Corporate Finance Career Path #3: Treasury

-


What is Treasury?

Treasury is the lifeline of a company's financial health, dealing with all things related to cash and cash flow. Unlike other financial metrics that can be manipulated, cash flow reveals the true financial state of a company. If the company runs out of cash or credit, it’s game over. This makes Treasury a critical function in corporate finance.

Role of a Treasury Analyst

As a Treasury Analyst, your main job is to ensure that the company has enough cash to meet its future needs. This involves:

  • Cash Forecasting: Predicting future cash needs and ensuring funds are available.
  • Funding: Raising capital through bonds, equity, commercial paper, or credit lines.
  • Bank Relations: Regularly interacting with banks and investors to secure funding.
  • Cash Management: Balancing the cash positions of various accounts to avoid fees and optimize interest income.

Your work involves close coordination with Debt Capital Markets (DCM) groups at banks, ensuring that the company’s cash flow is balanced and that any surplus funds are invested wisely to generate interest income.

Organizational Structure

The size of the Treasury team varies depending on the industry. For instance, banks require larger Treasury teams to handle liquidity and capital ratios and comply with regulations. In contrast, industrial companies might have smaller teams since their day-to-day cash management is less complex.

Each Analyst in the Treasury team typically specializes in areas like bond issuance or cash forecasting, while the Treasurer coordinates their efforts and serves as the primary contact for investment banks and investors.

Lifestyle

The workload in Treasury can vary widely. In times of financial stability and strong cash flow, the job can be relatively easy, with standard 40-50 hour workweeks. However, if the company faces cash flow challenges, expect to work long hours, potentially reaching 70-80 hours per week during crises.

Treasury Salary

Treasury positions are often more senior and better compensated than those in FP&A and Controllership due to the intense interaction with investors and banks. Here’s a summary of typical salaries:

  • Analysts: $70-90K USD
  • Senior Analysts: $100-170K USD, with up to a 15% bonus
  • Treasurer: $200K USD to $4MM USD, depending on company size, health, and the Treasurer’s seniority

Path to Becoming a CFO

Many in corporate finance aspire to become a CFO. A decent-sized division’s CFO manages 25-200 people and earns $300,000 USD and above. However, reaching this position requires a mix of skills, networking, and navigating office politics.

Traditionally, an FP&A Manager path was the route to CFO, but with evolving regulations like the Sarbanes-Oxley Act, strong controllership skills have become essential. A background in the Big 4 accounting firms can be advantageous.

After gaining experience in Management Accounting and demonstrating your ability to manage a P&L, you can move up the ladder towards the CFO role.

Exit Opportunities in Corporate Finance

There’s significant debate about exit opportunities from corporate finance roles. Here’s what usually happens:

  • 60% stay in corporate finance but move to another firm.
  • 10% transition to investment banking or venture capital.
  • 20% shift to consulting.
  • 10% move to sales & marketing or risk.

While transitioning to investment banking or private equity is challenging, the skills acquired in FP&A and Controllership are highly relevant and valuable. For those interested in consulting, a background in FP&A can be particularly useful for roles focused on strategy and operations.

Conclusion

Treasury is a pivotal role within corporate finance, balancing the company’s financial health through effective cash management and strategic funding. Understanding this career path can open up various opportunities, from senior roles within Treasury to potential CFO positions. Whether you aim to stay in corporate finance, transition to investment banking, or explore consulting, the skills and experience gained in Treasury are invaluable.

Comments

Post a Comment

Best Blogs

IB Interview Questions: M&A : Level 1 M&A Questions

-
Image
1. Why do companies merge? While are many reasons that companies merge the underlying driver of most M&A deals to expedite growth and/or generate cost savings to create value for the owners of the business. When people say that M&A is an ‘art’ and a ‘science’, what does that mean? The science refers to the mechanical valuation methods (Comps, DCF, etc.), but the art is in making a judgment call on valuation based on the outputs of the various valuation methodologies. 2. Who can pay more when buying a company: a Financial buyer or Strategic buyer? Why? Strategic (i.e. corporate) buyers can typically pay more than Financial (i.e. Private Equity) buyers because strategic buyers typically have overlapping operations that can be removed post-merger to generate cost savings (i.e. Synergies). 3. When are sponsors and corporate buyers on equal footing? When a Financial buyer already owns a competing asset, they can generate synergies (which justifies a higher price) and thus are on mor
Read more

Getting into Investment Banking: A Comprehensive Guide

-
Image
Introduction Breaking into investment banking (IB) is no small feat, whether you're pre-MBA or post-MBA, from a target or non-target school. While high GPAs and test scores are standard, they are often not enough to stand out. Here’s a strategic approach to help you embark on a successful investment banking career. 1. Network Extensively When your application lands at an investment bank, it’s usually reviewed by a small team of bankers responsible for recruiting from specific schools. Given the competitive nature of this field, networking is crucial. Why Networking Matters: Decision-making bankers are more likely to advocate for you if they know you. Especially vital for non-target school students. Engage with alumni and other connections at your target firms. How to Network: Start reaching out to analysts and associates a few months before core recruiting starts. Look for non-target alumni if you're from a non-target school; they often help each other out. Demonstrate Interest
Read more