Well, well, well. Look who's had a little 8-bit glow-up… Yes, your boy with the ‘face for animation’ is back, with a new look and a new Playbook. And this month, it’s the CFO’s guide to Corporate Treasury.

In most circles, that would be met with a collective yawn. But not here. No, this is a safe space for people who get excited about cash pooling, counterparty risk, and FX hedging. Good people.

BUT… before we dive in, I've got a new friend to tell you about:

Every board I’ve reported to asked the same question come budget time: “how does our finance function compare to others?”

The usual answer calls for a salary survey and a couple of calls to my fellow CFOs. It gets you the answer you need in that meeting…but it doesn’t tell you whether your team is built right.

Airwallex’s 2027 CFO Benchmarks report is a better starting point. It shows you what companies your size spend on finance, how many people they carry, and how many entities they run.

Here’s the stat I’d take into that meeting: 86% say their systems are integrated, but only 38% say data actually moves between them. That gap means people re-keying numbers at month end.

Read it before your board sees the budget.

“You do know we have no cash, right?”

Things were tight, but the hyperbole seemed a bit silly. Especially coming from Paul, my Head of Treasury (not his real name).

It was our first face-to-face meeting, just a few days into my new role.

So, I put him straight: “Well, we've got about $100m.”

“Sure, that's what the balance sheet says. But nearly all of that is stuck. It's trapped. We can't use it.”

“No, that's an exaggeration. About $20m of the $100m is restricted cash, sitting in escrow from an earlier M&A deal. So we've got about $80m to play with. Admittedly, at our current burn rate, it won't last long. But it's something.”

“No. $20m meets the accounting definition of restricted cash. I'm your Treasurer, and I'm telling you that most of the other $80m is just as inaccessible to me as that $20m.”

OK. He had my attention now.

Was he telling me that essentially all our cash was tied up?! To quote the kids, this would be huge, if true.

It reminded me of Ned Stark's first Small Council meeting in Game of Thrones, where he quickly discovers that the Crown's finances are in rather worse shape than he'd imagined:

And Paul (who I know will read this) I apologize for casting you as Littlefinger in this analogy. The comparison is purely financial, please don't have me poisoned.

Anyway.

Littlefinger... er… I mean, Paul, went on to explain that there was no proper cash pooling in place. He'd only recently joined the business himself, and cash was scattered all over the group, leaving most of it functionally useless.

He reeled off the reasons:

Fixing all this would be a huge operational lift. Months of work. And that was before you got into the internal politics, which, in this case, were yuuuuuge.

“It's funny,” he said. “The balance sheet says you've got $100m in cash. But what you've actually got is something a lot more like a receivables balance.”

“Yeah… you're not wrong.”

“And a receivables balance so soggy you're not entirely sure when, or even how, you're going to collect it.”

Lovely.

“So, as I was saying, for planning purposes, you've got a functional cash balance of zero. Good luck. Looking forward to working together!”

I'd never felt so poor.

So... welcome to the start of a new Playbook series. A four-part guide to Corporate Treasury for CFOs.

Today, we're going to kick things off by defining what Treasury is, what it isn't, and how it fits into the CFO's wider capital management system.

The role of Treasury is to make sure the business has access to the right money, in the right place, at the right time, at an acceptable cost and level of risk.

A conventional piece of finance wisdom is that cash is ‘fungible’. In other words, one dollar is as good as another.

But if that were really true in practice, there wouldn't be much need for Treasury.

Imagine five dollars sitting on the same group's consolidated balance sheet.

Paul didn’t say we didn't have $100m. He was telling me we didn't have a Treasury system capable of making that $100m useful. And that is why Treasury is important…

A good Treasury function balances four objectives:

Well... I say balance, but in practice, it's more about delivering the first objective, then subsequently balancing the other three.

No one will thank you for an extra point of yield if you can't make payroll because all your cash is tied up in money market deposits.

So, what does all that mean in practice? Well, here's what keeps a Treasury team busy all day:

Some of these things are ‘big company problems’, but not all of them.

There are plenty of small businesses wrestling with buying in one currency and selling in another. Living and dying by the FX markets. Or figuring out how to safely hold their cash in preparation for another massive seasonal working capital build.

Likewise, there are plenty of larger businesses with relatively simple Treasury needs.

So Treasury complexity doesn't necessarily follow company size.

It's an interesting question...

The CFO is the ultimate Treasurer of any business. Even those with a Paul and a team to support them.

But many Treasury decisions go way beyond cash and the lines of the P&L below EBIT.

Let's go back to a business buying in EUR and selling in GBP. Its gross margin will live and die by the exchange rate, and how commercial contracts are structured to manage it. That makes FX a crucial business driver, affecting margins, pricing, demand and therefore EBIT.

In cases like this, how you connect Treasury to the wider business is crucial.

And that isn't easy, for one reason in particular...

Finance teams frequently complain that they're brought in too late. That they have to live with the consequences of decisions made upstream in the business.

Fwiw, I don't have much time for this narrative, but people say it...

But for Treasury folk, it's particularly true.

Think about most transaction workflows. Whether it's order-to-cash, procure-to-pay, or any of the other processes that move money around a business, they nearly always end with a single box: cash settlement.

Treasury lives at the end of the process for so many different business cycles. So frequently, by the time they get involved, it's too late to change anything.

And honestly... for most things, that's OK. Great Treasury isn't noisy. The business doesn't even know it's there.

That doesn't mean letting money leave the business when it shouldn't. But the decision about whether money should be spent belongs upstream, along with the commercial approvals and controls that support it. Treasury still needs to make sure the payment is properly authorized, goes to the right place, and doesn't disappear into a princely gentleman’s bank account in Lagos.

So, to some extent, keeping Treasury disconnected from those commercial decisions isn't such a bad thing.

Why complicate things? You don't want the tail wagging the dog. Plus, there's the segregation of duties to consider.

But there are decisions where you absolutely need a Treasury lens upstream in the business.

Take Anthropic, who this week has disclosed a cool ~$900 billion of contractual commitments for compute and infrastructure.

Imagine the Treasury considerations involved in a commitment like that. Putting the funding itself to one side, what happens when interest rates or currencies move? What exposure do you have to energy prices, commodities, and foreign currencies? And how much of that risk should you lock in before signing the contracts?

These are huge commercial decisions (arguably some of the most economically consequential in the world right now), with Treasury decisions embedded inside of them.

And fortunately, the tech sector is famously experienced in making these kinds of long-term CapEx commitments... cough, cough.

A key part of the CFO's role is spotting those issues and those moments, making sure Treasury is involved when it's part of the dog, not just the tail.

You can think of Treasury as one part of the CFO's wider capital management system.

The responsibilities are broadly split as follows:

One of the challenges is that Treasury sits at the intersection of two very different worlds.

On one side, you have the operating business. Decentralized, high-volume, relatively low-value transactions happening all day, every day.

On the other, you have the much more centralized world of funding, capital structure, and capital allocation. Fewer decisions, but potentially enormous consequences.

Treasury has to support both.

And the CFO needs to make sure those relationships work properly. Treasury shouldn't become a parallel capital allocation committee, and centralizing cash shouldn't absolve operating leaders of their responsibility for generating it.

And, like so much in finance, Treasury is full of important trade-offs. How well those decisions are made at the margins is what ultimately determines how effective the function is:

When treasury goes wrong, it can be catastrophic:

The horror stories can usually be traced back to getting the balance wrong in one of its basic responsibilities:

So, this month’s series is all about how to build a Treasury function that avoids those failure modes. Here’s what’s coming…

Week 1 (Today) — Intro To Treasury

Week 2 — The Treasury Policy

Week 3 — The Treasury Machine

Week 4 — Treasury and the Wider Business

Not all cash is the same, and Treasury is the art of recognizing and managing that. And doing so in a wonderfully semi-invisible way, so the business doesn't have to think about it.

Doing that consistently in a complex business is tricky. And it starts with having the right guardrails in place.

Or the Treasury Policy, as it's known...

That's where we'll go next week.

🥓🔥 Stay Crispy,

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.