Liquidity management is an important part of successful corporate management. The solvency of a company is ensured by the effective work of the treasurer, as the English expression for the treasurer of a company is. In times of digitalization, treasurers are facing new challenges. Legal conditions change and new technologies must be understood and successfully implemented in the company. Therefore, treasurers must constantly educate themselves and stay up to date with all legal and technical changes.
What are the responsibilities of a treasurer?
A treasurer controls and monitors a company’s cash management. Through an active and goal-oriented approach, he ensures that a company is solvent and remains solvent in the future. Not only large companies should employ a treasurer, but also small and medium-sized enterprises (SMEs). Experts advise companies with an annual turnover of 100 million euros or more to maintain their own treasury department. However, smaller companies with many loans or numerous foreign customers should also consider using a treasurer. This is either the company’s chief financial officer or the chief financial officer (CFO), i.e. the head of the accounting and finance department, or the services are outsourced to qualified service providers.
Increasing digitalization poses new challenges for treasurers. Risk management is becoming increasingly digitalized, so that the processing channels and reporting are fundamentally changing.
How have the conditions for treasury changed?
A company’s liquidity management is changing more and more due to increasing digitalization. Some new areas that treasurers have to deal with are big data, FinTechs, blockchain and changing payment methods and forms. In addition, there are legal regulatory changes that affect the areas of risk management and financing. Here are some examples of planned or already implemented legal innovations:
- Basel I – IV on capital requirements and regulation of banks with implications for lending to companies
- EU Payment Services Directive PSD2 for secure and fast payment transactions throughout Europe
- Planning an EU Financial Transaction Tax for Exchange and Over-the-Exchange Trading Activities
- European Market Infrastructure Regulation (EMIR) on over-the-counter derivatives trading
- International Financial Reporting Standard 9 (IFRS 9) on the classification of financial instruments, impairment and accounting for hedge transactions
- MiFID II for more consumer protection in securities transactions
- Capital Markets Union of the Member States of the European Union (EU)
In addition to the new areas and the constantly changing legal requirements, the worldwide increase in cybercrime also poses new challenges for companies’ treasury departments. Security standards in payment transactions and cash management must be continuously monitored and adapted to the latest threats.
How do you see the developments in treasury? What impact will digitization have? We look forward to your comments.
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