7 Pain points of CFOs
and how Treasurers can solve them
In this article, we will address several key pain points faced by Chief Financial Officers (CFOs) and explore how treasurers can effectively tackle these challenges. By highlighting the strategic collaboration between CFOs and treasurers, we will demonstrate how treasury can enhance financial planning, risk management, and overall organizational efficiency.
By reading this article, you will gain insights into the key pain points faced by CFOs and how treasurers can address these challenges. You will discover how strategic collaboration between CFOs and treasurers can drive better financial management, risk mitigation, and overall organizational success.
Insights from industry leaders such as GTreasury, Ebury, Embat, Treasurer Search, Kantox, and GPS Capital Markets offer valuable guidance on improving collaboration, leveraging best practices, and using technology to overcome current treasury challenges.
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Article Overview
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Mergers and Acquisitions: Challenges in Data Integration
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Currency Management: Addressing FX Risks and Cashflow Challenges
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Balance Sheet Hedging: Protecting Corporate Value From Currency Risks
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Prevention of Incorrect Payments: Enhancing Security and Reducing Errors
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Treasury Data Troubles for CFOs: Overcoming Accuracy and Timeliness Issues
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Balancing Strategy and Daily Tasks: Managing Competing Responsibilities
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Fragmented Treasury Management: Enhancing Efficiency with PSD2 Innovations
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1. Mergers and Acquisitions: Challenges in Data Integration
Mergers and acquisitions (M&A) bring unique challenges for CFOs and treasurers, particularly when it comes to financial data integration between entities. Without a robust system in place, effective data absorption can be difficult, leading to delays and complications that decrease the speed to value of your acquisition.
This integration process is often complex due to disparate financial systems, varying accounting practices, and different reporting structures between the merging organizations.
GTreasury hosted a very insightful CTP-certified webinar on this topic, “Accelerating Value from M&A: A CFO and Treasurer’s Guide to Maximizing Returns,” led by GTreasury’s Ashley Pater. Request the recording here to learn how to address your M&A Integration and maximize returns!
2. Currency Management: Addressing FX Risks and Cashflow Challenges
Drawing from Kantox’s CFO Perspectives series, we can identify several critical pain points faced by CFOs in currency management and how treasurers can address these challenges. The series highlights that CFOs often struggle with growth constraints due to FX risk, cash flow volatility, and complex financial statements impacted by currency fluctuations.
Additionally, operational inefficiencies and the perceived high costs of currency management can hinder strategic implementation. Treasurers can play an important role in solving these issues by implementing strategic currency management programs, developing automated hedging solutions, and leveraging modern technology for efficient FX execution.
For instance, Kantox emphasises the importance of setting clear FX strategy goals and avoiding ad hoc hedging. The series also underscores the value of digitisation, with 84% of CFOs viewing it positively according to an HSBC survey. You can read here more about how a CFO should set a currency hedging strategy to protect cash flows or to minimise P&L impact
By addressing these pain points through advanced currency management techniques, treasurers can position themselves as strategic partners to CFOs, demonstrating how effective FX management can drive growth, enhance financial stability, and improve overall business performance. This approach aligns with Kantox’s vision of currency management as a tool for stimulating growth, and lowering cash flow or earnings variability, ultimately contributing to the company’s strategic objectives and value creation.
3. Balance Sheet Hedging: Protecting Corporate Value from Currency Risks
CFOs often face challenges in protecting corporate value from currency fluctuations, particularly when their organizations have significant foreign currency exposures on their balance sheets. This can lead to unstable financial statements and reduced investor confidence.
For instance, a leading semiconductor manufacturer with $1.7 billion in annual revenues and global operations across 50 entities faced risks from 12 different currencies. GPS Capital Markets used its FXpert platform to implement tailored balance sheet hedging strategies, stabilizing financial outcomes and enhancing predictability.
As demonstrated by this example, effective balance sheet hedging helps treasurers manage currency risks, stabilize key metrics, and indirectly strengthen financial positions. By supporting robust hedging strategies, CFOs can improve financial stability and protect company value in a volatile market.
4. Prevention of Incorrect Payments: Enhancing Security and Reducing Errors
Effective payment solutions enable businesses to manage cash flow more accurately, reduce the cost of payments, automate routine manual processes, and improve payment security.
- Fraud Reduction: Businesses can reduce fraud by activating four-eyes authorization with their banking or Ebury Online platform if they are an existing customer. This allows them to validate their payments securely.
- Local Currency Payments: Enabling customers to pay in their local currency can lower the charges associated with currency conversion, reduce trade friction, and drive revenue. For example, with Ebury, our clients access local collection accounts in 11+ currencies to receive payments locally.
By addressing these pain points, CFOs and treasury teams can better navigate the complexities of treasury management, ensuring their company’s financial stability and operational efficiency.
5. Treasury Data Troubles for CFOs: Overcoming Accuracy and Timeliness Issues
CFOs continue to struggle with the inability to act quickly and confidently due to a lack of trust in the accuracy and timeliness of treasury data, including current cash positions, forecasts, and capital structure information.
Another common pain point is missing opportunities to put idle cash to work, which could be used for strategic project funding or reducing interest expenses.
Additionally, many CFOs face challenges in accurately assessing upside and downside risks based on market changes, limiting their ability to make confident capital structure decisions.
6. Balancing Strategy and Daily Tasks: Managing Competing Responsibilities
CFOs and treasurers often face the challenge of balancing strategic initiatives with routine operations. Managing daily tasks like manual payments and cash forecasts can consume significant time, making it difficult to focus on long-term goals such as optimizing cash flow and driving growth.
When too much time is spent on everyday activities, it can hinder progress on strategic planning. Finding a balance between these responsibilities is crucial for improving both immediate efficiency and long-term success.
To address this issue, consider delegating or automating routine tasks. This shift can help free up time for more strategic work, ultimately enhancing overall effectiveness and contributing to better business outcomes.
7. Fragmented Treasury Management: Enhancing Efficiency with PSD2 Innovations
The European PSD2 directive is making treasury management more digital and strategic, as Tomas Gil, CTO at Embat, explains. AI is also making waves in finance by improving data analytics, forecasting, process automation, and risk management, which helps in making smarter decisions.
In order to effectively automate and manage Treasury operations across complex, fragmented legal structures, data from banking products and internal accounting systems can not be siloed. The Open Banking PSD2 directive allows for the convergence of this data in systems such as Embat in real-time, regardless of complex legal and organizational structures.
Carlos Serrano, Co-CEO at Embat, points out that a dose of AI can then be added on top of a solid data source for efficient and accurate process optimisation, across the entire Treasury process – from Cash forecasting to automating Accounting and Reconciliation activities. This automation wave is changing the role of Finance leadership, fostering better strategic decision-making and financial culture.
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