“The treasury function, as we know it today, is a relatively recent development – it is 40 to 50 years old, at most,” explains François Masquelier, President of the Association of Corporate Treasurers of Luxembourg. Treasurers are indispensable to any business. Interview.
Could you describe ATEL in a few words?
ATEL, the association of treasurers, was created in 1994. It has 300 members, representing the largest companies, including Ferrero, Aperam, Arcelor, Cargolux, SES Global, RTL, Amazon, PayPal, and Koch Chemical. It defines itself as a founding member of the European association, which I now chair, with 14,000 members throughout Europe. Our mission focuses on several actions: Defending the interests of treasurers; “influencing” (European) financial regulations that may impact them; networking with our colleagues; informing our members of new technologies and techniques; training them and discussing these topics. We also try to share our expertise with other associations whose members – for example, hedge funds – need treasurers or to understand how multinationals manage cash optimally. Finally, ATEL promotes Luxembourg as a center of expertise specializing in centralized management of cash internationally. For various obvious reasons, the Luxembourg ecosystem makes it a prime location for a European treasury center.
“Even if the company can survive without a treasurer, it’s like driving a bus without a proper license”
How would you define the function of a corporate treasurer?
The treasury function as we know it today is a relatively recent innovation – it is 40 to 50 years old, at most. The treasurer corresponds in the company to a kind of internal banker serving all the operational subsidiaries with financial services. It manages banking relationships; ensures the creditworthiness and solvency of the group; manages surplus liquidity; covers exchange risks for inflows and outflows in foreign currencies and manages all financial risks by mitigating or hedging them. It handles all “front-office” operations, where accounting is akin to a kind of “back-office” and translates financial operations into accounts. Companies can survive for years making book losses, but if they cannot ensure the payments, they will immediately fall into bankruptcy. Treasury is ultimately the key function at the heart of finance and the most technically and technologically developed of the entire finance department.
But isn’t cash only reserved for very large companies?
The essential cash function is not confined to companies of a certain size. For example, in Luxembourg, some funds of moderate size have the capacity and would benefit from dedicated and professional cash management using the appropriate tools. Many substantial companies, with turnovers of several hundred million, do not employ a dedicated treasurer. Even if the company can survive without a treasurer, it’s like driving a bus without a suitable license, risks are taken. Thanks to technological developments and “native SaaS” solutions, firms have access to professional tools without excessive costs or long implementation. Firms can access Formula 1 technology while driving an everyday car. Hiring the resource with the cash expertise or outsourcing to experts can be a problem according to the context. We can “Uberize” cash and in this way earn a lot of money while reducing risk.