The argument for having a specialist TMS, or treasury module of an
ERP, is therefore rather compelling for the complex organisation. Whilst
it seems counterintuitive to spend to make savings, without this
investment, treasuries under pressure to operate on reduced headcount
Paring back treasury too far could even intensify risk exposure as it
becomes increasingly difficult for the organisation to apply an
appropriate level of segregation of duties, for example. Offsetting
increasing risks, especially given the current increased corporate
sensitivity to internal controls, may then force the downstream
proliferation of manual back office operations and processes.
Indeed, a common method of achieving this, notes di Paola, is to call
upon the accounting department to fulfil back office duties such as
confirmation matching. Whilst this creates a separate reporting line, it
merely displaces the problem elsewhere, and to a function that is not
necessarily well-versed in the treasury specialism. Doing so could
introduce yet more inefficiencies and risks.
Building a business case
The desire to make treasury lean rarely starts with the notion that
the function is oversized, says Paul Taylor, Global Head of Corporate
Sales, GTS and Head of Sales for GTS EMEA, Bank of America Merrill
Lynch. Instead, efficiency is often derived from digitisation, the
removal of manual and paper-based processes and ensuring proper
visibility of data.
With the common view that many companies are operating on a
“patchwork quilt” of technologies, often thrown together through
mergers, Taylor argues that the main barrier to treasury efficiency
often relates to that ‘post-integration’ set-up. But change is afoot. He
believes that “there is so much that can be simplified and refined”.
The evolution of treasury is “naturally lending itself to greater
process and cost efficiency”.
Structuring a leaner treasury function is therefore a matter of first
mapping every financial process, workflow and touch-point. This
end-to-end view (even if it is fragmented) will inform the plan of
action. But it will also call out the “mandatory from the obsolete”,
Armed with self-knowledge and an action plan for efficiency, treasury
now has to develop a convincing business case for the investment
required to rationalise and integrate that fragmented infrastructure.
There are many options. A ‘one system’ approach may, for example,
yield greater efficiency through automation of labour-intensive manual
process. From document management and KYC, to cash forecasting and
reporting, ideas of robotic process automation and the use of artificial
intelligence to manage workflows are much in evidence in treasury
conversations today (if not yet in treasury practice).
These new ideas may be deemed fanciful. But, advises Taylor, “the
more technology can be harnessed to digitise processes, the greater the
efficiency will be for treasury, and the bigger the gains for the
If, as it seems, investment is necessary, asking hands outstretched
for ‘more’ when less is called for will be a challenge. It helps that
with the ready availability and relative ease of implementation of
Software-as-a-Service (or cloud) solutions, running the basic
functionality of a TMS is cheaper than when an installed solution was
the only option.
Even in today’s consolidated treasury technology market, the
competitive edge amongst vendors is still evident, says di Paola. The
larger players, with a stable of acquisitions, have to differentiate who
they are aiming their products at. And that, he says, has a positive
impact on pricing for the customer. “It is still possible to get
something that would easily make the business case fly.”
Furthermore, as treasury makes its contribution in areas such as
improved cost of capital, more efficient working capital management, and
improved FX management, Taylor makes the further point that it starts
to become, if not exactly a profit centre, then at least “a generator of
Despite the number of quantitative and qualitative benefits (and
improvements to organisational health) potentially derived from lean
treasury, resistance to investment is still found, notes di Paola.
Overcoming this depends to an extent on whether the CFO is
treasury-minded or not.
Coming from a treasury background, or at least having had significant
exposure to treasury, would usually encourage in the CFO a degree of
sympathy and understanding for the value of treasury. Making investments
in its delivery of strategic value to the wider business should, in
theory, be an easier ‘sell’. Conversely, resistance from a CFO without a
treasury background suggests the value of treasury is not being
sufficiently well articulated. It is down to the treasurer to do just