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CurrencyCast

CurrencyCast is a treasury podcast series from currency management experts. In each episode, we look at the pressing foreign exchange (FX) risk issues facing treasurers and CFOs today and help them identify the potential gaps in their FX risk management strategy.

The Human Element in Modern Treasury with Alexander Ilkun

June 4, 2025
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How to mix hard and soft skills to succeed in modern treasury management

What are the four pillars of treasury management? How do you make investment decisions involving treasury technology? To what extent should treasurers ‘embrace currencies’ as they manage FX risk? And what are the ‘soft skills’ needed by members of the treasury team as they confront AI-led innovation?

Alexander Ilkun, founder and chair of the Baltic Treasury Association, provides answers to all of these issues in an extended conversation with Kantox’s Agustin Mackinlay. 

The four pillars of treasury management

Treasury has four pillars: cash management, risk management, corporate finance, and debt and capital markets. Today, these four different areas of expertise are further empowered and enabled by treasury technology.

But one needs to be aware of possible ‘silos’. The fact that there are different pillars doesn't necessarily mean that they are silos or that they are completely independent. It only means that they might require a slightly different skill set. 

Ultimately, everything in the treasury comes down to cash management. And that’s because everything that happens in treasury ultimately hits your bank account as an inflow or as an outflow.

From a risk management perspective, what you are really interested in is quantifying and being able to say how much cash you will have at some point in the future in a particular currency to meet your outflows, to meet your obligations.

That includes parent entities and their funding needs. Risk management therefore is an area that is very closely interlinked with that subject because you will most likely have your cash dispersed across the organisation in different currencies as well.

The ROI in treasury technology

In assessing the ROI as you invest in treasury technology, there are both quantifiable and non-quantifiable elements. Cost reduction and savings of manual hours can be readily quantified and compared against your investment. 

What is more difficult is where you don't have a baseline. This includes, for example, things like improving the error rate in the process, the rework effort. So how do you quantify that without a system that really tracks these things?

This is where assessing ROI becomes more difficult, especially in implementing something large like an enterprise-wide ERP implementation.

Embracing currencies

Very often in the Baltics, entrepreneurs and treasurers charge customers in EUR, even though these customers may be based in a country that is not a euro user. It could be Poland, Sweden, Norway, or any other country outside of the eurozone. 

But that does not mean that the underlying FX risk just goes away. One has to ask the question: “How are these customers making the purchasing decision?” If you negotiate a Euro contract with a Swedish-based supplier, they will be converting into their home currency most likely.

So what happens is on your books, you don't have the exposure, but essentially you, by doing this, you outsource the pricing or purchasing decision to another party.

The end result is that instead of tackling the volatility and the uncertainty of foreign exchange in your own company by having visibility and taking the corresponding risk management action, you leave it to another party to take that action.

What if you're pricing your goods or services in EUR and SEK suddenly depreciates? You may find yourself in a position where your price is no longer competitive for the local market.  And maybe it wasn't competitive to start with. 

Maybe you underpriced in the past because you priced in euro and now you're overpriced and you haven't changed anything in terms of your own pricing, but the FX markets changed that whole composition. It’s more a question of visibility than FX sensitivity. 

The role of emotional intelligence

Treasury and treasury teams are typically very lean. When technology frees up valuable time for people to focus more on the analysis as well as working with others, your skillset needs updating. And guess what? Emotional intelligence is very important when it comes to working with people.

That’s because emotional intelligence gives you the necessary skill sets to first of all understand your own emotions and how they affect your decision-making and your behaviour. By the same token, it makes it easier to understand the emotions of others and how to work with other people.

So emotional intelligence becomes more and more important as technology helps us to shift our focus to these value-added tasks. It is equally important in stressful situations at times of market volatility. A currency may collapse 10% and then bounce back by 7%. Emotional intelligence gives us the necessary skill sets to regulate our emotions, understand what's driving us and minimise the chances of decisions based on panic and impulse.

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