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Treasury Management

Testing the Boundaries of Treasury’s Role

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January 24, 2018

Even amid the “do more with less” trend of the last decade, treasurers are still testing the limits of their value

Game planThere is no doubt that the treasurer’s role has come up in the world. There are open invitations for seats at the M&A, digitalization and strategic planning tables among others. Nonetheless, they haven’t yet reached that Alexander the Great moment where they weep for there are no more worlds to conquer. So when and where treasury can push traditional boundaries and add even more value across the organization.

This was a topic of a session of a fall 2017 NeuGroup European Treasurers’ Peer Group (EuroTPG). Members wanted to know what kind of organization does that require?

One takeaway surrounds where to draw the line between a streamlined and a value-adding treasury. A member highlighted how his company’s treasury – since the arrival of a new CFO three years ago – has undergone a reorganization focused on efficiency and underperforming business units. For the former, there is a shift of accounting, finance and “borderline treasury” tasks to a shared services center.

Meanwhile, the remaining treasury organization is being aligned with more specialist functions like capital markets (funding FX and cross-border transactions); treasury services (cash management, back office and systems); and advisory. The question becomes what is “borderline” and not, and what exactly goes into the shared services center? Also, how the processes and communications become streamlined and don’t break down, as well as when the advisory team gets involved versus when it takes a hands-off approach. The goal is 80% automated; “no intervention” execution of capital markets and treasury services work.

Many treasuries are now leaning on IT to help bolster and add value. And if there is no dedicated IT to help, it was suggested that members may have to go it alone with some technology choices. For systems that are used and valuable mainly to treasury, much depends on how IT resources are made available at a company. Dedicated treasury IT resources can be deployed to build dashboards, for example, while these projects tend to fall well behind in the queue at companies with corporate (shared) IT.

Mostly, it often falls on a treasury employee gifted in technology to attempt to create dashboards as a side project with no budget. But even broader-scope systems projects can be stymied by blocks in the road: another member noted how investments in what he considers essential value-enabling technology for his lean European team had recently been rejected by the new treasurer, who felt that Excel was more flexible and customizable and downplayed the inherent risk of human errors in this manual tool.

And speaking of systems, don’t mistake an SAP HANA implementation for just another SAP upgrade. “Implementing SAP HANA is as hard as doing SAP from scratch,” said a member currently going through it.

Ultimately, the treasury organization needs to be reviewed with a critical eye from time to time, but in reality, this is often prompted by a management change. As treasury is tasked to do more with less, the organizational philosophy and technology infrastructure need to be considered holistically, and resourced appropriately, with secure automation to free up resources for value-adding tasks.

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