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When Opportunity Knocks, Change Treasury

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September 21, 2017

Treasury organizations aren’t static; they need to change with the times.

football x's and o'sTreasury organizations always need to be ready to adapt to changes in the underlying business while operating with full continuity. Big changes like M&A are obvious opportunities to reassess the organizational structure, but perhaps not fully appreciated are the opportunities for change that come with new systems implementations. New implementations can provide a chance to tune up processes and operations to today’s standards.

At a recent meeting of the NeuGroup’s European Treasurers’ Peer Group (EuroTPG) members discussed the different approaches other treasuries take to altering operations and organization. One member from a US-based company kicked off the discussion by sharing some ideas on a treasury redesign for Europe and beyond.

Currently, this treasury has 21 people at its central treasury Center of Excellence (at headquarters) and six in the global service center for the broader EMEA region. It has approximately 55 FTEs (which could mean more than 100 individuals spending part of their time on it) that support treasury at the local level. At HQ, responsibilities cover capital markets and financial risk management. An EMEA in-house bank covers a range of services for 135 “customers” or its business units, including cash pooling, loans, third-party netting, payments and POBO, cash positioning, and short-term investments. The EMEA area treasurer serves as the link between country-level and global treasury, provides treasury counsel to the countries, and oversees bank relationship management, controls and compliance and other regional and intermediary services to central and country treasury.

This treasury began its drive for organizational change with the implementation of global ERP system. The treasurer acknowledged that her company was risk-averse so wanted to leverage a new SAP implementation, including SAP Treasury, as much as it could and to also satisfy an underlying mandate to do more with less – without any loss of excellence. This they were able to accomplish by moving activities from several areas into global service centers (GSCs). For example, the GSC for EMEA — providing cash coding, reconciliation, in-house cash clearing, cash pool reconciliation and bank payment monitoring — was a result of the SAP deployment.

Another suggestion from the presentation was to clearly define what is core treasury and what is not. One lesson learned with a systems-driven re-organization is that treasury – and what would normally be defined as shared-service center-type tasks – can get commingled for process reasons related to the new ERP and/or TMS. Therefore it’s important to be clear on how core and noncore treasury tasks are defined and what the appropriate reporting lines are for each. If this isn’t addressed, treasury may end up with added responsibilities without the corresponding budget or resources. This is a particularly important risk for regional treasury centers where those resources may be even more scarce.

Related to the above, companies also run the risk of personnel quality issues and high turnover in new service centers, which are prone to “teething problems.” It helps to have a plan for training, career planning and ways to get employees to develop cohesiveness and an affinity to the company so the teams become more stable.

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