The Dividing Line Between Treasury and Accounting (#142)
/In this podcast episode, we discuss whether certain functional areas should be given to the treasury department or the accounting department. Key points made are:
Which functions fall into the treasury or accounting departments? It depends on how the departments are organized and who has more power. Most functions are initially clustered under the controller, and then shift to treasury as the business gets larger.
Payables and collections are heavily transactional, which accounting is better-designed to handle. Treasury tends to deal with lower transaction volumes.
Payables, credit and collections are linked to accounting through the accounting software, and accountants are better trained to use the system.
Controllers don’t like to give up control over payables, credit, and collections.
The treasurer is responsible for cash management, so payables can be used to control cash outflows. Alternatively, the treasurer can have authority over the timing of large payments, to better manage cash flows.
There is less reason for having treasury control collections, since payments are under the control of customers.
Some companies have shifted credit to the treasury department, since it is more of an analysis role, and can be managed by altering the credit policy.
In short, Treasury needs the information from payables, credit, and collections, but it has no particular need to manage them.