Treasury Lessons from the Financial Crisis

Treasury Lessons from the Financial Crisis
Image via Flickr by Peter-Ashley

The financial crisis from 2008 rocked the world, no doubt about that. It also served as an important and glaring catalyst for change in corporate management in all areas, and especially for corporate treasurers. A case study stemming from this crisis, presented at the IATA Treasury Conference in late 2009, could be worth reviewing to see if your strategies and management have learned from some of the early lessons discovered after the crisis.

The case study importantly acknowledges and goes over the views of treasury within corporate institutions before the crisis occurred. They explain that in many situations, the treasury side of operations was often isolated from other management and decision making bodies of the organization.

Compacting this was the fact that the treasury was “misunderstood” by senior management and even the board. Additional perceptions of the treasury were that it was expensive and of low value, did not effectively integrate new technology, was not integrated, was a “strain on resource,” and was staffed by inadequate employees.

Of course, this was not the case in all organizations, but a general pattern of perceptions was discovered by the authors of the case study. What happened as a result of the financial and economic crisis the world faced in 2008 and the years after? A lot of changes took place in treasury departments at many corporations.

Some of these changes still affect corporate treasurers today, including the changed “credit landscape” and the implications of those changes. Additionally, treasurers are now focused on “liquidity risk management and cash.” There has been consistent discussion about changes to how corporate treasurers manage their accounting and how they direct themselves as well. Many boards are paying much closer attention to corporate treasurers.

Fortunately, much has been gleaned from studies of how corporate treasurers and their teams have operated in past. The authors of this specific case study have duly examined the impact of the crisis on corporate treasurers and their departments. Some predictions they make for the future see treasury being “centralized, highly specialized, tightly controlled, highly automated,” and much more. It’s a worthwhile read for anyone interested in the area.