Report suggests a more consultative approach for treasury, coupled with greater automation, is the way forward for the profession
Only one third of people involved in the treasury function report directly to the treasurer, according to a new PwC report.
Released on 31 January, The ‘Virtual Reality’ of Treasury – compiled from a global survey of 220 corporate treasurers and CFOs – notes that there is a growing tendency within the profession to outsource back office and payment factory tasks.
That trend has created new complexities in implementing regulations, safeguarding liquidity and managing risks. It also suggests that treasury should now be viewed more as a process than a department.
Furthermore, the level of task-based success that treasurers enjoy is increasingly defined by how well they deploy external applications to keep the function running.
Various software tools – including those provided by an ever-growing range of fintechs – should, in the report’s view, enable people across the whole organisation to collaborate internally and externally on treasury processes.
Other points that the survey revealed include:
- Treasurers require the means to ensure that their work is resilient and effective At present, their agenda is dominated by a wide range of high-effort compliance work such as know your customer due diligence and adjusting to accounting rule changes. However, in recent years, resources have been flat and budget outlooks remain stagnant, posing challenges to long-term effectiveness.
- Treasurers must confront rising cybersecurity threats Typically, treasurers ‘own’ payment infrastructures and bank communications. Neither function can afford to be compromised. With cyberattacks and payment fraud regularly making headlines, treasurers must be vigilant in safeguarding assets. It is therefore worrying that only 19% of treasurers list cybersecurity as a critical concern. By contrast, 45% of CFOs cite cybersecurity as a priority.
- The Base Erosion and Profit Shifting project will bring tax and treasury closer together New fiscal legislation stemming from the flagship initiative of the Organisation for Economic Co-operation and Development is putting substance and transfer pricing centre stage. This may have a material impact on the location of treasury activities, distribution of decision power and system setups. As a result, treasury will need to work more closely with the tax division to assess the impact and ensure their organisations are properly prepared.
- A deeper focus on cash-flow forecasting is required 80% of respondents ranked cash flow as either of high, or critical, importance. However, some basic technology issues must be resolved, such as accuracy of data and data mapping, before treasurers can truly benefit from proper predictive and scenario analysis.
PwC global corporate treasury leader Sebastian di Paola said: “Treasury is becoming increasingly virtual and treasurers need to be jacks of all trades by collaborating more with the business, shared services and banks, and raising their game in IT security, valuation and financial risk management.
“As a result, traditional management models may not be as effective as in the past. Instead, a consultative approach, better integration with other business processes and automation will generally be the best strategy.”
Find the full report here.
