Corporate Treasury: Snooze Fest or Fast Track into Capital Markets?

I’ve written a few articles about Financial Planning & Analysis (FP&A) within corporate finance, but have mostly ignored other areas, like Corporate Treasury.

FP&A is considered more “interesting,” but groups like Treasury are also important because:

1. If you want to move up the ladder and eventually become a CFO, you’ll be expected to rotate around and gain experience in the other groups.
2. Treasury provides another pathway into the industry, especially for career changers, and it offers benefits that you won’t necessarily get in FP&A or Controllership… if you’re at the right company.

If the Chief Financial Officer (CFO) sets the vision and the FP&A team forecasts the vision, the Treasury team executes the vision.

The Short Version of Corporate Treasury Jobs

Here’s my summary:

• The work is a mix of routine, repeating tasks related to cash management and ad-hoc projects related to debt/equity issuances, stock repurchases, hedging, and other capital markets activity.
• The job is most interesting at companies like commercial banks that constantly issue debt, firms with extensive hedging needs, and corporations with shaky financing due to growth, industry disruption, or internal turmoil.
• Recruiting is pretty much the same as in all corporate finance roles: It’s far less competitive than IB/PE, so you can get in even if you start late, have lower grades, non-ideal internships, etc. Accounting-related coursework and work experience always help.
• Salaries are good but not great. At big companies, it’s a similar progression to other corporate finance roles, starting below $100K and progressing up to the $150K – $200K levels at more senior levels. But you also work 40 – 50 hours per week.
• Careers and promotions are tricky because you’ll rarely be promoted to the top job (Treasurer) just by staying in Treasury; you need to rotate around if you want to reach the top or become a CFO.
• Exit opportunities exist but are typically transfers to other corporate finance teams and sometimes moves to groups like credit analysis or corporate banking; capital markets within IB is theoretically possible but not necessarily plausible.

Treasury would not be my first pick within corporate finance, but it can be a good option in some cases, and you’ll probably need to spend some time in the role if you want to become a CFO.

Now for all the details:

What is Corporate Treasury?

In Corporate Treasury, you forecast your company’s cash flows, manage payments, and arrange the debt and equity needed to maintain sufficient cash; you also coordinate hedging related to factors like FX rates and fuel prices.

Depending on the company, these tasks are sometimes split into different groups, such as “Cash Management” (routine/repeating work) and “Capital Markets” (equity/debt issuances, stock repurchases, and some deal support).

Compared with Controllership roles, Treasury is more forward-looking because much of the job involves forecasting cash flows and considering upcoming needs.

The full list of tasks looks like this:

• Cash Management – Sending/receiving/approving payments and making sure each group has enough cash for their needs over the next 30, 60, or 90 days.
• Working Capital Management – Reviewing each group’s receivables, payables, inventory, and other items and making sure they have the funds required to pay for inventory by the supplier’s payment deadline (for example).
• Cash-Flow Forecasting – To support everything above, you’ll need detailed forecasts of different groups’ cash flows, which requires working with other teams and communicating about upcoming changes.
• Risk Management – Does the division have enough funding to pay for higher-than-expected expenses? What happens if oil prices spike or the USD/EUR exchange rate moves in the wrong direction? Can you set up hedges at reasonable prices?
• Equity and Debt Issuances and Stock Repurchases – You will work with bankers of all types (commercial, corporate, and investment), depending on your company and funding size. You focus on negotiating terms for outside financing and proposing prices, timing, and mechanics for something like stock buybacks in the open market.

Most new hires start on the Cash Management side and learn the routine work first, but the deal-related work at the bottom of this list gives you more transferable skills.

Since the job depends entirely on the routine vs. ad-hoc mix, day-to-day activities vary widely.

If you’re at a bank or insurance firm that must issue debt frequently, the job will be faster-paced since you’ll be working on deals all the time.

If you’re at a company heavily linked to oil prices or foreign exchange rates, such as an airline, it will also be faster-paced since you’ll have to buy and sell hedges, such as swaps and collars, frequently.

(A “swap” lets you lock in a specific price for a certain volume of oil, gas, or another commodity over a certain time frame, while a “collar” guarantees a specific price range for a certain volume over a fixed time frame.)

Arguably, Treasury is most interesting if you’re at a company that’s failing or struggling because it will desperately need funding ASAP.

On the other hand, if you’re at a mature food-processing company without much need for outside capital, the Treasury role might approach the “snooze fest” description.

A CFO, FP&A Director, Treasurer, and Controller Walk into a Bar…

To understand the workflow, imagine you’re working at an energy-drink company planning a major expansion.

Here’s how each role in corporate finance might contribute:

CFO: He decides that the company should buy a new facility in Thailand to launch its new product line, Hyper-Elite-Aura-Maxxing Garuda Energy. He asks the team to “figure it out.”

FP&A: They might review expected acquisition costs, speak with other groups about unit economics, and create forecasts to show the impact of the new plant in Thailand.

Based on their analysis, they think the company can fund it with internal cash flows and no outside capital.

Treasury: The team reviews the historical and projected cash flows from all the groups affected by this new facility.

They agree with FP&A that a long-term loan is not necessary, but they do think a new Revolver for temporary borrowing might be useful.

This is because one division has had cash-flow issues recently and might fall below its minimum cash target as production ramps up.

So, the Treasury team reaches out to bankers to request proposals and negotiates the terms with the winning bank.

Once the Revolver is issued, they manage the drawdowns and repayments (think: cash flow sweep mechanics).

Controllership: After the Revolver is issued, they’ll review interest payments, draws, repayments, and other general ledger entries and ensure everything is presented properly in the financial statements.

The Treasury team wants to maintain a healthy cash buffer while also ensuring the Revolver’s capacity is neither too big nor too small.

A Revolver that’s “too big” might incur higher fees for the unused portion, while one that’s “too small” might limit the company’s financing options when it needs cash.

Recruiting: Who Sails to Corporate Treasury Island?

Most of the points about recruiting in the corporate finance jobs article also apply here: You don’t need to attend a top target school, your GPA only needs to be “decent,” and the internship and networking requirements are much lower than in IB.

You can also get in as a lateral hire; for example, Treasury teams tend to like anyone with a Big 4 accounting/audit background.

You could also move in from a field like investment banking or corporate banking, but people usually want to move in the opposite direction.

So, it’s more common to see transfers in from commercial banking, credit ratings agencies, or other corporate finance teams.

The CPA is probably the most useful certification, but it’s still overkill for most entry-level jobs, and a CFA or MBA is not the best use of time/money.

One counterintuitive point is that the stability, work/life balance, and low turnover in Treasury can work against you because teams don’t need to hire as often.

It’s still much less competitive than “high finance” jobs, but it’s not always easy to find openings.

Salaries, Hours, Careers, and Promotions

Work-life balance is quite good (consistent 40-50-hour weeks), and most of the job is relaxed, so, of course, Treasury doesn’t pay that well.

The entry-level rates are like other corporate finance jobs: Expect to start under $100K and then move up to the $100K – $150K range after a few years and $150K – $200K after another few.

Sometimes, the Head of Treasury is paid quite well – possibly even the second-highest-paid CF team member after the CFO – but this varies widely by industry and importance of the group.

The overall hierarchy / promotion path is:

• Treasury Analyst
• Senior Treasury Analyst
• Treasury Manager or Assistant to Treasurer
• Head of Treasury or “Treasurer” (???)
• CFO (???)

I put “(???)” after the two titles at the bottom because it is very rare to advance to these top-level roles strictly via internal promotions within Treasury.

Normally, companies want you to have experience in other groups and even other industries.

So, it’s more common for external hires to win these positions after stints in many other teams.

Various sources also confirm that it’s fairly rare to move directly from a Corporate Treasury role into a CFO position, with only about 15% of current CFOs having followed that path.

Finally, it’s in your best interest to work at a large company’s global hub rather than a regional office because Treasury work gets more challenging and valuable when you must coordinate across many different teams.

Exit Opportunities

The most likely exits are other teams within the company, such as FP&A, Controllership, or more niche areas within finance (pricing, risk, tax, etc.).

In theory, you might be able to move into a group like Debt Capital Markets in investment banking, but commercial banking, corporate banking, and credit analyst roles are more realistic targets.

You might be able to bend the rules and get into DCM directly if you worked on a lot of debt issuances in a Treasury role at a top investment bank (for example).

However, I don’t have a firsthand example of someone doing this, so I’m not sure how plausible it is.

Corporate Treasury Jobs: The Final Word

If you’re interested in corporate finance at normal companies, you need to spend some time in Treasury, but it’s quite a narrow place for a long-term career.

If you’re considering corporate finance roles as a “Plan B” option or thinking about specific options within CF, you should still lean toward FP&A, despite the issues we’ve noted before.

I might even rank something like investor relations more highly, even though it’s not exactly a “corporate finance” role.

Corporate Treasury is best in one of two scenarios:

1) Unusual Company with Lots of Ad-Hoc Projects – If you’re at a company with constant financing or hedging needs, Treasury can be a lot more interesting and give you valuable skills. And if you’re at a bank, you also get the regulatory capital

High-growth and distressed companies can also be “fun” to work at, even if your job doesn’t last, and so can earlier-stage companies where the Treasury role covers a wide range of tasks beyond simple cash management.

2) Process and Chill – Or, if you’ve already had a solid career and you just want a stable job and the ability to focus on other things in life, Treasury could also work well. You will not become CFO if you do this, but maybe you don’t care.

These jobs may not be great enough to treasure, but Treasury Island is still worth at least a short side trip in your long career.