Top issues facing corporate treasurers today.

A recent survey of corporate treasury practices by consulting firm Treasury Strategies Inc. indicates that economic impacts--some direct, some not--have been the largest factors influencing corporate treasurers' priorities for 2003.

Tight credit markets, for instance, have raised the importance of effective working capital management and cash flow forecasting processes, and a difficult economic environment has forced treasurers to become even more focused on the efficiencies and controls enabled by well-implemented technology solutions and operating structures.

The annual Treasury Strategies survey is one of the firm's ongoing research tools to assess the treasury management function, monitor the changing landscape and provide benchmarking data to the treasury community, in 2003, 131 corporate treasurers and treasury executives participated in the survey, providing information about their organizations, key issues, technology platforms, international structures and current initiatives.

Among the survey's key findings, six points stand out:

* Liquidity Management Tops the List. Nearly one-third of all respondents mentioned liquidity as the most significant issue facing treasurers, in response, treasurers are focusing on ensuring adequate funding, enhancing cash forecasting tools, more effectively managing banking relationships, reviewing cash management structures and assessing the optimal capital structures for their organizations.

* Limited Influence on Working Capital Management Decisions. Treasurers often have little control over key areas of working capital management that impact corporate liquidity needs. While most survey respondents reported having high influence over or direct control of banking decisions, they said they had much less influence over customer credit and payment terms, billing practices, capital expenditures and payables practices. Treasurers have the opportunity to significantly improve liquidity management by becoming more involved in these related financial functions, which have typically resided in the business units or the accounting function.

* Treasury Staffing Levels Stabilizing. Despite a difficult economic period, treasury staff levels have remained stable over the past year. Almost two-thirds of all respondents reported no change in their number of full-time employees.

* Sarbanes-Oxley Is a Key Corporate Concern, but Is Not Driven by Treasury. It appears that the responsibility for addressing Sarbanes-Oxley lies outside the control of most treasury departments. Few respondents identified this as a key treasury concern, while over three-quarters indicated that their companies are very concerned and are aggressively responding to the new regulation. However, many forward-thinking treasurers are viewing Sarbanes-Oxley as an opportunity to improve processes, controls and structures, and to make investments in appropriate technology.

* A Trend Toward Centralization Continues. Last year's survey indicated such a trend, which continues this year. In multinational organizations, inter-company funding, externally provided funding, liquidity management, banking decisions and foreign exchange are the activities most likely to be centralized at corporate headquarters. However, cash management, cash forecasting and payables/ receivables management tend to be managed at a regional or local level.

* Use of Treasury Technology Is Expanding. A year ago, the survey indicated that robust treasury management systems were used by only about half the respondents--surprising, since technology offers an invaluable tool to treasurers operating with limited staffs. For purposes of the survey, treasury management systems are defined as integrated treasury systems that combine debt, investment and cash management functionality. This year, as a result of initiatives to select and implement technology, treasurers reported a significant increase in the use of treasury management systems.

FEI and its Committee on Corporate Finance (CCF) win explore many of these topics in more depth during upcoming teleconferences. Beginning in October and running monthly thereafter for the remainder of this fiscal year, FEI began hosting a series of treasurers' teleconferences, covering topical issues. In the spring of 2004, FEI and Treasury and Risk Management magazine will again co-host a treasury conference in New York City. The conference is scheduled for March 23-24, and will be held at the Plaza Hotel. FEI will provide additional information about the event in the near future.

Mark Prysock is FEI Director of Public Affairs and General Counsel. Ron Chakravarti, Principal at Treasury Strategies Inc., also contributed to this article.