How Corporate Treasury Teams Can Step Into Their New Found Power
The landscape of global business has undergone a profound transformation in recent years, ushering in a new era of globalisation driven by digital innovation and shifting economic power dynamics.
At the heart of this evolution lies the evolving role of corporate treasury and finance teams, who are no longer confined to operational tasks but are now wielding increasing strategic influence over the long-term future of their organisations.
Faced with a complex and volatile trading environment, treasury and finance professionals are tasked with managing unprecedented foreign exchange and interest rate volatility, emerging risks, new compliance protocols, and the financing of ambitious transformation plans. But their responsibilities extend far beyond the back office.
According to a new report from DBS, these teams are now integral to shaping corporate strategy, diversifying revenue streams, embracing digitalisation, driving sustainability, and reconfiguring global supply chains.
In recent years, the phenomenon of globalisation has faced a reckoning. The Covid-19 pandemic, geopolitical tensions, and the unfolding impact of climate change have all contributed to a rebalancing of trade and investment on a global scale.
The once-prevalent “hyper-globalisation” – characterised by the deep integration of national economies – is giving way to a new era of globalisation, one that is powered by digital innovation and centred around the dynamic markets of Asia.
“Asia continues to be the epicentre of growth, with businesses seeking new consumer markets and manufacturing capacities in the region’s emerging economies,” says Soon Chong Lim, Group Head of Global Transaction Services at DBS.
“To capitalise on these opportunities, companies are increasingly operating across borders, embracing e-commerce and delivering on-demand services to keep up with changing consumer preferences.”
However, this shift is not without its challenges. As Chaitanya Mehrotra, CFO of Siemens Healthineers Ultrasound, cautions, “The pace of growth in Asia is double-digit, but it’s not a homogeneous market. To grow in this environment, we need to take geopolitical risk into account and factor in fluctuations within the region. It’s a question of scenario analysis and funding diversification, as well as hedging and balancing growth against that.”
In this new era of globalisation, corporate treasury and finance teams have emerged as pivotal players, wielding growing strategic influence over the long-term future of their organisations. Their guidance is essential as businesses navigate the complexities of diversifying revenue streams, embracing digital transformation, driving sustainability initiatives, and reconfiguring global supply chains.
“Treasury and finance teams are uniquely positioned to influence the long-term success of their organisations by enhancing strategic planning, risk management and data-driven decision-making,” says Su Shan Tan, Group Head of Institutional Banking Group at DBS. “Through these measures, companies can better navigate challenges and capture new business opportunities.”
More than nine in ten treasury and finance professionals are now involved in shaping corporate strategy, collaborating closely with functions such as corporate planning and development to achieve the organisation’s overarching priorities.
This strategic role is not about driving commercial strategy, but rather about enabling it, as Inga Kudzmaite, Regional Treasury and Tax Director, APAC, for Carlsberg Group, explains:
“Treasury for me is an enabler of business strategies. We play a key role in safeguarding economic value and ensuring the business has all that it needs to operate, such as creating the procedures and policies to make sure that foreign exchange or financing is used effectively.”
As businesses seek to diversify their revenue streams and tap into new growth markets, Asia has emerged as a prime focus. The region’s enormous consumer base and growing receptiveness to digital innovation exert a strong pull, especially in times of volatility, uncertainty, complexity and ambiguity.
“The region’s long-term growth potential is one of its main attractions,” says Julain Prevost, Director of Financial Management at Lidl & Kaufland Asia.
“Following recent changes in the macroeconomic environment, our business has expanded within Asia, diversified into new markets, and explored new product categories to offer.”
However, the diversity within Asia cannot be overlooked. “Asia is not a homogeneous market,” cautions Mehrotra.
“To grow in this environment, we need to take geopolitical risk into account and factor in fluctuations within the region. It’s a question of scenario analysis and funding diversification, as well as hedging and balancing growth against that.”
Businesses are increasingly turning to innovation as a key driver of diversification, with 77% of those focused on diversification citing innovation as a top priority. This encompasses the adoption of new technologies, such as generative AI and the internet of things, as well as the proliferation of data-enabled business models.
James Li, CEO at LinkLogis International, a fintech supporting supply chain financing, explains how digital capabilities underpin his company’s expansion plans in the region.
“Our platform facilitates supply chain financing through digital technology,” he says. “We want to build a whole ecosystem, working with banks, working with corporates, using data to support financing even at the earliest stages.”
Digitalisation is not limited to topline growth; new technologies are also essential on an operational level. Companies are using digital tools to enhance supply chain visibility, reconfigure logistics networks, and develop more efficient sourcing strategies.
As businesses diversify across different markets, managing regulatory frameworks inevitably becomes more challenging.
“We are very familiar with the regulatory framework in Chinese environments, but there is a different way of doing business when you go out into Asia,” says Li. “If we grow in Vietnam, the regulations, law, banking system and way of doing business all operate differently from Mainland China.”
This regulatory complexity has significant implications for treasury and finance teams, who must navigate the nuances of each market and ensure compliance while enabling the organisation’s growth aspirations. “We need to be aware of local regulatory compliance and legal knowledge in the countries where we operate,” says Mehrotra.
“Treasury on its own would not be able to offer concrete guidance to the business unless you couple it with local regulatory and compliance know-how.”
Sustainability has risen to the forefront of the corporate agenda, driven by increased investor, stakeholder, and regulatory pressure. Businesses are now actively developing more sustainably produced goods and services to satisfy changing customer preferences and align with global decarbonisation goals.
Haier Group, the electronics company, is a prime example of this shift. “Haier leads in the number of ‘lighthouse factories’ in China recognised by the World Economic Forum and McKinsey,” says Vice President and CFO Xinzhi Shao.
“Additionally, Haier has established China’s first home appliance recycling and interconnected factory, capable of dismantling two million discarded home appliances per annum.”
The role of treasury and finance in this sustainability transformation is crucial. Sugandha Singhal, Head of Treasury at Indian chemicals conglomerate SRF Limited, explains: “Treasury plays a crucial role in sustainability. We evaluate the impact of each project funded through banks and encourage sustainable practices throughout the company.”
As companies increase their ESG reporting, they are moving towards more consistent and comparable local requirements for sustainability reporting, such as the EU’s Sustainable Finance Disclosure Regulation. However, challenges remain in establishing a standardised framework for benchmarking performance.
“What is missing is an index to compare company performance,” says Mehrotra. “A standard key performance indicator doesn’t exist. Cross-border partnerships seem to be becoming increasingly important for ASEAN businesses, which will help standardise this. But it’s not there yet.”
Treasury and finance teams are at the forefront of navigating this evolving ESG reporting landscape, ensuring compliance with regulations while also aligning their organisation’s sustainability initiatives with the expectations of investors and other stakeholders.
As multinational businesses dedicate greater investment to Asia, many are repositioning their regional treasury centres (RTCs) to better manage risk exposure, rising inflation, and foreign exchange volatility. The choice of RTC location is a strategically important decision, with factors such as local regulatory compliance, legal knowledge, and depth of talent pool playing a crucial role.
“We need to be aware of local regulatory compliance and legal knowledge in the countries where we operate,” says Mehrotra. “Treasury on its own would not be able to offer concrete guidance to the business unless you couple it with local regulatory and compliance know-how.”
Beyond the RTC, treasury and finance are also leveraging disruptive technologies to transform their back-office operations. Process automation and the adoption of tools like generative AI are freeing up teams to focus on more strategic tasks, with 49% of respondents reporting that AI is helping them overcome long-term talent challenges.
The rise of e-commerce and digital services has also had a significant impact on the responsibilities of treasury and finance. As businesses unlock new revenue streams through digital channels, these teams must navigate the complexities of managing cash flow, forecasting, and working capital in a more volatile and unpredictable environment.
Xuelin Chen, Head of Treasury in North Asia at L’Oréal, explains the challenges her team faces in supporting the company’s rapid e-commerce growth: “The challenge is that those sales are more irrational and can happen when someone sees a TikTok video and makes an impulse buy. People are more likely to return those products than the ones they buy in a store. Our goal in treasury is to maintain the cash balance and invest the surplus, but sometimes the return rate is as high as 25%, which complicates our forecasts.”
To fulfil their growing strategic mandate, treasury and finance teams must forge closer partnerships with other functions within the organisation, such as corporate planning, procurement, and supply chain.
This upstream collaboration is a hallmark of the leader group, who are significantly more likely than their peers to be integrated with strategic plans and transformation efforts across all areas.
“Understanding what the business needs and finding solutions together is crucial,” says Julain Prevost at Lidl & Kaufland Asia. “There’s satisfaction in overcoming barriers and working together.”
Scenario planning is one effective mechanism to prompt this upstream collaboration, as treasury and finance professionals can play a vital role in preparing the organisation for black swan and grey rhino events through horizon scanning, risk management, and contingency planning.
As businesses diversify their operations, treasury and finance are also required to build stronger relationships with local and regional partners, including financial service providers. These partnerships are crucial in navigating market-specific challenges, unlocking financing opportunities, and enabling trade and payments digitalisation.
“We look at geopolitical risks and what they mean for the business across regions,” says Inga Kudzmaite, Regional Treasury and Tax Director, APAC, at Carlsberg Group.
“While I don’t believe it’s possible to be fully prepared for black swan events as such, it’s extremely important to understand the risks associated and plan for the steps possible to mitigate it, protecting the company and its value in various sets of circumstances.”
The growing strategic influence of treasury and finance also requires these teams to be prepared to challenge their peers in other functions, particularly when the stakes are high. A vital differentiator for the leader group is their willingness to flag concerns, identify threats, and even recommend drastic changes to corporate strategy.
“We need to be prepared to take tough discussions,” says Kudzmaite. “Commercial teams often want to be guided by certain returns because of inflationary and foreign exchange risks even if it means rethinking the business case.”
By fostering a culture of constructive challenge and collaboration, treasury and finance can ensure that the organisation’s strategic decisions are well-informed and aligned with the evolving landscape of global business.
The strategic transformation of treasury and finance is closely intertwined with the adoption of disruptive technologies. Process automation and the integration of tools like generative AI are freeing up teams to focus on more value-added activities, while also helping to overcome long-term talent challenges.
“Technology has been revolutionary in treasury and finance,” says Mehrotra. “Rather than spending my team’s time trying to put the data together, I can ask them to give me insights to feed into decision-making.”
The leader group is more positive about the future role of treasury and finance and is also more likely to be exploring blockchain, AI, and other emerging technologies to transform their business models and drive strategic objectives.
The proliferation of data and the ability to derive meaningful insights from it are also empowering treasury and finance teams to play a more influential role in strategic decision-making. By leveraging data analytics, these functions can challenge assumptions, identify emerging risks, and provide data-driven recommendations to guide the organisation’s growth and transformation.
“We are making good use of robotic process automation, but the goal is to have full system connectivity,” says Xuelin Chen at L’Oréal. “Instead of small plugins here and there, we want to be able to copy to all other platforms and have a more holistic view of the data.”
As treasury and finance teams continue to embrace disruptive technologies, they are poised to unlock new levels of efficiency, agility, and strategic relevance within their organisations.
The role of corporate treasury and finance teams has undergone a profound transformation in the new era of globalisation. These functions are no longer confined to operational tasks but are now wielding increasing strategic influence over the long-term future of their organisations.
Faced with a complex and volatile trading environment, treasury and finance professionals are navigating the challenges of diversifying revenue streams, embracing digital transformation, driving sustainability initiatives, and reconfiguring global supply chains.
By leveraging data-driven insights, forging strategic partnerships, and harnessing the power of disruptive technologies, these teams are stepping into their newfound power and positioning their businesses for success in the rapidly evolving global landscape.
As Julain Prevost at Lidl & Kaufland Asia aptly summarises, “There’s satisfaction in overcoming barriers and working together” – a sentiment that encapsulates the pivotal role of treasury and finance in the new era of globalisation.
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