Nothing is perfect. There is always room for improvement. All treasury functions and teams are a work in progress in one way or another. So if you ask a group of treasury professionals what they would do if they could make one change for the better, the responses (perhaps unsurprisingly) can range from the sublime (“Travel back in time and tell everyone I have ever met to vote against Brexit”) to the ridiculous (“Eat more chocolate”).
We may learn more about the professional concerns, challenges and priorities of treasurers from more mundane responses. These include: “Convince my team that treasury workflow will help them to be more strategic”; “Collaborate with financial planning and analysis”; “Drop IFRS before IFRS 9 becomes mandatory”; and “Automate the reconciliation of bank statements against the general ledger”.
Some of these suggestions echo findings in the Kyriba/ACT 2016 Treasury Survey. Earlier this year, when members of the corporate treasury community were asked about their concerns, challenges and priorities, their responses painted a picture of a resource-strapped profession facing the concurrent issues of growing operational complexity, more onerous compliance requirements and an expanding role.
As well as managing traditional liquidity and risk issues, increasingly treasurers are being asked for strategic advice. “In many organisations the CFO’s role is becoming akin to that of deputy CEO,” says Colin Tyler, CEO at the ACT. “As the CFO steps up to the plate, I expect the treasurer’s responsibilities will broaden and help fill the gap,” he adds. (You can read his blog, exploring some of the implications, here.)
It may be getting more difficult for treasurers to expand their role, to offer strategic financial analysis and counsel to the board and executive team. Half the Kyriba/ACT survey respondents were unhappy with the amount of time available to address matters of strategy.
If you get it right, the rewards can be significant and extend beyond complete transparency around all of the financial flows in your organisation
In 2016, treasurers seem to be spending less time on strategic planning than in 2015 and more time on cash-flow forecasting and management, and compliance-driven bank account management.
If Brexit makes liquidity management and compliance more important and onerous in coming years, more treasurers may need to find ways of automating and streamlining these resource-heavy activities, if they are to manage the growing burdens and free up time for activities that can add strategic value to the business. But what are the options for treasurers, who need to optimise use of available resources or achieve more despite having fewer resources?
IT may seem like the solution, but is it? Perhaps you should focus your resources on process standardisation before automation, or combine them? How critical to success is integration: across data, functional and divisional silos, treasury management systems (TMSs) and the wider IT landscape? Would your problems be best solved by addressing pain points in and around treasury or by taking a broader ‘big picture’ perspective?
These questions are the tip of an iceberg and, to a large extent, the right answers to these and to many other related questions will depend on each unique organisation, treasury function, finance function, IT infrastructure and the associated aims, objectives, strategies and budgets. However, research and some of the practical experiences of CFOs and treasurers may point towards some answers and approaches being more effective than others.
When the FSN Modern Finance Forum for CFOs recently surveyed 760 members, it found that they, like many treasurers in the ACT survey, were struggling to find an equilibrium between their traditional role and the new demands of business partnering and strategic adviser – with lack of time the main barrier. The research also delved into experiences of possible solutions and the relative significance and merits of automation, process standardisation and integration.
“When we analysed their impact on corporate performance, we found that standardising your processes is most important, because doing this acts as a springboard to do other things,” says Gary Simon, leader of the Modern Finance Forum. As well as confirming the value of standardisation, the research highlighted that it is the automation that follows this standardisation and the associated integration that enables you to make faster and smarter decisions.
At Schüco International, a global supplier of window, door and façade systems, the road to standardised and optimised treasury processes has been paved with increased automation and system connectivity. “We have been able to implement an integration solution that provides efficient and professional support for Schüco’s treasury processes and conserves the limited resources of a medium-sized firm,” says Thomas Schlesing, Schüco group treasury manager.
Previously, its 40 subsidiaries used numerous e-banking solutions, including manual working procedures. Now, an automated integration solution from Deutsche Bank helps Schüco to harmonise its cash management processes; it automatically exchanges information with one central TMS from Bellin; this receives data from Schüco subsidiaries and exchanges (XML and MT940 format messages) with Schüco’s enterprise resource planning (ERP) system.
The Modern Finance Forum survey identified cloud as an enabler of standardisation, which is reflected in experiences at eBay. Standardising treasury processes at its many global entities might have been impossible without the intrinsic uniformity of a single cloud-based solution. “We couldn’t have actually created the reports we needed that many times across the world,” says Debdatta Banerjee, senior treasury manager, eBay.
Fashion brand Chanel is also benefiting from the combination of standardisation and automation that can be delivered by an integrated cloud-based treasury solution. “We had been using different systems depending on the process area,” recalls Kimberly Karg, assistant treasurer. France was the only country with a system for cash management with various systems in use for cash-flow planning, FX, intercompany loan management and netting.
An integrated system from Reval has improved decision-making and data quality by eliminating the need to move data between systems. “For the first time ever, we now have a single view of all our cash worldwide, in the bank and in country,” says Karg. The uniformity of the cloud system has other benefits, too. “It helps, having a single platform for all our users worldwide, as we continue to look to have standardisation in terms of processes and controls,” she adds.
Most treasury functions have no option but to make the most of what they have. This may mean rationalising existing systems, whether they include spreadsheets, some manual processes or multiple systems for ERP and/or treasury and risk management. As The Treasurer previously outlined, just getting all parts of an organisation onto a single instance can do wonders for process standardisation.
However, the scale of such standardisation and rationalisation efforts can vary significantly. For the independent oil and gas producer Santos, rationalising systems for cash and liquidity management, risk management plus hedge accounting and reporting was a hop, skip and a jump away from the data duplication and relatively high cost of their predecessors. “We had a mix of multiple systems and spreadsheets,” says Simon Hillier, senior treasury analyst at Santos.
Things are less simple for fellow oil and gas producer Shell. Its journey towards process standardisation, simplification, automation and operational efficiency (with straight-through processing through better systems integration) spans every element in its finance organisation – and many years. Shell treasury operations has been rolling out its ‘standard model’ since 2001, to thousands of users in dozens of countries using no fewer than 40 ERP systems.
The larger and more complex the organisation, the more difficult and time-consuming it can be to standardise treasury processes, automate treasury processes or integrate the associated data, ERP and TMS, and the wider IT landscape, and so much more. But if you get it right, the rewards can be significant and extend beyond complete transparency around all of the financial flows in your organisation and the capacity to make faster and smarter decisions.
You may find you have the time (and other resources) to provide all business units with excellent services and professional assistance, manage all of your company’s financial risks, take on a more strategic role today and be prepared to meet future treasury challenges. Just don’t expect all of this to happen any time soon. After all, nothing is perfect. There is always room for improvement. All treasury functions and teams are a work in progress – in one way or another.
Lesley Meall is a freelance journalist specialising in technology and finance
