Patrick Clarke explains how treasury departments manage cash, mitigate risk, and support business operations. He addresses why treasury spending is hard to justify and what infrastructure companies need to build.
When I look at cash management, I mean, it's a lot like air traffic control in that you have funds coming in and out and essentially your job is to essentially make sure everybody gets the money they need to make their payments on time and then anything that's not required to be there. So you're sort of a. And it's a. It's a term that gets used by consultants and strong in the accounting word. I mean, a business partner and I think it's misused, but there's a lot of ivory tower. Treasury, I mean, I think less these days. I think the culture has very much changed, is that we're a support function. Our job is to make sure that in terms of getting the money that they need in the right currency at the right time for a shorter period as possible, sorting out their banking needs. If there's, you know, when it comes to risk, I mean, a lot of treasurers, I think, make the mistake that you can stop bad things happening to your company where if there's a permanent change in a currency position or an interest rate or in a regulatory framework, all you can do is give the business time to adapt. You know, if oil prices now $40, when I joined the company, they were above 60 dol briefly, we had zero. You can't hedge that away. You can give the company time. I think there'll be a lot of treasures. We've learned through the COVID is you might have your hedging program in place, but what if your activity stopped and you don't need those hedges? Then you've potentially caused an issue for your balance sheet. So you're protecting the company from the immediate impacts of bad things and you're facilitating the people who are out in the field who need to make the things or sell the things and so forth that they don't have to deal with the hassle of a guarantee or beg for funds or be sort of left. Left out of the loop when you're making a change in your banking decision and so forth. And I think that's a problem treasury has sometimes in justifying its existence, is that we should be able to make the business run smoother and focus on actually generating the profits that we use the cash for, rather than, you know, sort of being the head office and just expecting compliance. Because it's in the manual. Yeah, because you must apply. That's it. Yeah, and that's it. And I think, you know, when, when you. I mean, I've learned the hard way because it's always hard to justify spend on a system or on a process or something like that, because you can't to numbers exactly what the benefits are going to be. Everyone just sees it as a cost center. So I think being able to articulate that you're there to support the business is a key for getting those sort of advancements. If you're struggling with a mortgage and you've got kids and you think about putting through university and so forth, I wouldn't listen to a single word I say. I would do the exact opposite. But I mean, I think treasury should be fun. You need to go to jobs where things aren't stable because essentially accountants can run a company that's doing fine. Issuing you debt is fun. It often gets taken over by the cfo, but that's just the nature of the beast. But building a good cash flow forecasting process and improving the most regional controllers or territory controllers, I mean, they're useless at forecasting because it's not really that important. But actually meeting people and getting out of the office and going to a site and getting, you know, go to a factory or go to the sales team or those sort of things because I mean, as you say, I've got lots of interesting stories and I've loved almost every minute of it because, you know, I understand eight or nine different businesses and in a year's time I should know a lot more about oil and gas. It makes what is essentially a job that involves sitting in front of a computer, playing with spreadsheets and entering data and putting together PowerPoints far more exciting when you can actually see that you're benefiting other people.
