Published : 6 years ago, on 18/09/2018

By Mike Richards the CEO of The Treasury Recruitment Company

One of the biggest news stories in the banking sector recently, has been the TSB IT crisis where many customers were unable to access their accounts for several weeks, leaving customers enraged and struggling to access funds for day to day life. This was a PR disaster and top lawyers have now been employed to probe the IT meltdown.

IT meltdowns, data breaches, hostile takeovers, and other disasters have an impact on treasury roles whether or not the treasurer has any involvement in the circumstances that led to it.

While a crisis is being investigated and remedied, it is of the upmost importance that all parties have complete faith in the treasury as they can help mitigate the risks associated with a crisis.

We outline how those in treasury roles need to preserve their reputation, and the organisation’s.

Why is Your Reputation As A Treasurer Paramount in a Crisis?

External factors, adverse conditions or mismanagement can push a company into a downward spiral. There can be financial losses, loss of contracts, personnel departures, increase in prices from suppliers and investors can get nervous.

So when a company is involved in a large crisis, how can the treasurer help?

During a crisis, the treasurer is there to act as counsel and support for all involved parties. If stakeholders have trust in the treasurer, they are much more likely to work with or continue working with the company while the crisis in being investigated and addressed.

 For this reason, I think it’s really important to build your reputation as a ‘safe pair of hands’, way before any crisis hits. By having a good relationship with the bank, for example, you can potentially take the pressure off your organisation in a crisis. No organisation is immune from disaster, bad things happen to good guys, so plan for disaster.

 Therefore, where possible, build you reputation as a trusted and ethical treasurer, to help buy time and leniency for the organisation in the event of a crisis. An ethical treasurer will have a reputation for making great decisions and a willingness to build good relationships, and will work hard in order to maintain them during a crisis.

What can the treasurer department do to help a crisis and what qualities do you need to display?

 As you know, the treasurer must work in the interest of the organisation as a whole and not just the investors and the board as is stated in the ACT’s ethical code. In a crisis, when often different parties have different priorities and drivers, it is important to continue to maintain the line that your decisions are made in the best interests of the organisation, that is your priority.

 When a crisis hits, the treasurer can do the following to soften the blows that come with such events and be part of the solution:

1. Know where the cash is

Without a doubt the most important role the treasurer has to fulfil during a crisis, is to have the big picture on where the cash within the company is. You need control over the cash, what’s coming in and what’s going out. Cash forecasts and reports from subsidiaries and vendors become important: as does all the detail in your relationships with suppliers and customers. What are their payment terms? What are their projected sales?

With a clear view on exactly where the cash is, there can be no accusations that you (and the business) have lost control over the finances.

2. Communicate

Communication with all parties is paramount as many people may be in the dark when it comes to investigations and solutions so it is important to be as available as possible to them. Sometimes a treasurer’s credibility may be questioned if the crisis was on their watch, so it is important to re-establish this with open communication. While transparency is important, confidentiality is essential too. Ensure the right balance between the two.

3. Focus on the business and its long term goals and strategies

 The treasurer must understand the longer term goals of the business and how decisions made during a crisis can affect the future of the company and its ability to meet those goals. As well as business objectives, the treasurer must know the business inside and out from a commercial and operations perspective as this is the only way to fully understand the risks to the business and the potential solutions. By demonstrating this in depth knowledge, you can build trust and respect with stakeholders, getting them on your side.

5. Show Leadership

 It’s important for the treasurer to show leadership across all parties. Being open to all employees and keeping them motivated with a roadmap to a solution will help with the overall solution.

6. Ensure everything goes through the treasurer

 The treasurer is the guardian of all cash flow and absolutely everything must go through them that can carry any financial risk. This is at all levels including board level. This is a significant responsibility and affects your professional reputation as well as the organisation’s. However, if you can successfully navigate an organisation through a crisis, you stand to enhance your professional reputation significantly.