Treasurers should take opportunity to demonstrate the value-add of treasury in challenging environment, survey finds

Brussels, 23 May 2006 - Treasurers have an opportunity to add value to their businesses in a complex and ever-changing environment, according to a new pan-European survey by PricewaterhouseCoopers LLP.

The European Treasury Survey 2006, entitled Measuring Value from Treasury, questioned 182 treasurers from 13 European countries, including the UK, about the activities of the treasury function and how they see treasury adding value to their businesses now and in the future.

The responses reveal that treasurers believe major challenges lie ahead if they are to add value to their business, and, importantly, to effectively measure and communicate what value they are adding to the broader finance function, but that a genuine opportunity exists for them to do this.

Key findings from the survey include:

• Treasurers are adding value through an increasingly broad range of activities. Some traditional treasury activities, such as transaction processing, are seen as less value-adding and many activities cited as critical for the future, such as working capital management and pensions, were in areas beyond the traditional boundaries of treasury.
• Treasurers believe that they add most value in areas such as bank relationship management. However, they acknowledged that the shareholders of the businesses, for which they worked, were far more likely to perceive treasury risk management as their most value-added activity. This suggests a communication gap between treasurers and shareholders, as well as potentially a different focus.
• The potential exists to improve performance measurement. 25% of treasurers questioned do not use formal performance indicators to demonstrate how they are adding value, because they find it difficult to define and measure treasury performance. The treasurers that are measuring performance do not always use indicators that are effective in demonstrating the level of value-add, nor do they measure the areas that are potentially adding the most value to the business.
• Technological and systems-based developments ranked top among current developments or enablers that can help treasurers add value in treasury management. Particular examples highlighted were in-house banking, payment factories, and straight-through processing. The effective implementation of treasury systems was still recognised as a significant challenge.
• The greatest obstacle cited in the treasury function adding value was limited resources in terms of people. This indicated that treasurers are not constrained by budgets, but rather in finding the right people with the appropriate skills to enable them to add value.
• Over the next five years, respondents said they expect to focus on supporting the business in areas ranging from working capital management, capital structure and customer financing to IT integration and commodity risk management.

• "The role of treasury and the treasurer continues to evolve. Increased regulations have put the spotlight on traditional treasury activities and focused the awareness of the Board on what treasury does. At the same time, the need for cost reduction and the drive for efficiency across a business both have had an impact on treasury functions."
• "In this environment, the ability of the treasury function to add value is essential – and treasurers need to demonstrate and communicate this to the wider business. Partly due to the specialist nature of treasury activities, the wider finance function and business are often not aware of the skills of treasurers."
• "Treasurers have a challenging future ahead if they are to convince the broader business and finance function that they are adding value, but there is a genuine opportunity to do this and to build closer relationships with other parts of the business."

• "The survey confirms the continuing extension of the role of treasury beyond its traditionally narrow boundaries, into areas such as shared services, working capital management and general business partnering. It provides an excellent basis for understanding where the treasury function of companies in Europe is headed."

1. The PricewaterhouseCoopers LLP European Treasury Survey was carried out between November 2005 and February 2006 by the market research unit at PricewaterhouseCoopers LLP. 182 CFOs, Group Treasurers, regional and in-country treasurers and business unit/divisional CFOs/treasurers across 13 European countries. All major industry sectors are represented. For a copy of the survey please contact: valerie.vandenbemden@pwc.be .
2. The PricewaterhouseCoopers LLP European Treasury Solutions Group comprises over 150 dedicated professionals across Europe with a broad range of complementary treasury, banking, technology, taxation, accounting and programme management skills.
3. PricewaterhouseCoopers ( www.pwc.com ) provides industry-focused assurance, tax and advisory services for public and private clients. More than 130.000 people in 148 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.