Treasurers are expected to do more than just the back office task of cash management. Increasingly they are being asked to manage and streamline financial risk management. This is the result mainly of market pressures and volatility.
Less fragmented liquidity management is needed
To allow for successful liquidity management, you need harmonised, centralised, integrated, and automated processes. With the introduction of advanced analytics and automation, timely decision-making is enabled.
What is currently lacking is an alignment of goals and tools in the area of liquidity. These are usually still fragmented and exercised in multiple departments with no overarching liquidity performance strategy.
Integration is not an easy task: liquidity must take into account many considerations, such as taxation, compliance, regulatory environments, internal processes, procurement spending and economic outlook. Clear responsibility for this should be as close as possible to top-level management, according to an article on the cfo.com website.
New role: chief liquidity officer (CLO)
You may consider the creation of a new role: chief liquidity officer. The person in this position would be accountable for the life cycle of liquidity and report directly to the CFO. The CLO should steer cash management, including:
- forecasting
- payments
- operational savings
- working capital
- various levers that affect the areas mentioned before
The CLO can then help the company to achieve:
- better return on investments
- earnings targets
- faster growth thanks to available liquidity
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