

So I guess this has been hard but to us, at least in currency management automation, APIs play such an important role in removing some of the most manual and resource-intensive tasks in providing real-time data analytics and allowing businesses to scale their operations. In exposure collection even before that in pricing with an FX rate and in providing traceability, for example, for automating swap execution.

Relationship manager role

AM: Given all that's happening nowadays in terms of automation, the role of modern Treasurers is evolving towards a relationships manager, having to deal with so many different stakeholders, the banking partners, the C-suite, the commercial teams... How do you avoid siloed-based approaches and act as a relationship manager in a way?

SO: Treasury has really evolved due to being able to leverage off technology from a very ops-driven department, to now where treasurers see themselves more as strategic business advisors, who ultimately liaise with other senior stakeholders throughout the business.

So I think having that more holistic approach is really important. And building rapport and ultimately strong relationships with your colleagues and peers, is the fundamental thing. If you stay in a silo and you don't have the buy-in from other teams and other colleagues, you're going to hit a brick wall getting your ideas across the line.

And ultimately, when implementing a project management system, for example in Treasury, you can't just go and implement it on your own because then it's a standalone system. How does it fit into your ecosystem? You need to buy in from your account and your GL teams. If you want to look at ERP integration, if you're looking at your payment platforms and order switch systems, you know, you've got to work with those teams too.

So looking at it as a, as an ecosystem with that Treasury is one segment of, I think is really important. And I think it works both ways as well. I think you've got to ensure that you're there to be able to support and advise your colleagues from other areas too.

FX centralisation and in-house banking

AM: At Xerox, you were involved in an in-house bank project. And one of your tasks was to remove as much exposure as possible. What was your approach to the issue of centralisation of foreign exchange risk management, and centralisation of other functions? Would you favour complete decentralisation, full centralisation, or other setups in between?

SO: When you look at a business the size of Xerox and the vast volume of entities that they have within their group structure, with thousands of subsidiaries, there are a lot of intercompany transactions going on. So a lot of FX risk can impact the financial statements.

So running a global netting program made sense. If we went to manage entities on an individual level and manage their FX risk, it’d be a truly complex hedging program, and we would have needed another team of people just to run those programs. Ultimately, running a netting system for intercompany, and then allowing the in-house bank to manage the net risk, with the entities that had materiality in their exposure, was the decision there.

In terms of the ideal degree of centralisation, we've seen both extremes that you mentioned there and probably even many other examples, depending on how businesses have grown. If businesses have grown organically, or they've grown through M&A and have absorbed other businesses that have had different ways of doing things.

In a decentralised setup, you may have a local business partner or finance business partner who's wearing many hats from all areas of finance, but won't necessarily be a specialist in Treasury. So knowing when to transact, and when to trade would be my concern there. Another concern would be that not every subsidiary is created equal, so you won't have consistent ways of doing things.

Having a more centralised Treasury function probably gives you more chance of getting that consistency. But I suppose the downside of that is the local staff tend to have more insight into the cash flows. So when it comes to forecasting, the centralised function is relying on those hopes to be pushing up their local forecasts.

Ultimately, I think we have to end up in a world of balance, where headquarters decides the FX policy and they partner with the local Treasury team to execute the policy. But it should be driven from the top because then that's the only way you can ensure consistency across the organisation.

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