‘We’re Not Just Cash Custodians:’ CPG Treasury Chiefs Call for Greater Strategic Integration

The old adage is that two heads are better than one. And in the corporate realm, let’s extend that sentiment a bit — to one where several departments, collaborating with one another, rather than operating in silos, are better than … well, just about anything when it comes to transforming the business itself.

That’s especially true in the consumer packaged goods (CPG) industry, which, all told, is tied to about $2.5 trillion of the U.S. economy. As with any company, capital and cash flow — or lack thereof — affect all aspects of operations, from research and development to marketing to acquisitions. If cash flow visibility is less than optimal, so too is planning. Treasurers are at the center of the financial well-being of their firms, as they help steer the use of cash, debt and other instruments that provide the operating funds on hand and anticipated to be on hand in the future.

Yet, as PYMNTS Intelligence found in collaboration with Citi, in the report, “The Impact of Misunderstood Treasurers in the Consumer Packaged Goods Sector,” there’s a lack of understanding about the treasurer’s role itself — on the part of other executives and departments within the same firm — and there’s lack of awareness on the ways and means in which financial management can help, and be informed by, those other, far-flung job functions.

Misunderstanding the Influence

The data show that a 43% — a minority — of treasurers’ colleagues heading other departments think treasurers are highly influential. That’s a problem, given the fact that a minority of CPG firms also have predictable cash flows, at only 47% of enterprises. There’s some work to be done, as Citi and PYMNTS Intelligence have found that while roughly three-quarters of treasurers think they’re influential within the CPG industry, only 43% of department heads in other operations in the same firm would say the same.

Fostering interdepartmental dialogue can lead to a better understanding of the ways in which different departments consume and bring in cash — and can, in tandem with the treasurer’s department, set strategic goals that have everybody on the same page. The positive impact can and will be felt in better returns on investment. In fact, there’s some low-hanging fruit here, as 75% of treasurers see finance departments as an obvious candidate among departments that benefit from closer collaboration.

Collaboration can be encouraged by enabling standard means of communication between departments. More than two-thirds of treasurers identify at least one barrier to their engagement, and nearly half (47%) feel that current levels of collaboration are not adequate. More than half of treasurers face three or more barriers, reflecting more complex challenges within their organization; a quarter of them think there’s an issue with not being invited to meetings in the first place.

As for other gaps that need to be closed, there are significant gulfs between what treasurers think they can achieve through better collaboration and what their department peers think will be the result. While 88% of CPG treasurers cite improved cash flow predictability as a key advantage gained from working more closely together, only 18% of other department heads consider cash flow predictability a benefit of that same “meeting of the minds.”

Separately, 71% of treasurers feel reduced debt would be on the table with closer collaboration, but a mere 6% of other department heads agree. At a high level, 78% of treasurers believe at least one other department at their firm would benefit from working more closely with them, and as a group, treasurers identify an average of 2.2 departments as benefiting from potential collaboration improvements.