Practical reporting for treasurers

Published: 22 May 2024

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As treasurers we are both producers and users of many different reports. Improving the quality and focus of our own reporting, and our use of reports from other sources, will add significant value for our organisation, our career and the treasury profession. Seasoned treasury practitioners advise us to sharpen and practise our reporting skills accordingly.

Trump Media's earnings report

On 21 May 2024 the share price of Trump Media fell just under 9% for the day, following the company’s earnings report which disclosed a net loss of $328 million for the first quarter of 2024 (Source: CNBC). The market had been expecting a more favourable earnings report. This is why the share price fell so sharply following the announcement.

This is an example of mandatory external reporting by an organisation. Treasurers report both externally and internally within our organisations, as well as receiving and using reports produced by other people.

Treasury reporting

Amit Mehta AMCT, Corporate Finance & Treasury Specialist, summarises, “There were reports for external parties like banks and rating agencies - these could be simple compliance reports or outlook reports. I also had a lot to do with commenting on treasury policy, its appropriateness with changing circumstances or aligning with company risk appetite and goals.”

Report for value creation

Successful communication means knowing our audience, their perspectives and goals, and then tailoring our reporting to their needs. For example, as Ian Cooper AMCT, Group Treasurer of 3i Group plc explains, "Many treasurers and ACT members will be reporting to boards that are controlled or influenced by a PE investor. PE investors will have a clear investment case on how they intend to create value during their anticipated ownership, which will typically be for four to seven years.

The PE investor will aim to create value via various levers, which could include, among others:

• Driving international growth through acquisitions;

• Generating operational improvements in all areas of the business, for example, sales effectiveness, cost efficiency, controls and reporting."

Identify users' priorities

Raj Gandhi FCT, former group treasurer and CFO agrees. “Reflecting back, it would have been useful to survey all interested parties to understand precisely what their priorities were. Add to this any other metrics for effective treasury reporting. Ultimately, it's about giving assurance whether we are on track versus defined risk appetite parameters."

Give senior stakeholders comfort

"Treasury's most important function is that it is able to give the Treasury Committee, and senior stakeholders comfort via regular monthly reporting that Treasury is managing the company's exposures within the limits set by the board.

Typically this will include the monitoring of headroom for going concern, to bank counterparty limits, and FX and interest rate hedging exposures, and more.

Other wider important reporting will be preparing annual debt covenant compliance certificates to external stakeholders who would typically include banks and credit rating agencies."

(Tim Coope FCT, Head of Treasury, Interim, St James’s Place)

Banking best practice and non-financial corporates

Banks and other financial services firms are closely regulated and supervised, compared with non-financial corporates. For this reason, many evolving reporting practices originated in the financial sector, then migrated to non-financial corporates.

Dimitris Papathanasiou CFA, Treasury and Risk Executive, comments, “The Basel Committee with the BCBS 239 standards defined the most important principles of reporting that any bank or non-financial corporate should follow.

In summary, it highlighted the importance of a thorough end to end process that included governance and [IT] infrastructure.

It presented the risk aggregating capabilities key values (accuracy and integrity, completeness, timeliness and adaptability) and outlined the principles of reporting practices (accuracy, comprehensiveness, clarity and usefulness, frequency and distribution)."

Declutter reports for clarity

Picking up on the theme of clarity, it’s important to prune our reports of irrelevant or excessive detail, that can obscure the important information that it is wrapping around. Better still, design reports for sharp focus and clarity from the outset.

"Reporting should be purposeful. I always start designing a report with a blank sheet of paper, divide it into squares, and then write the questions I’m trying to answer in each square. This avoids putting numbers in a report just because they are produced.

E.g. How is my liquidity going to change in the next 90 days? Key questions that each graph or table should answer for the reader are (1) What has changed? (2) Is it important? (3) Do I need to do anything?"

(Robert Langley FCT, Director of Treasury Strategy, OSB Group)

Change or drop some reports entirely

The volume of individual reports, and the total number of reports, has a tendency to increase over time. Users often request additional information, leading to excessive growth and redundancy.

Andre Khor FCT, Chief Financial Officer, Chandra Asri Group, advises taking initiative to restore efficiency. "The key question to ask for every report produced is: ‘… and then what?’ This question should be used as the filter for the efficacy and usefulness of the report produced.

If there are no good answers as to how the report will be used to make an impact, drive decisions, or shape specific outcomes - one should really change or drop it, and save time and effort."

Do due diligence

As users of financial information, we can’t rely on pre-existing reports to give us all the information we require for multiple different purposes. For example, financial reporting standard setters counsel against excessive - or exclusive – reliance on published annual reports.

"... general purpose financial reports do not and cannot provide all of the information that existing and potential investors, lenders and other creditors need. Those users need to consider pertinent information from other sources, for example, general economic conditions and expectations, political events and political climate, and industry and company outlooks."

(IFRS Conceptual Framework)

Advance the treasury profession by reporting your story

"While there are many ‘traditional’ ways to consider reporting within the treasury function, it’s also important to think outside the box. Increasingly, this means looking beyond pure financial reporting to include non-financial areas such as ESG and DEI.

Since reporting is about the provision (and consumption) of reliable business information, the concept also includes the sharing of treasury best practices and innovation. This might be via treasury associations, conferences, webinars, podcasts, magazine articles, and more.

In fact, reporting on successes (and failures) is vital to the ongoing education of the treasury community. As such, if you ever have the opportunity to share your story with other treasury professionals, consider it not only as an act of reporting with accuracy and balance around your project or career but also of advancing the profession."

(Eleanor Hill, Founder, The Treasury Storyteller)

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Author: Doug Williamson, FCT