How Tech is Empowering the Modern Treasurer
The role of the treasurer is typically not the most visible in a company. Historically, treasurers have kept tabs on an organization’s cash and managed risks and were viewed as a “back office” function and cost center. While other departments modernized and adopted advanced tools, the office of the CFO often remained a technological backwater. Today, this is no longer the case. The role of the treasurer is now strategic and conspicuous.
As risks become more complex and new tools emerge, treasurers are evolving into critical strategic partners for leadership teams. Armed with real-time data and powerful analytics, they are helping CFOs and CEOs make better decisions and boost profitability. Ed Barrie, treasurer and chief product officer at Treasury4, and Jeff Mullen, a partner at WestCap and former treasurer of Airbnb, sat down to discuss why the future of treasury is anything but boring.
Treasury used to be a forgotten back-office function. Why is that changing?
Ed: Treasury is the one team in the organization that has to look backward to explain what has happened and look ahead to project what is going to happen in the future, especially around cash flow. And now, they also have to look sideways and around corners for risks, and those risks are getting bigger. Recently, we had the banking crisis, a rapid increase in interest rates and growing climate risks. All of this elevates the role of treasury, which can leverage data to understand risks and explain them in clear ways to management. Best-in-class treasuries are becoming a center of excellence around analytics — not just for finance, but for the broader organization.
Jeff: I agree with that, and I can share my personal experience. Before I joined Airbnb as treasurer, I hadn’t thought much about that role. As I dug in, I realized that it was an underappreciated area of finance that didn’t get the respect it deserved. My hypothesis at Airbnb was that treasury was core to enabling the entire business to run by helping to maintain the financial infrastructure while assessing and managing all the risks involved with a global platform. That evolution is continuing to occur, as more companies realize the value that a treasury group can bring.
So how should the office of the CFO see its role today?
Ed: The office of the CFO is becoming more of a strategic business partner to the CEO and board of directors — it’s not purely a finance function anymore. Rather, it’s helping leaders think through business models: How are they going to generate revenue? What’s the cost to get that revenue? What are the risks around that? CEOs are leaning more on CFOs to have a seat at the table around running and expanding the business, while ensuring compliance is happening. That’s why the office of the CFO needs great analytics to draw insights from underlying data.
Jeff: That’s a great way to articulate it. WestCap founder Laurence Tosi, who was previously CFO of Blackstone and Airbnb, describes it as “the strategic CFO.” They have an opportunity to be a proactive partner, rather than playing defense and just reporting. Technology is key to enabling that.
Why has technological innovation been slow to reach the office of the CFO until now?
Jeff: Partly, it’s that the finance teams involved in managing the budget are particularly conscious of spending money. That often leads to a reluctance to adopt new technologies. Finance is also reliant on a lot of arcane systems that do not communicate well with other systems. As the broader financial infrastructure in the banking system and markets evolves, that enables advances in technology for treasury.
Ed: I’d echo that. Traditionally, finance and treasury are viewed as cost centers. Since they’re not seen as revenue-generating, they get a smaller share of the budget and make do with less from a technology perspective. Treasury specifically tends to be reliant on enterprise resource planning (ERP) systems, which lacks the functionality it needs. That’s why you see so many inefficient processes built around spreadsheets, whether cash forecasting or foreign exchange or exposure management. People get used to spreadsheets and don’t feel empowered to find new tools.
How has this held the office of the CFO back?
Ed: Not having more advanced technology inhibits your visibility and transparency, whether it’s your cash position, status of payments or forecasts around foreign exchange exposure. Instead of getting a question from the CEO or board and coming back three days later with the response, treasury teams need to be able to provide insight in the moment. The sooner you can surface data through analytics, the faster you can get answers, educate and take appropriate actions.
Jeff: It has a real financial impact. In my prior role, we had billions of dollars in transit at any given time and a complex financial platform. Developing a system that gave us better visibility into our cash enabled us to manage it more efficiently and generate tens of millions of dollars in yield. More companies are realizing that the right tools can empower the treasury, not only to enable the company’s activities but also to have a meaningful impact on the bottom line.