Siemens has undertaken a radical overhaul of its treasury function under the leadership of Group Treasurer, Peter Rathgeb. Major changes include an organisational realignment from functional segments to product-oriented teams as well as promoting transparency and establishing a ‘fail-forward culture’ that encourages experimentation and rapid technology adoption.
This transformation – which includes transitioning to virtual account management – has significantly reduced internal management efforts. Nicola Bates, President and CEO, Siemens Capital Company explains that treasury has been repositioned from a supportive role to a strategic business enabler.
“Cost savings originate from specific strategic initiatives,” she says. “A significant portion result from reducing complexity through global process harmonisation, adapting to a more centralised, streamlined hedging approach and focusing on core activities with clear business impacts. Siemens treasury therefore further consolidated currency risks, trade finance instruments and guarantees, bank accounts and cash pools, directly cutting related expenses.”
In cash management and payments, substantial savings have been derived from automating cash application and internal management processes, using multi-entity virtual bank accounts and programmable payment technologies. The company says this has produced an approximately 70% decrease in internal management efforts and is increasing automated cash application rates to around 80%.
“Additionally, a strategic overhaul of banking and payment infrastructures led to lower bank fees and transactional costs through account consolidation and automated real-time sweeping and programmable money movements,” adds Bates. “Implementing automated, real-time FX hedging and the management of trade finance security instruments further reduced operational efforts.”
Moving treasury out of the back office is designed to enhance operational efficiency and position treasury as a proactive partner in achieving the company’s strategic objectives, particularly in the realm of digital business models.
“Siemens treasury now actively participates in strategic decision-making processes,” says Bates. “This evolution is already influencing our digital business models by supporting innovative digital pricing strategies such as freemium models and subscriptions, leveraging programmable payments and micropayments for automated payment triggers based on predefined conditions.”
The company’s blockchain payments initiative demonstrates treasury’s expanding strategic role. Advancements in programmable and micropayment capabilities facilitate embedded automated financial transactions within Siemens’ products, shifting from traditional invoicing to usage-triggered payments.
The anticipated benefits of this transformation include enhanced agility, stronger support for Siemens’ transition to digital business models and improved responsiveness to evolving market demands.
The company has worked closely with J. P. Morgan Payments, whose Head of Americas for Liquidity and Account Solutions, Priyanka Rath, emphasises the importance of focusing on bottom line improvements and having a long-term strategy when trying to position treasury as a strategic partner that adds value to the business.
“Treasury transformation projects are a significant commitment in terms of time, costs and resources and therefore the benefits and the outcome need to be clearly substantiated and articulated for the treasury team to secure buy-in,” she says.
The business case needs to align with the company’s strategic objectives and goals and demonstrate cost savings, enhanced growth and improved decision-making. According to Rath, establishing well-defined KPIs and key stakeholder engagement in advance is also critical, as is effective communication and the ability to showcase benefits.
“By implementing robust risk management strategies, treasury can protect the company’s financial health and contribute to stability and growth,” she adds. “Being at the forefront of innovation – either through technology investments to enhance performance or process improvements to drive improved decision making – is another way for treasury to demonstrate effectiveness and catalyse growth.”
