A Short Note on Treasurers and Finance Officers

Efficient management of finances is critical to ensure the smooth and long-term growth of any company. If an organisation’s stakeholders lose faith in its ability to control and account for its money, they may withdraw their investments in it. Finance officers play a critical role in ensuring the finances of the company are well managed. Treasurers help finance officers with managing daily transactions such as payment of bills, maintenance of records, budgeting, etc. 

A finance committee generally assists people who work for large corporations. In financial matters, they serve as a link between management and the Board of Directors. They monitor monthly finances with help from the Treasurer, who ensures the proper processes are followed.

The finance officers work with other board members, staff, and the chair to draw up a new budget each year. The Board then approves it for use. The treasurer ensures that quarterly, half-yearly, or annual reports are made by the management and checked by the Board, as and when necessary. He keeps the Board informed about financial liabilities and likely future risks to better help them modify the financial plan accordingly to mitigate risks.

Who is a Treasurer?

A treasurer plays a very important role in the organisation. This is usually someone who has a good deal of experience in financial management and a good understanding of financial governance. Making a clear distinction between financial management and governing of finances. Financial management is a management role, while financial governance involves the actual execution of the role. The treasurer must understand the differences between these two roles to be an effective financial manager. In other words, financial governance would mean that financial oversight would be done. Financial oversight is basically to make sure of the following:

• The way the company manages its money is satisfactory.
• It has all of the controls and policies in place.
• It’s clear how the reporting structures work.
• The compliances are on time and are adequate.

As part of its oversight role, the Board needs to ensure that the above four areas are in place. On behalf of the Board, the treasurer ensures that this is in place. The treasurer is also someone who acts as a link between the Board and the people who run the business on ground. It is also worth noting that the treasurer’s position, more than any other, demands a significant amount of time and work. This is a highly critical role and among other things involves ensuring that company assets or finances are used for personal use or gains. 

Duties and responsibilities of the treasurer

The following are typical duties of a treasurer:

Oversight and financial management

A treasurer is responsible for managing or overseeing the organisation’s financial affairs, including activities as simple as choosing the bank, reconciling bank statements, and monitoring cash flow. The treasurer may also be in charge of investing money by relevant legislation in certain organisations. The treasurer needs to keep a track of who has access to the organisation’s money and who is responsible for any outstanding invoices or obligations. The treasurer is responsible for developing and maintaining procedures that ensure the organisation’s long-term stability, and overseeing the formulation of financial policies. Checks to sign authority, cost reimbursement, credit card use, and, if appropriate, petty cash rules are all good policies usually implemented and managed by the treasurer.

Budgets: The treasurer may be responsible for designing or aiding in the formulation of a yearly budget and routinely reviewing and comparing actual revenue and expenditures against the budget. Creating a budget that supports the organisation’s aims and guides decision-making is critical to achieving its mission’s success. The Board should evaluate and approve the budget, but it is the responsibility of the treasurer to explain and defend it if need be.

Reports: The treasurer should be well-versed in the firm’s financial reports and key financial ratios. He shall keep the Board up to date on key financial events, trends, challenges, and the financial health evaluations. The treasurer is also in charge of completing or ensuring that mandatory financial reporting documents (such as the IRS Form 990) are completed and made available for the Board’s scrutiny.

Liaison financial: A good Treasurer should be able to interpret financial ideas and facts for board members who don’t have a financial background or much expertise with money. The treasurer needs to devote time to studying the organisation’s finances and associated regulations, including rules governing earned income, unrelated business income tax, reasonable spending, and wise investments. An efficient treasurer facilitates and encourages the Board’s strategic thinking regarding the organisation’s near and long-term financial viability to promote its goal.

California charities must also be aware of state legislation, which mandates the appointment of a treasurer and Chief Financial Officer for nonprofit organisations (CFO). Organisations may have both a treasurer and a CFO, with the former serving on the Board and assisting the CFO. In this situation, the treasurer’s responsibilities and duties may be more focused on broad policies and monitoring. If an organisation has a treasurer but no designated CFO in its bylaws, the treasurer will be recognized as the CFO by law.

While the treasurer’s major role is financial management, financial supervision and accountability are shared amongst the entire Board.

Difference between treasury and finance officer

The primary distinction between treasurer and finance officer is the degree of action involved. The finance officer focuses on long-term and strategic investments, while the treasurer is focused on short-term and day-to-day investment monitoring. To put it simply, the treasurer plays a subordinate role to the finance officer.

Conclusion

The enterprise’s treasury management function works at the micro-level, ensuring that money is available and used effectively regularly to ensure that the company’s activities run smoothly.

On the other hand, financial management is concerned with the high-level finance function that assures that the company can achieve its value maximisation goal and meet the shareholders’ expectations. It also considers the company’s overall profitability and financial solvency.