The Role of Treasury in a Business

Not all risks come from markets moving. Some come from people, institutions, or simply timing.

A customer doesn’t pay. A bank becomes less reliable. Cash is in the wrong place at the wrong time. None of this requires a crisis headline to hurt a company.

These are the risks treasury manages daily. Less visible than FX or interest rates, but often more immediate.

Credit Risk: When Money Owed Doesn’t Arrive

Credit risk is the risk that a counterparty, typically a customer or financial institution, fails to meet its obligations.

For treasury, this includes:

• Large customer exposures 
• Deposits placed with banks 
• Investments in short-term instruments 

The key questions:

• How much exposure do we have to a single counterparty? 
• How reliable are they? 
• What happens if they don’t pay? 

High concentration increases vulnerability. If one large counterparty fails, the impact can be significant.

Treasury monitors:

• Credit ratings 
• Exposure limits 
• Payment behaviour 
• Concentration levels 

Because the problem with credit risk is that it often looks fine… until it suddenly isn’t.

Counterparty Risk: Beyond Just Customers

Counterparty risk goes beyond customers. It includes:

• Banks holding deposits 
• Financial institutions involved in hedging 
• Partners in financial transactions 

Even large, well-known institutions are not risk-free. History has made that painfully clear.

Treasury manages this by:

• Diversifying across institutions 
• Setting exposure limits per counterparty 
• Monitoring creditworthiness regularly 
• Using collateral or netting agreements where applicable 

It’s not about assuming failure. It’s about not being overly exposed if it happens.

Liquidity Risk: The Timing Problem

Liquidity risk is one of the most fundamental risks in treasury.

It’s not about whether the company is profitable. It’s about whether it has cash available when needed.

A company can be profitable and still face liquidity stress if:

• Cash inflows are delayed 
• Outflows are poorly timed 
• Funding is not accessible 
• Cash is trapped in certain entities or countries 

Liquidity risk is about timing, access, and flexibility.

Managing Liquidity

Treasury ensures liquidity by:

• Maintaining accurate cash visibility 
• Forecasting inflows and outflows 
• Securing committed credit facilities 
• Holding liquidity buffers 
• Structuring cash centrally where possible 

The goal is not to hold as much cash as possible. It’s to have sufficient and accessible liquidity without excessive idle balances.

Finding that balance is where experience comes in.

Trapped Cash and Accessibility

Not all cash is equal.

Cash held in:

• Restricted jurisdictions 
• Entities with legal limitations 
• Structures without efficient transfer mechanisms 

May not be readily available.

Treasury needs to understand:

• Where cash is located 
• Whether it can be moved 
• How quickly it can be accessed 

Because cash that cannot be used when needed does not solve liquidity problems.

Concentration Risk

One of the recurring themes across credit, counterparty, and liquidity risk is concentration.

Too much exposure to:

• One customer 
• One bank 
• One region 
• One funding source 

Increases vulnerability.

Diversification reduces risk, but introduces complexity. Treasury balances both.

Early Warning Signals

These risks rarely appear out of nowhere.

Warning signs include:

• Deteriorating payment behaviour 
• Changes in credit ratings 
• Increasing reliance on short-term funding 
• Reduced liquidity buffers 
• Operational issues with banks or counterparties 

Treasury monitors these indicators to act early, not react late.

Where It Goes Wrong

Some familiar patterns:

• Overconcentration in a few counterparties 
• Lack of visibility into exposures 
• Assuming large institutions are always safe 
• Underestimating liquidity needs 
• Ignoring access restrictions on cash 

Most of these issues build gradually. Then become urgent very quickly.

Treasury’s Role

Treasury ensures the company:

• Knows who it is exposed to 
• Limits dependency where needed 
• Maintains access to liquidity 
• Can withstand disruptions 

These risks don’t usually get attention when everything is stable.

But when something goes wrong, they become the only thing that matters.

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Every company needs funding. Not just once, but continuously. Growth, operations, acquisitions, refinancing. It never really stops.

Financing strategy is about deciding how, when, and where to raise that funding, without locking the company into something it will regret later.

Sounds straightforward. It’s not.

What Financing Strategy Actually Covers

Financing strategy goes beyond “we need money, let’s borrow it.”

It includes:

• Choice of funding sources 
• Timing of market access 
• Currency of borrowing 
• Maturity profile of debt 
• Fixed vs floating interest exposure 
• Diversification of investors and lenders 

Treasury builds a structure that supports the business today while keeping enough flexibility for tomorrow.

Because the one thing you can guarantee is that circumstances will change.

Bank Financing vs Capital Markets

Companies typically access funding through:

• Bank financing: loans, revolving credit facilities, bilateral agreements 
• Capital markets: bonds, commercial paper, private placements 

Bank financing offers flexibility and relationship-driven access. Capital markets offer scale and often better pricing for larger issuers.

Treasury decides:

• When to use which 
• How to balance both 
• How to avoid overdependence on one source 

Rely too much on banks, and you’re exposed to credit tightening. Rely too much on capital markets, and you depend heavily on investor sentiment.

Diversification isn’t just a nice idea. It’s survival planning.

Timing the Market (Or Trying To)

Everyone wants to issue debt at the perfect moment:

• Low interest rates 
• Strong investor demand 
• Tight spreads 

Reality is less cooperative.

Treasury monitors:

• Interest rate trends 
• Credit spreads 
• Market liquidity 
• Peer activity 

But timing the market perfectly is rare. The real strategy is to be prepared so you can act when conditions are favourable, instead of scrambling when they aren’t.

Preparation beats prediction. Every time.

Maturity Profiles and Refinancing Risk

Debt doesn’t just sit there. It matures. And when it does, it needs to be repaid or refinanced.

Treasury manages:

• Maturity ladders 
• Concentration of refinancing points 
• Balance between short-term and long-term funding 

Too much debt maturing at the same time creates refinancing risk. Especially if market conditions are unfavourable.

Spreading maturities over time reduces that risk. It also reduces stress. Which is underrated.

Interest Rate Strategy

Interest rates move. Sometimes slowly, sometimes not.

Treasury decides:

• Fixed vs floating exposure 
• Use of interest rate swaps or derivatives 
• Sensitivity to rate changes 

Fix too much, and you miss out if rates drop. Float too much, and you’re exposed if they rise.

There is no perfect balance. Only informed trade-offs.

Currency of Funding

For international companies, funding isn’t just about amount. It’s also about currency.

Treasury considers:

• Matching debt currency with revenue streams 
• Managing FX exposure on funding 
• Access to local vs global markets 

Borrowing in the wrong currency can introduce unnecessary risk. Sometimes companies do it anyway because pricing looks attractive.

That tends to work… until it doesn’t.

Investor and Lender Diversification

A strong financing strategy avoids dependency.

Treasury builds relationships with:

• Multiple banks 
• Institutional investors 
• Debt capital markets participants 

This creates optionality:

• Access to different funding channels 
• Better negotiation leverage 
• Reduced reliance on any single counterparty 

Because when one door closes, you want others open.

Liquidity Buffers and Backup Facilities

Not all funding is used immediately.

Treasury maintains:

• Undrawn credit facilities 
• Liquidity buffers 
• Backup lines 

These don’t always look efficient. They cost money.

But when markets tighten or unexpected events occur, they become critical.

Efficiency is nice. Survival is better.

Where It Goes Wrong

Some predictable mistakes:

• Over-reliance on short-term funding 
• Poor diversification of funding sources 
• Ignoring refinancing concentration 
• Chasing lowest cost without considering flexibility 
• Lack of preparation for market access 

These issues don’t always show up immediately. They build quietly and then surface under pressure.

Treasury’s Role in Financing Strategy

Treasury ensures the company can access funding:

• When it needs it 
• At a reasonable cost 
• Without compromising flexibility 

It doesn’t control markets. It controls preparedness.

And in financing, being prepared is usually the difference between acting confidently and reacting under pressure.

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Cash management isn’t just about knowing where the money is. It’s about how it moves. Payments going out, collections coming in. Every day, across multiple entities, banks, currencies, and systems.

If this part fails, nothing else matters. You can have perfect forecasts and beautiful dashboards, but if salaries don’t go out or customers can’t pay you, things escalate quickly.

The Objective: Efficient, Controlled Cash Flows

Treasury’s role in payments and collections is to ensure that money moves:

• On time 
• Accurately 
• Securely 
• At the lowest reasonable cost 

Miss one of those, and you either create operational issues, financial loss, or risk exposure.

Sometimes all three at once.

Payments: Outgoing Cash

Payments cover a wide range:

• Supplier payments 
• Salaries 
• Taxes 
• Intercompany transfers 
• Debt repayments 

Each of these has different requirements in terms of timing, approval, and execution.

Treasury ensures:

• Sufficient funds are available 
• Payments are prioritised correctly 
• Processes are standardised where possible 
• Execution is reliable and controlled 

Because once a payment is sent, reversing it is often… complicated.

Payment Processes and Control

This is where structure matters.

Strong payment frameworks include:

• Segregation of duties (initiation, approval, execution) 
• Multi-level approvals 
• Standardised workflows 
• Clear authorisation limits 

These controls reduce the risk of:

• Errors 
• Fraud 
• Unauthorised payments 

And yes, they also slow things down slightly. That’s the trade-off. Speed without control tends to get expensive.

Payment Factories and Centralisation

Many companies move towards centralised payment structures.

A payment factory allows:

• Central initiation and processing of payments 
• Standardised formats and processes 
• Better control and visibility 

Benefits include:

• Reduced operational complexity 
• Improved efficiency 
• Stronger control environment 

It also requires:

• Alignment across entities 
• System integration 
• Clear governance 

Which means it’s never as quick to implement as people hope.

Bank Connectivity

Payments rely heavily on connectivity with banks.

Common methods:

• SWIFT 
• APIs 
• Host-to-host connections 

The goal is automation:

• Reduce manual input 
• Minimise errors 
• Increase speed and reliability 

In reality, different banks offer different capabilities. So treasury ends up managing a mix of solutions.

Because consistency across banks would be too convenient.

Collections: Incoming Cash

Collections are just as important as payments.

Treasury focuses on:

• Making it easy for customers to pay 
• Reducing delays in incoming cash 
• Improving visibility on received funds 

This can involve:

• Structured bank account setups 
• Use of virtual accounts 
• Clear payment instructions 
• Automated reconciliation 

The faster and cleaner the inflow, the better the liquidity position.

Reconciliation: Matching Reality

Once cash moves, it needs to be matched.

Reconciliation ensures:

• Payments and receipts are correctly recorded 
• Differences are identified and resolved 
• Financial data remains accurate 

Without proper reconciliation:

• Errors accumulate 
• Visibility decreases 
• Decision-making suffers 

It’s not the most exciting part of treasury. It is one of the most important.

Fraud and Security Risks

Payments are a prime target for fraud.

Common risks include:

• Payment redirection fraud 
• Fake supplier requests 
• Internal misuse of access 

Treasury implements:

• Strong controls 
• Verification processes (e.g. supplier validation) 
• Secure connectivity 
• Monitoring of unusual activity 

Because one successful fraud attempt can undo years of careful work.

Cost of Payments

Payments are not free.

Costs include:

• Transaction fees 
• FX margins 
• Banking charges 

Treasury optimises:

• Payment routes 
• Bank pricing 
• Currency handling 

Small optimisations at scale can lead to meaningful savings.

Where It Goes Wrong

Some familiar issues:

• Fragmented payment processes across entities 
• Weak controls or unclear responsibilities 
• Manual processes increasing error risk 
• Poor visibility into incoming cash 
• Inefficient reconciliation 

These issues don’t always show immediately. They build until something breaks.

Treasury’s Role in Payments and Collections

Treasury ensures that cash flows:

• Are controlled 
• Are efficient 
• Are secure 
• Support overall liquidity management 

It connects operational execution with financial oversight.

Because at the end of the day, treasury is not just about managing cash.

It’s about making sure it moves exactly how it should.

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Treasury is not a single-skill job. It sits at the intersection of finance, operations, technology, and strategy. Which means being good at just one thing is… not enough.

A strong treasury professional combines technical knowledge with practical thinking and the ability to deal with people who don’t always see things the same way.

Core Technical Skills

At the foundation, treasury requires solid financial understanding.

Key areas include:

• Cash flow management and forecasting 
• Financial risk (FX, interest rates, liquidity) 
• Funding and capital structure 
• Working capital dynamics 

You don’t need to be a quant. But you do need to understand how financial decisions impact cash and risk.

Analytical Thinking

Treasury deals with data constantly.

Being able to:

• Interpret numbers 
• Identify patterns 
• Challenge assumptions 
• Translate data into decisions 

Is critical.

It’s not about building complex models for the sake of it. It’s about understanding what matters and what doesn’t.

Attention to Detail

Small errors in treasury can have large consequences.

• Incorrect payment details 
• Misinterpreted exposures 
• Wrong assumptions in forecasts 

Detail matters.

At the same time, you can’t get lost in detail. Knowing when to zoom out is just as important.

Systems and Data Skills

Modern treasury is system-driven.

Professionals need to be comfortable with:

• ERP systems 
• Treasury Management Systems (TMS) 
• Data tools and reporting platforms 

Not necessarily coding, but:

• Understanding how systems interact 
• Working with data structures 
• Identifying data issues 

Because a large part of treasury work involves making systems work properly.

Communication Skills

Treasury sits between multiple stakeholders:

• Finance 
• Operations 
• Banks 
• Management 

Which means you need to:

• Explain financial concepts clearly 
• Translate technical topics into practical impact 
• Push back when needed 

Being right is not enough. People need to understand and act on it.

Stakeholder Management

Treasury rarely operates in isolation.

You need to:

• Align with different departments 
• Manage expectations 
• Influence decisions 

This requires:

• Diplomacy 
• Persistence 
• A bit of patience 

Because not everyone prioritises liquidity the way treasury does.

Problem-Solving

Treasury deals with situations that are:

• Time-sensitive 
• Data-dependent 
• Sometimes incomplete 

You need to:

• Make decisions with imperfect information 
• Find practical solutions 
• Adapt quickly 

Waiting for perfect clarity is usually not an option.

Understanding of Risk

Treasury is fundamentally about managing risk.

This requires:

• Awareness of potential exposures 
• Ability to assess impact 
• Judgment on when to act 

It’s not about avoiding risk completely. It’s about managing it intelligently.

Adaptability

The treasury environment changes:

• Markets move 
• Regulations evolve 
• Systems are updated 

Professionals need to adapt:

• Learn new tools 
• Adjust to new processes 
• Respond to changing conditions 

Static thinking doesn’t work well here.

Commercial Awareness

Treasury decisions impact the business.

Understanding:

• How the company makes money 
• What drives costs 
• Where risks originate 

Helps align treasury actions with business objectives.

Without this, treasury risks becoming disconnected from reality.

The Balance of Skills

A strong treasury professional combines:

• Technical knowledge 
• Analytical thinking 
• Communication skills 
• Practical judgment 

Leaning too much on one area creates gaps.

Too technical, and you struggle to influence.
Too commercial, and you miss risk details.

Balance is what makes the difference.

Where It Goes Wrong

Some common gaps:

• Strong technical skills but weak communication 
• Overreliance on systems without understanding outputs 
• Lack of business context 
• Ignoring stakeholder dynamics 

Treasury is not just about knowing things. It’s about applying them.

Treasury as a Skill Set

Treasury develops a unique combination of skills:

• Financial 
• Operational 
• Strategic 

Which are transferable across finance roles.

And once developed, they tend to stick.

Even if you didn’t plan to learn them in the first place.

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Banks sit at the center of almost everything treasury does. Payments flow through them, cash sits with them, funding comes from them, and risk is often managed with them.

Which means one thing: if your banking setup is weak, everything else becomes harder, slower, and more expensive.

Managing banking relationships is not about being friendly. It’s about control, access, pricing, and reliability. Treasury needs banks, but it also needs to manage them actively. Otherwise, banks will happily manage you.

The Role of Banks in Treasury

Banks provide a wide range of services:

• Payment processing and collections 
• Cash management and account structures 
• Lending and credit facilities 
• FX and hedging products 
• Trade finance and guarantees 
• Market access and advisory 

Most companies don’t rely on a single bank. They operate with a panel of banks across regions and services. That creates flexibility, but also complexity.

Treasury’s job is to structure that landscape in a way that balances efficiency, cost, and risk.

Bank Selection: More Than Just Pricing

Choosing a bank is rarely about who offers the lowest fee. At least, it shouldn’t be.

Treasury evaluates:

• Geographic coverage and local presence 
• Product capabilities and technical infrastructure 
• Credit strength and stability 
• Connectivity options (APIs, SWIFT, host-to-host) 
• Service quality and responsiveness 

A cheap bank that fails operationally or lacks capability will cost more in the long run. Usually in ways that only become visible after you’ve already committed.

Concentration vs Diversification

This is a constant balancing act.

Too few banks:

• High dependency 
• Increased counterparty risk 
• Limited negotiation leverage 

Too many banks:

• Operational complexity 
• Fragmented cash visibility 
• Higher administrative burden 

Treasury aims for a structure where:

• Core banks handle the majority of activity 
• Secondary banks provide backup and regional support 
• No single point of failure exists 

It’s not about having many banks. It’s about having the right ones, in the right roles.

Pricing and Bank Fees

Bank fees are one of those areas where companies quietly lose money for years.

Payment fees, FX margins, account charges, connectivity costs. Individually small, collectively significant.

Treasury is responsible for:

• Negotiating pricing structures 
• Monitoring actual charges versus agreements 
• Running periodic fee reviews or benchmarks 

The uncomfortable truth is that many companies don’t actively manage this. Banks notice. And they price accordingly.

Negotiating with Banks

Negotiation is not a one-time event. It’s an ongoing process.

Leverage comes from:

• Volume of business 
• Breadth of services 
• Competitive tension between banks 
• Long-term relationship potential 

Treasury needs to:

• Clearly define requirements 
• Run structured RFP processes where needed 
• Compare offers beyond headline pricing 
• Understand where banks actually make their margin 

And then there’s timing. Negotiating when you urgently need something is the worst possible moment. Negotiating when you have options is where value is created.

Credit Facilities and Liquidity Access

One of the most critical aspects of banking relationships is access to funding.

Revolving credit facilities, overdrafts, bilateral loans, syndicated facilities. These provide liquidity buffers and flexibility.

Treasury ensures:

• Sufficient committed facilities are in place 
• Maturities are spread over time 
• Covenants are manageable 
• Headroom is maintained 

Because access to liquidity is easy… until it isn’t.

Bank Connectivity and Integration

Modern treasury relies heavily on automation and data. That requires strong connectivity with banks.

Options include:

• SWIFT connectivity 
• APIs 
• Host-to-host connections 

The goal is simple: reliable, automated, and secure data exchange.

The reality is less simple. Integration projects can be complex, and not all banks are equally advanced. Treasury needs to balance innovation with practicality.

Relationship Management: The Human Layer

Despite all the systems and contracts, banking is still a relationship business.

Treasury interacts with:

• Relationship managers 
• Product specialists 
• Credit teams 

Good relationships can:

• Improve responsiveness 
• Provide early access to solutions 
• Help in difficult situations 

But relationships should never replace structure. Being on good terms doesn’t mean you stop challenging pricing or performance.

Where It Goes Wrong

Some classic issues:

• Too many banks with overlapping roles 
• No clear ownership of bank relationships 
• Lack of fee transparency 
• Over-reliance on one key bank 
• Weak negotiation due to lack of preparation 

Most of these are not strategic failures. They’re the result of neglect over time.

Treasury’s Real Objective

Treasury doesn’t aim to have “good” banking relationships. It aims to have effective ones.

Banks should:

• Deliver reliable services 
• Provide competitive pricing 
• Support the company’s strategy 
• Offer access to liquidity when needed 

Anything less becomes friction. And treasury’s job is to reduce friction, not live with it.

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Cash flow forecasting is the process of estimating how much cash will come in and go out of the business over a given period.

That sounds simple. It isn’t.

Because forecasting depends on assumptions. And assumptions depend on people. And people are… let’s say, optimistic.

Treasury’s job is to take all those assumptions and turn them into something that resembles reality.

Why Cash Flow Forecasting Matters

Cash flow forecasting allows companies to:

• Anticipate liquidity shortages or surpluses 
• Plan funding or investment decisions 
• Support strategic initiatives 
• Avoid last-minute surprises 

Without a forecast, treasury is reactive. With a forecast, it can act ahead of time.

The difference is usually measured in cost, stress, and how often someone says “we didn’t see this coming.”

Different Forecast Horizons

Not all forecasts are the same.

• Short-term (daily to weekly)
  Focus on cash positioning and immediate liquidity needs 
• Medium-term (monthly to quarterly)
  Support planning, funding, and working capital management 
• Long-term (annual and beyond)
  Linked to strategic planning and capital structure decisions 

Each serves a different purpose and requires a different level of detail.

Short-term forecasts need accuracy.
Long-term forecasts need direction.

Confusing the two is a common mistake.

Sources of Forecast Data

Forecasts are built from multiple inputs:

• Sales projections 
• Accounts receivable and payable data 
• Payroll and operational expenses 
• Capex plans 
• Tax payments 
• Financing activities 

Treasury consolidates these inputs into a single view.

The challenge is not collecting data. It’s ensuring that data is:

• Complete 
• Consistent 
• Timely 

Which is where things usually start to fall apart.

The Reality of Forecast Accuracy

Everyone wants a “highly accurate” forecast.

Reality check: perfect accuracy doesn’t exist.

Forecasting is influenced by:

• Changing business conditions 
• Delays in payments 
• Unexpected expenses 
• Human assumptions 

Instead of chasing perfection, treasury focuses on:

• Improving accuracy over time 
• Understanding variances 
• Building confidence in the forecast 

A forecast that is directionally correct and consistently improved is far more valuable than one that looks precise but isn’t trusted.

Direct vs Indirect Forecasting

There are two main approaches:

• Direct forecasting
  Based on known cash flows, such as invoices and payments 
• Indirect forecasting
  Derived from P&L and balance sheet projections, typically through FP&A 

Direct forecasting is more accurate in the short term.
Indirect forecasting is useful for longer-term planning.

Most companies use a combination of both.

Rolling Forecasts

Static forecasts quickly become outdated.

Rolling forecasts are continuously updated, typically:

• Weekly for short-term views 
• Monthly for longer horizons 

This keeps the forecast relevant and allows treasury to adapt to changes.

It also creates more work. But useful work.

The Role of Technology

Forecasting can be supported by:

• ERP systems 
• TMS platforms 
• Data aggregation tools 
• Increasingly, AI and machine learning 

Technology helps:

• Consolidate data 
• Identify patterns 
• Reduce manual effort 

But it does not fix:

• Poor input data 
• Lack of ownership 
• Weak processes 

If the inputs are unreliable, the output will be too. Just faster.

Ownership and Accountability

One of the biggest challenges in forecasting is ownership.

Who is responsible for:

• Providing inputs 
• Validating assumptions 
• Updating data 

Without clear ownership:

• Inputs arrive late or incomplete 
• Forecasts lose credibility 
• Treasury spends more time chasing data than analysing it 

Clear roles and accountability improve both efficiency and accuracy.

Variance Analysis

Forecasting is not just about predicting. It’s about learning.

Treasury compares:

• Forecast vs actual 
• Identifies deviations 
• Understands root causes 

This feedback loop improves future forecasts and highlights structural issues.

Without it, forecasting becomes a repetitive exercise with limited value.

Where It Goes Wrong

Some familiar issues:

• Overly optimistic assumptions 
• Lack of input from key stakeholders 
• Fragmented data sources 
• No regular updates 
• No analysis of variances 

The result is a forecast that exists, but isn’t trusted.

Which defeats the purpose entirely.

Treasury’s Role in Forecasting

Treasury brings structure, discipline, and realism to forecasting.

It ensures:

• Cash flows are understood and projected 
• Liquidity risks are identified early 
• Decisions are based on forward-looking insight 

It doesn’t predict the future. It reduces uncertainty around it.

And in treasury, that’s about as close as you get to control.

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Once risks are identified, treasury has to decide what to actually do about them. That’s where hedging comes in.

Hedging is the use of financial instruments or structures to reduce or stabilise the impact of market movements. It doesn’t eliminate risk. It changes how and when that risk shows up.

The objective is not to “win” against the market. It’s to create predictability in cash flows and financial results.

Which sounds reasonable, until someone compares the hedge result to what would have happened without it.

Why Companies Hedge

Companies hedge for a few key reasons:

• To protect margins from FX or interest rate movements 
• To stabilise cash flows and improve planning 
• To reduce earnings volatility 
• To align with internal risk appetite and policies 

In short, hedging reduces uncertainty. It trades potential upside for reduced downside.

That trade-off is where most debates start.

Types of Hedging Approaches

There is no single hedging strategy. Companies typically choose between:

• No hedging (natural exposure)
  Accepting market movements and absorbing the impact 
• Natural hedging
  Structuring operations so inflows and outflows offset each other, for example matching revenue and costs in the same currency 
• Financial hedging
  Using derivatives or financial instruments to manage exposure 

Most companies use a mix, depending on the type and size of exposure.

Common Hedging Instruments

Treasury has a toolbox of instruments. The most common ones include:

• Forwards
  Lock in an exchange rate or interest rate for a future transaction
  Simple, predictable, widely used 
• Options
  Provide protection against adverse movements while keeping upside potential
  More flexible, but come with a premium 
• Swaps
  Exchange cash flows, often used for interest rate or currency exposures
  Useful for longer-term structures 
• Money market hedges
  Using borrowing and investing to synthetically lock in rates 

Each instrument has different implications in terms of cost, flexibility, and accounting treatment.

Hedging Strategy: How Much and When

The real challenge is not the instrument. It’s the strategy.

Treasury needs to decide:

• What percentage of exposure to hedge 
• Over what time horizon 
• At what frequency (layering hedges over time or all at once) 

For example:

• Hedge 100% immediately 
• Hedge gradually over time 
• Hedge only a portion and leave the rest open 

There is no universally correct answer. It depends on:

• Risk appetite 
• Predictability of exposures 
• Market conditions 
• Business priorities 

And, inevitably, hindsight.

The Cost of Hedging

Hedging is not free.

Costs include:

• Bid-ask spreads 
• Option premiums 
• Credit charges from banks 
• Operational and administrative effort 

Treasury constantly evaluates whether the cost of hedging is justified by the reduction in risk.

Sometimes the answer is yes. Sometimes it’s not. Sometimes it only becomes clear afterwards.

Hedge Accounting: The Technical Layer

This is where things get less exciting and more restrictive.

Hedge accounting determines how hedging results are reflected in financial statements. Without it, hedges can introduce volatility rather than reduce it.

To qualify, companies need:

• Clear documentation 
• Demonstrated effectiveness 
• Consistent application 

Failing hedge accounting doesn’t mean the hedge is wrong. It just means the accounting impact may not match the economic reality.

Which tends to confuse people who only look at reported numbers.

Timing and Forecast Accuracy

Hedging relies on forecasted exposures.

If forecasts are inaccurate:

• You hedge too much 
• You hedge too little 
• You hedge at the wrong time 

All three happen regularly.

This links hedging directly to forecasting quality. Weak forecasts lead to weak hedging decisions.

Where It Goes Wrong

Some classic issues:

• Over-hedging or under-hedging due to poor forecasts 
• Using complex instruments without fully understanding them 
• Focusing on market timing instead of consistency 
• Lack of clear policy or inconsistent application 
• Evaluating hedges based on outcomes instead of objectives 

The last one is particularly common.

A hedge that “loses money” may have done exactly what it was supposed to do.

Treasury’s Role in Hedging

Treasury doesn’t try to beat the market. It creates structure around uncertainty.

It ensures:

• Risks are managed consistently 
• Decisions align with policy and risk appetite 
• Financial impact is stabilised where needed 
• The company avoids unpleasant surprises 

Because in the end, hedging is not about being right.

It’s about being prepared.

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Ask most treasury professionals how they got into treasury, and you’ll hear a familiar answer: “by accident.”

And then, a few years later, they’re still there.

Treasury is one of those functions that sits quietly in the background, but once you’re in it, you realise it touches everything. Cash, risk, banking, systems, strategy. It’s broad, dynamic, and surprisingly practical.

Which makes it a solid career path. Even if no one planned it that way.

What a Career in Treasury Looks Like

A treasury career typically starts operational and becomes more strategic over time.

Early roles focus on:

• Cash positioning and forecasting 
• Payments and bank account management 
• Basic reporting and reconciliation 

As experience grows, responsibilities expand to:

• Risk management (FX, interest rates) 
• Funding and capital structure 
• Banking relationships 
• Process and system improvements 

Senior roles involve:

• Strategic decision-making 
• Leading treasury transformation 
• Supporting corporate strategy 
• Managing teams and stakeholders 

It’s a progression from execution to influence.

Why People Stay in Treasury

Treasury offers a combination of:

• Variety
  No single day looks the same 
• Visibility
  Direct connection to financial performance 
• Impact
  Decisions affect liquidity, cost, and risk 
• Complexity
  Enough moving parts to keep things interesting 

It’s not purely theoretical. It’s practical and connected to real business outcomes.

Key Roles in Treasury

Typical roles include:

• Treasury Analyst
  Focus on operations, reporting, and cash management 
• Treasury Manager
  Responsible for processes, risk management, and coordination 
• Head of Treasury / Treasurer
  Strategic oversight, funding, and leadership 
• Specialists
  Focus areas such as FX, funding, systems, or cash management 

Each role builds on the previous one.

Skills Needed in Treasury

Treasury requires a mix of skills:

• Financial understanding
  Cash flow, risk, funding 
• Analytical thinking
  Interpreting data and making decisions 
• Attention to detail
  Small errors can have large consequences 
• Communication
  Explaining financial topics to non-financial stakeholders 
• Systems and data skills
  Working with TMS, ERP, and reporting tools 

It’s not just about numbers. It’s about connecting them to decisions.

The Technical vs Soft Skills Balance

Early in your career, technical skills matter more.

Later, soft skills become critical:

• Stakeholder management 
• Influencing decisions 
• Leading projects and teams 

Treasury sits between departments, which means communication is not optional.

Career Paths and Opportunities

Treasury offers multiple directions:

• Deep specialisation (e.g. FX, funding, systems) 
• Broad leadership roles (Head of Treasury) 
• Moves into CFO or finance leadership positions 

It also provides:

• Exposure to international business 
• Interaction with banks and financial markets 
• Involvement in strategic projects 

Which makes it a strong foundation for broader finance roles.

Common Challenges

Treasury is not without its challenges:

• Limited visibility compared to revenue functions 
• Reactive workload during critical moments 
• Balancing operational and strategic responsibilities 
• Managing complexity across systems and entities 

But those challenges are also what make the role valuable.

The Future of Treasury Careers

Treasury is evolving.

Key trends include:

• Increased use of technology and automation 
• Greater focus on data and analytics 
• More involvement in strategy 
• Growing importance of risk management 

The role is becoming:

• Less operational 
• More analytical 
• More strategic 

Which makes it more interesting. And slightly more demanding.

Treasury as a Career Choice

Treasury is not always an obvious career path.

But it offers:

• Strong skill development 
• Broad exposure 
• Tangible impact 

And once people discover it, they tend to stay.

Not by accident anymore.

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