Treasury Manager interview questions, with worked answers

How to use these questions

Answer each question with the purpose first: protect cash, keep it available, keep its cost and risk low. Then the process, the control and the result. Add a case of your own with sizes in words, such as the number of banks or currencies, without the company's balances or deal terms.

What a treasury manager is expected to know

• Cash and liquidity: cash managementKnow where the group's cash is each day, forecast it, move it to where it is needed and keep it safe., the cash forecast, cash pooling, netting and short-term investments.
• Banks and payments: bank accounts and signatories, payment controls and fraud prevention, and the bank channels SWIFT and EBICS.
• Risk: currency and interest rate risk, hedgingReduce currency and interest rate risk with forwards, swaps and options, within the policy and on record., hedge accounting and counterparty limits.
• Financing: credit lines, loans and bonds, covenants, ratings and working capital.
• Systems and figures: a treasury management systemThe system that holds accounts, cash positions, deals and payments; set up, kept clean and used daily., SAPFind your way through the ledger: bank accounts, postings, payment runs and the reports treasury needs., ExcelCash forecasts, deal checks and exposure reports in workbooks that another person can follow and check. and enough financial reportingHow cash, debt, derivatives and hedges show in the accounts under IFRS or the local rules. to agree with accounting.

The systems differ by company and are named in ads side by side: Kyriba, SAP, FIS, ION and Coupa for treasury, with payments sent through SWIFT or, in Germany and some neighbouring countries, EBICS, and much still checked in Excel. Interviewers care less which one you know than whether you kept it clean and controlled.

Cash, liquidity and investments

How do you build a cash forecast, and how do you know whether it is any good?

What they check: a method, sources from the business and a measure of accuracy.

Short answer: "A cash forecast lists the cash coming in and going out by week or month, from receipts, payments, payroll, taxes, investments and financing. I collect it from the business units with one template, check it against the plan and the past, and compare each week's forecast with what really happened. The forecast error, and its causes, tell me where to improve."

The full answer: Use a direct forecast for the next weeks, built from known payments, and an indirect one from the plan for the longer view. Large errors usually come from a few items, such as a customer paying late or a tax payment forgotten. Share the accuracy with the units, so the forecast matters to them.

A weak answer: "We take the budget and divide it by twelve." Follow-up: "The forecast missed by a large amount three months running." Say how you find the cause.

How would you set up cash pooling and netting for a group of companies?

What they check: the mechanics, the benefits and the limits in tax and law.

Short answer: "Cash pooling moves balances of the subsidiaries' accounts to a header account every day, physically or only in the calculation, so surplus cash pays for deficits and the group borrows less outside. Netting sets off payments between subsidiaries, so only the net amount moves once a month, which cuts transfers and currency deals."

The full answer: Each pool creates loans between group companies, which need interest at market terms, agreements and care with local rules; some countries limit cross-border pooling. In a large group, pooling and netting often run through an in-house bank, a group company that acts as bank for the others.

A weak answer: "We pool everything everywhere to make it simple." Follow-up: "One subsidiary is in a country with currency controls." Explain what you would do there.

How much liquidity should a company hold, and where would you invest the surplus?

What they check: a reasoned buffer and an investment approach that puts safety first.

Short answer: "The buffer covers what could go wrong in the forecast, such as a quarter of weak sales, plus payments that cannot wait, and it counts unused committed credit lines. Surplus cash is invested by the policy: safety first, then availability, then return, with limits per bank or fund and short terms."

The full answer: Money market funds, short deposits and short government paper are usual; anything that can lose value or cannot be sold quickly needs a reason and an approval. Spread the investments over several counterparties, and review the buffer when the business or the market changes.

A weak answer: "We put the surplus where it earns the most." Follow-up: "The CFO wants a higher return on the cash." Say what you would offer and what you would not.

Banks, payments and systems

How do you manage bank relationships and keep the number of bank accounts under control?

What they check: a bank strategy and clean account management.

Short answer: "I keep a core group of banks that give the company credit and get its business in return, and review each bank's share of fees against its credit. Every bank account is in one register with its purpose, signatories and owner; accounts without a purpose are closed, and new ones need treasury's approval."

The full answer: Fewer banks and accounts mean less fee, less fraud risk and a clearer cash view, but too few means dependence. Bank relationship management is also a negotiation: tenders for payment services every few years keep fees fair.

A weak answer: "Each subsidiary chooses its own banks." Follow-up: "Nobody knows who can sign on twenty accounts." Walk through the clean-up.

How do you protect payments against fraud?

What they check: controls that hold under pressure, not just a policy.

Short answer: "Segregation of duties first: the person who sets up a payment does not approve it, and changes to a supplier's bank details are checked by a call to a known number. Payments go through a controlled channel such as SWIFT or EBICS with two approvers, limits by person, and checks against unusual amounts or new accounts."

The full answer: Most fraud attempts are social: a fake email from the CEO or a supplier asking for an urgent change. Train the staff who make payments, test them, and make it easy to stop a payment without blame. Review the access rights to banking systems regularly.

A weak answer: "The CFO can always approve an urgent payment alone." Follow-up: "An email from the CEO asks for a confidential transfer today." Say what you do.

How would you choose and introduce a treasury management system?

What they check: requirements first, then a project that delivers.

Short answer: "I start from what the treasury must do: cash positions, forecasts, payments, deals, hedge accounting, the number of banks and countries, and the link to the ledger. I compare several systems against that, check the cost over years, run a tender, and introduce it in steps, starting with bank statements and cash positions."

The full answer: A treasury management system is only as good as its data: clean bank and account data, agreed processes and access rights matter more than features. Plan the bank connections early, because they take the longest.

A weak answer: "We buy the system our auditors know." Follow-up: "The go-live date is close and two banks are not connected." Say what you would do.

Currency, interest rates and counterparties

How do you manage foreign exchange risk, and when do you hedge?

What they check: that you know which exposure you hedge, why, and how much.

Short answer: "I find the exposures first: sales and costs in foreign currencies, assets and loans in them. A natural hedge, such as costs and sales in the same currency, comes first. For what remains, the policy sets how much to hedge and how far ahead, usually with forwards, sometimes options, and I report the hedge ratio and its effect."

The full answer: Separate the exposure of cash flows from the translation of foreign subsidiaries' results; they need different answers. Hedging reduces surprises, not costs: the aim is a predictable result, not a gain from guessing the market.

A weak answer: "I hedge when I think the currency will move against us." Follow-up: "The currency moved in our favour and the hedge lost money." Explain to the CFO why that is fine.

How do you manage interest rate risk on the company's debt?

What they check: a target mix and the tools to reach it.

Short answer: "I look at how much debt has a fixed or a floating interest rate and when it is due, and set a target mix in the policy. To move towards it I use the loans themselves or interest rate swaps, and I show how a rise in rates would change the interest cost and the covenants."

The full answer: Rising rates hit floating debt quickly; falling rates make fixed debt expensive. Spread the maturities so not all debt must be refinanced in the same year, and keep the swap terms matched to the loans they hedge.

A weak answer: "All our debt is floating because it was cheaper last year." Follow-up: "Rates rise sharply next year." Show the effect on interest cost.

When does hedge accounting matter, and what does it need?

What they check: the link between a hedge and the accounts.

Short answer: "Without hedge accounting a derivative's change in value hits profit at once, while the item it hedges shows later, so results swing although the risk is covered. Hedge accounting lets the two show together, but it needs documentation at the start, a clear link between hedge and hedged item and a test that the hedge works."

The full answer: IFRS 9, the international standard, and US GAAP in the US both allow it under their own conditions. Agree the setup with accounting and the auditors before the first deal; fixing it afterwards is hard.

A weak answer: "Accounting deals with that after we trade." Follow-up: "The auditors ask for the documentation of last quarter's hedges." Say what it should contain.

How do you manage counterparty risk with banks and funds?

What they check: limits, ratings and a view on concentration.

Short answer: "Counterparty risk is the risk that a bank or fund we have money or deals with fails. I set limits per counterparty by its rating and other signs such as market prices, spread deposits and derivatives over several banks, and check the use of the limits every day."

The full answer: Count all exposure to one bank: deposits, the value of derivatives, and credit lines you depend on. Bank failures in recent years showed how fast deposits can be at risk; have a plan for moving cash quickly.

A weak answer: "Our house bank is too big to fail." Follow-up: "The house bank's rating is cut two steps." Say what you do that day.

Financing, working capital, policy and the group

How do you prepare a refinancing, and how do you keep track of covenants?

What they check: timing, options and the discipline of covenants.

Short answer: "I start a year or more before the debt is due, look at the options, such as a new bank loan, a syndicated loan or a bond, compare cost, terms and flexibility, and talk to the banks early. Covenants, the financial conditions a lender sets such as a maximum debt to earnings ratio, are tested each quarter and forecast ahead, so a breach never comes as a surprise."

The full answer: Keep headroom on every covenant, and model the plan and a downside against them. If a breach looms, talk to the lenders before it happens; a waiver agreed early costs less than one asked for late.

A weak answer: "We refinance when the bank reminds us." Follow-up: "The forecast shows a covenant breach in two quarters." Say what you do now.

How can treasury help improve working capital?

What they check: that treasury works with the business, not only with banks.

Short answer: "Working capital is the cash tied up in receivables and stock minus what we owe suppliers. Treasury measures it, shows the business what a day of collection is worth in cash, and offers tools such as factoring or supplier finance, while sales, purchasing and accounting change the terms and processes."

The full answer: Targets for days of receivables, stock and payables work best when they sit in the units' own goals. Supplier finance can help both sides, but it must be shown correctly in the accounts and not hide debt.

A weak answer: "We just pay suppliers later." Follow-up: "A key supplier threatens to stop deliveries." Discuss the balance.

How do you prepare for a talk with a rating agency or the company's lenders?

What they check: that you know what they look at and can tell the story with figures.

Short answer: "Rating agencies and lenders look at the business, its debt and cash flow, liquidity and financial policy. I prepare a short pack with the plan, the debt and its maturities, liquidity and the main ratios, agree the messages with the CFO, and answer questions with the same figures every time."

The full answer: Consistency builds trust: what you told lenders last year should match what happened, or you explain why not. A rating matters for the cost and access to bonds; many mid-sized companies have no public rating and talk to their banks instead.

A weak answer: "I send them the annual report." Follow-up: "The agency asks why debt rose while profit fell." Answer in two sentences.

What belongs in a treasury policy, and how do you report treasury to the CFO and the board?

What they check: that treasury runs inside clear rules and reports against them.

Short answer: "The treasury policy sets the goals, who may do what, which instruments are allowed, the hedge rules, counterparty limits, liquidity buffer and payment controls, approved by the board. I report against it each month: cash and forecast, debt and covenants, hedges, limits and any breach, with what was done."

The full answer: A policy that bans speculation and names the instruments protects the company and the treasurer. Review it every year and when the business changes, for example entering a new currency.

A weak answer: "Our policy is in the treasurer's head." Follow-up: "A subsidiary signed a derivative the policy does not allow." Say how you handle it.

As head of treasury or group treasurer, how would you organise treasury for a group in many countries?

What they check: a model for the group and the steps to get there.

Short answer: "I would centralise what gains from scale, such as funding, hedging, cash pooling and bank relations, often through an in-house bank or a treasury centre, and keep what needs local knowledge close to the subsidiaries. One treasury management system, one policy and clear reporting tie it together."

The full answer: At senior treasury analyst and treasury manager level you run parts of this; the head of treasury designs it and the group treasurer answers for it to the CFO and the board. Local rules on currency, tax and banking decide how far centralising can go, country by country.

A weak answer: "Every country does its own treasury, as it always has." Follow-up: "Three subsidiaries borrow locally at high rates while the group has cash." Say what you change first.

Your CV for these questions

Each job on your CV invites the questions above: how big, how many banks and currencies, which risks, what you changed. Give those stories a line each, written so a head of treasury wants to ask about them:

Check your CV against a treasury job you want with the free score; any area it finds thin is the one to rehearse first, with a real case told without the company's figures.