Treasury Function ‘More Strategic than Ever’

Treasury groups report that their function is more strategic than ever before, with an increased focus on scaling the treasury organisation, related technology to support global operations, cash repatriation and liquidity risk management, reports Deloitte.

The firm’s just-published biennial ‘2015 Global Corporate Treasury Survey’ also indicates that treasurers are looking ahead at emerging challenges in cyber threats and navigating emerging markets. The findings come from more than 100 leading corporations globally, across a range of industry sectors.

“As treasury takes on increasingly strategic roles within the corporation, it continues to be viewed as a risk management function,” said Melissa Cameron, principal, Deloitte & Touche LLP, and global treasury leader.

“The findings of this survey add to our understanding of the challenges and solutions available to treasury groups as they close the gap to real-time and accurate financial exposures and control over cash exposures in all corners of the world.”

According to Benny Koh, managing director, treasury advisory, Deloitte Southeast Asia: “Southeast Asian chief financial officers (CFOs) and treasurers going through the survey results will find that, regardless of the size of their company, the key challenges their Treasury organisations face are very similar compared to their global counterparts. With the right contextualisation, the solutions available to them may also be the same.”

Key findings of the survey include:

• Fifty per cent of treasurers noted their biggest challenges are the ability to repatriate cash and to manage foreign exchange (FX) volatility.
• Forty per cent of companies remain challenged by visibility into global operations, including cash and financial exposures.
• Sixty-five per cent of survey respondents reported that they rely on multiple data sources and use multiple solutions (some manual) to address their company’s needs. This may lead to increased operational difficulties and risk rather than providing sufficient solutions to address these challenges.
• Centralised corporate treasury is still the most widely used operational model, with nearly 76% of respondents noting that treasury activities are currently handled there. A significant decrease in decentralised operations across all company sizes is strongly indicative of greater interest on the part of the respondents to use corporate treasury, centres of excellence and in-house banks (IHB).

The firm comments that it is critical for treasury organisations to navigate the operational and technological issues that mirror the larger threats to their colleagues across the business in emerging markets, third-party risk and cyber risk. Three particular emerging management challenges are:

Navigating restricted economies:
Many companies face the opportunity of emerging market growth with the constraints of repatriation. Treasurers need to be able to speak to their boards and executives about the inter-play (and sometimes divergent outcomes) of these growth opportunities on earnings-per-share vs. cash returns, as well as discuss the liquidity and balance sheet consequences.

Increasing need for substance in foreign jurisdictions:
Tax authorities are looking closely at the substance of global financing and treasury activities. Treasury teams should expect to see greater substance (decision making, scope of activities, and scale in offshore teams) in foreign treasury centres. This creates a unique opportunity to gather up the activities of countries not previously supported by treasury centres or shared services organisations.

Cyber threats have made it to treasury:
Treasury departments are now being targeted in elaborate phishing, social engineering and hacking attacks. With the growing complexity of the technology infrastructure, data storage surface, and multiple access points for cyber threats, an organisation’s internal monitoring and surveillance strategies as a whole may not be covering the assets treasury protects. Many treasury teams have focused on traditional process and financial controls, relying on team members to support systems administration and maintenance within its ‘four walls.’

The full survey results may be accessed here.

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