Creating a Treasury Function from Scratch
Living by the observation of Brazilian novelist Paul Coelho: “If you think adventure is dangerous, try routine. It is deadly.”, Anne Catherine Sailley has left big business and ventured into the brave new world of a tech scaleup. Here, the Group Treasury Manager, Ogury, shares her to-do list for the first three months in her exciting role.
After spending 12 years as the EMEA treasury manager of a US-listed manufacturing company, I decided to take on a fresh challenge: the creation of treasury function from scratch for a UK scaleup in the tech sector.
For those who aren’t familiar with the term ‘scaleup’ it is essentially a successful startup that has entered a growth phase. A scaleup generally aims to continue its development and expand its market, notably through strong international ambitions. At this stage of a company’s life cycle the creation of a treasury function can help the organisation to face new challenges in a dynamic global environment.
In this article, I will share this journey with you – the highs, the challenges, the opportunities, and the lessons learned. We will examine how the culture and the nature of the business itself impact ways of working, and we will explore the creation of a new treasury function in such rapidly changing conditions.
At this stage of a company’s life cycle the creation of a treasury function can help the organisation to face new challenges in a dynamic global environment.
A new world
Let’s start with my arrival at a business that is totally different to what I’ve been used to. Rather than working in manufacturing, I found myself in a digitally native organisation whose focus was on advertising, not
office furniture. There was no more 100-year history to the company, just seven years of scaling up. And of course, as noted, I swapped the US for the UK.
All these differences have an impact on the working environment, office conditions, human relations with peers, company hierarchy, employees’ behaviour, company culture and – most of all – the day-to-day way of working.
At Ogury I was pleasantly surprised to find that the working environment is more informal and even fun, with table tennis, Nerf gun battles, and video games for developers, as well as free drinks, a fruit basket, and confectionary on offer to everyone.
In addition, the average age of the employees is lower than I was used to, with plenty of diversity and inclusion among this younger workforce. The atmosphere is relaxed, friendly, and there are continuous new joiners. As might be expected from such an agile company, working in the office is not mandatory. There are options to work remotely or in a hybrid fashion. Yet the company still makes an effort to bring employees together and motivate them to come to the office, notably with entertainment organised on-site.
In tandem with this relaxed approach, the relationship with management is also less formal. Nevertheless, performance is strictly tracked and reviewed quarterly.
The company is also steeped in its own culture. Everything flows from that – whether it be the way the company’s results are communicated, how to motivate or reward employees, where to organise events and summits for employees, and even what should be included in wellbeing programmes.
Interestingly, I’ve noticed that the way the company’s bankers dress is also more relaxed! No more suit and tie and polished shoes, but smart comfortable clothes and sneakers instead.
Working differently
All of these cultural nuances are reflected in the day-to-day working of the company. For example, it’s noticeable that in a scaleup (compared with a corporate giant), the decision- making timeline is vastly reduced. Employees also have more autonomy, which in turn requires greater agility and risk management.
The remote working policy also encourages self-learning and problem-solving. Instead of asking a question simply because someone is sitting opposite you, working remotely you learn how to find the information by yourself – either through e-learning or relevant research.
What’s also noticeable is that the younger workforce in a scaleup has a high-level of presentation skills. Moreover, communication is focused on video – accompanied by humorous interludes and music.
But even if a scaleup company seems to be ‘cooler’ to work for, the pressure is intense. For treasurers, the challenges are much the same as in a large company but somehow more complex since the organisation (and resource allocation) is smaller and the work environment is rapidly changing.
Fundamental treasury tasks such as financing, cash forecasting, and efficient use of working capital require fast action plans in a scaleup. The pressure on cash is even higher than in a typical corporate since the cash burn ratio is shorter. And any decision may have more critical consequences, given the level of debt and banks covenants imposed, which is typical of fast-growing companies.
Key learnings for other treasurers
Before accepting a new challenge, it is important to be aware that your working references and habits are going to be completely shaken up when you move from a corporate environment into a scaleup. Proper integration into a different type of company requires great adaptive abilities, in order to embrace the new culture. The challenge is to adopt that cultural code while remaining true to yourself and keeping the rigour needed to undertake treasury responsibilities.
Proper integration into a different type of company requires great adaptive abilities, in order to embrace the new culture.
The birth of a treasury department
Now let’s turn to the creation of a treasury function from scratch – which is an exhilarating experience. In a scaleup, treasury activities would have been undertaken by the accounting team but they are unlikely to have used the same processes as a formal treasury department.
When you arrive, not only must you familiarise yourself with the existing process, you must also be a pedagogue and explain the role of treasurer to your new team. The role varies depending on the size of the company and
stakeholders’ expectations. The treasurer should not simply oversee all existing activities containing the word ‘cash’ i.e. cash reconciliation, or cash flow statements for annual financial statements. The approach needs to be more nuanced.
The term ‘cash forecast’ can have different meanings depending on the company. It can be the operational vision of a short-term cash forecast managed by the treasury department for cash flow management and optimisation, or a long-term cash budget for the board. Both are cash forecasts. The treasurer should not produce both, but they can be involved in building the long-term forecast.
Making a mark
You will no doubt be keen to achieve business objectives quickly, but my advice is not to rush headlong into the operation. Take the first three months to understand the risks and then, by prioritising objectives and obtaining management commitment, propose an action plan.
Don’t focus only on the technical aspect of the job. Communication and visibility are vital in order for your new function to gain credibility and acceptance throughout the business. Start with something you know you do very well so your colleagues can see a positive result. Then communicate and celebrate every milestone to make the treasury function tangible to everyone.
Whatever the size of the new organisation, all treasurers must start by ensuring that the process is secure and efficient and the used systems are relevant.
Various controls should be checked from the outset. These include the administration of e-banking, the user rights, access to payments platforms, payments file encryption, daily bank reconciliation, suppliers’ database management, back-up solution for payment, the storage of sensitive files, and the updating of the bank signatories list.
It’s amazing what any company can learn from the input of a knowledgeable new joiner, so where necessary, challenge the processes in place.
Be bold and creative
On that note, here are my tips for FX management. Don’t put a hedging policy in place to reduce the actual risks. Start instead by reducing or removing the risks by offsetting FX revenue and cost.
This is an opportunity to be creative. Change the currency of intercompany invoicing, change the functional currency of entities, and change cash repatriation inside the group.
Two years ago, my motto was a quote from Paulo Coelho: “If you think adventure is dangerous, try routine. It is deadly.” Today, I am thrilled to have joined an incredible dynamic company with an impressive culture and to have taken up the challenge of creating a brand-new treasury function.
Finally, when it comes to treasury functions, there are no boundaries between companies, whatever their structure or story. You are the fruit of your experiences and your history. It’s up to you to dare to take a step towards the unexpected, which is rich in surprises, lessons, and new challenging experiences.
Communication and visibility are vital in order for your new function to gain credibility and acceptance throughout the business.
