Cash & Liquidity ManagementCash ManagementUS Corporate Treasurers ‘Opening their Wallets’

US Corporate Treasurers ‘Opening their Wallets’

US treasury departments have coped with tight budgets in the five years since the financial crisis, but as American economic indicators pick up there are signs that treasury budget constraints are easing, according to the latest
‘Greenwich Market Pulse’
survey produced by Greenwich Associates.

Sub-titled
‘US Corporate Treasurers Seen Opening Their Wallets’
, the latest Greenwich Associates survey of 177 finance executives finds that more than a third of companies increased the budget allocated to their treasury department this year. This is allowing treasury departments to increase the level of automation and be more strategic in their activities.

The budget for treasury staffing was forecast to increase at 35% of companies, according to respondents to the study conducted in November 2012, with approximately 21% seeing an increase of 1-3%. The budget for treasury technology grew at 39% of companies, with 23% seeing an increase of 1-3%.

The survey comments that in some ways, the 2008 financial crisis and subsequent recession are credited with raising the profile of treasury departments within their companies. The crisis cut into banks’ willingness to lend and threw into disarray such sources of short-term funding as the commercial paper market, undermining companies’ ability to easily obtain additional credit. As senior executives’ concerns about liquidity and access to credit grew, they turned to their treasury departments for advice.

Challenging Business and Regulatory Environment

Given the limits on their ability to add staff, treasuries have responded to the new post-crash demands on their time by relying more on automation to handle routine work. The cost of the technology to enable such automation may be beyond the financial of the many treasury departments that still face budgetary constraints though, leaving those treasuries and their companies at a competitive disadvantage. The 2013 treasury staffing budget was flat at 55.4% of companies, while 9% saw a decrease, and the treasury technology budget was flat at 51.4%, while 9% saw a decrease. A third expected an increase in both staffing and technology budgets.

Annual treasury budgets varied, with most executives citing a budget of less than US$5m. Looking ahead to 2016, executives see budgets continuing to grow, with 60.5% anticipating a rise in treasury’s staffing budget over the next four years and 53.1% predicting treasury’s technology budget will be higher at that point.

“What we are seeing is a consistent need for treasury talent that can meet the needs of a challenging regulatory and economic environment,” said Diana Blaney, analyst with Greenwich Associates. “We are going to see companies spending more money on people that bring in knowledge from different jurisdictions.”

Most of the executives surveyed said their company provides solid support for treasury, with 66.7% describing the company as “extremely supportive” or “supportive” of the treasury function. Treasurers and cash managers are slightly less enthusiastic on this point than other executives, though, with just 58.1% of them describing the company as ‘extremely supportive’ or ‘supportive’.

On the issue of staffing, 45.8% of executives participating in the
‘Greenwich Market Pulse’
said their treasury organisation includes a treasurer, rising to 65.7% among those at companies with more than US$500m in revenue. Forty-eight per cent of companies overall and 64.3% of those with more than US$500m in revenue say the treasury group includes a cash manager. Just 11.3% of the companies have an international treasurer, although that rises to 14.3% at the largest companies.

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