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Global Treasury / Treasury Management

Treasury Management: Optimizing the Global Footprint

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March 25, 2014

Treasurers are looking to further streamline common finance activities globally.

MoneyBall Sm 125x76Now that corporate shared-service centers have firmly taken root around the world, treasurers are looking to refine their particular structures. This was the topic of one session of the NeuGroup’s Treasurers’ Group of Thirty – 3 (T30-3) in late 2013.

Members of the T30-3 continue move toward optimizing their company’s global footprint for regional treasury centers and/or shared service centers. And although shared-service centers have grown prolifically over the past several years, streamlining common activities like AP, AR and payroll, regional treasury centers can be seen as the second generation of process improvement, adding a treasury thought-partner regionally to help global treasury stay closer to the action to solve issues in real-time.

At the fall meeting, members discussed ways they say they are streamlining. Here are a few of the takeaways. 

Boots on the ground. As corporations struggle to manage global treasury needs from one location, regional treasury centers have become more prominent overlay structures, either as a stand-alone center or as part of a larger SSC. The journey toward centralization is an evolutionary process with the initial focus on transaction efficiencies. Once the basic structure is in place, treasurers are adding treasury staff that can assist with other value-added activities including liquidity and risk management in accordance with headquarter policies.

Best to be bank-agnostic. One of the initial benefits of establishing an SSC or RTC is the consolidation of bank accounts to a fewer number of global banking partners to increase processing efficiencies. Although this profile allows for better management of credit and operational risk, there is the possibility that too much operational risk is placed with one major banking partner. One way to offset this risk is to implement bank-agnostic solutions like SWIFT to process payments and mitigate the operational risk from any one major global banking partner.

Don’t just duplicate processes. When deciding to move any type of treasury activity to an SSC or RTC, one should take the time to thoroughly review the process to ensure it is considered “best practice” across the organization. This is the best time to make sure there is a standard system in place for processing activities. Standardizing accounting systems is also a critical piece of ensuring operational efficiencies when setting up an SSC or RTC. 

 As globalization pushes multinationals toward offshore markets and technology enables more integrated remote access, shared service centers (SSCs) are re-surfacing as more than just back offices for the treasury. As automation continues to improve, members are making the decision to implement a “second generation” structure to put some of the treasury activity back at the regional level. With an ever-expanding global presence, many feel that SSCs can be used in a more enhanced role, as problem-solvers and thought-partners. 

For more information on the T30-3 please contact Geri Westphal at gwestphal@neugroup.com.

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