Uncertainty meets its match

In brief 

• Despite an upturn in the economic outlook, uncertainty remains ingrained into business operations today. 

• As a result, most corporate treasuries are experiencing operational challenges that are beyond their control.  

• Treasuries that adapt by embedding more resilience and flexibility into their operations will be the ones that forge ahead. 

• Zanders created Treasury Business Services to provide a customizable suite of niche expertise and flexible resourcing options for treasuries. 

Treasuries today are expected to adapt faster than ever to challenges that are largely beyond their control. Here we outline the six most pressing issues affecting treasuries today that you not only need to be aware of, but also proactively planning for.  

The financial headwinds that have weighed down on investment activity, liquidity, and returns in recent times are gradually easing. And while optimism is creeping back into our outlooks, it’s not necessarily an end to uncertainty for treasury teams. That appears to be here to stay. Talent shortages, a more transient workforce, an expanding treasury role, large-scale digitalization, the lingering impact of recent global crises and unexpected opportunities too. Deeply engrained uncertainty means there are a lot of plates to keep spinning when you’re running a treasury function today. The following six challenges are making this balancing act more arduous for the corporate treasurer, emphasizing the urgent need to build greater resilience and agility into their operations. 

1. Peak load scenarios where performance is non-negotiable 

There are situations where treasury simply must deliver. Period. Even when it does not have the resources. M&A and IT-related projects are good examples but there are many more. When these peak load scenarios occur, treasuries need to be prepared to handle them in a fast, flexible, and efficient way. 

2. Demand for specialist treasury IT knowledge

A 2023 Treasury Technology survey found 53% of respondents were already using a TMS and a further 16% planned to implement within the next two years. It’s undeniable that technology now commands a dominant role in treasury processes, with investment in ERPs, TMSs, payment factories and e-banking portals a priority across the industry. However, the talent to implement and manage these complex IT systems is scarce, and costly to recruit and retain. And even when someone with the right skills and experience is identified and convinced to join, it often becomes apparent that a dedicated full-time employee might be excessive for the requirements of the role. This makes it even more difficult to fill this critical skills gap effectively and cost-efficiently. 

3. The paradox of lowering labor costs while delivering more

Treasury has never been a department with a high headcount, but it’s still not immune to company-wide edicts to reduce labor expenditure. In this cost-cutting environment, the best most treasuries can hope for is a cap on their existing headcount. So, while treasuries are increasingly called on to deliver more and faster, they’re required to perform this expanded role without increasing headcount.  

4. The evolution from a cost center to a performance-oriented business partner 

Like the rest of your company, treasury must show a tangible contribution to the improvement of productivity and performance. This was the subject of our recent white paper  – Treasury 4.x, the Age of Productivity, Performance & Steering. There are lots of ways to enable treasury to transition into this new more value-driven role – from introducing more automation, improving methodologies, and increasing use of data, to outsourcing certain activities. But all this comes with additional demands on budget, skills, and resources.  

5. The talent pool isn’t sufficient to keep treasuries today afloat 

The 2023 Association for Financial Professionals (AFP) Compensation Report suggests it has become increasingly difficult to fill open treasury positions. According to the survey, almost 60% of treasury and finance professionals said their organization was tackling a talent shortage. There are many reasons given for this. A competitive job market is certainly a dominant cause (as stated by 73% of organizations in the survey). But treasury is also facing a dearth of candidates with the necessary skills for their roles (indicated by 47% of organizations in the survey). As a result, treasury talent shortages are not only due to the general demographic challenges affecting all companies but also because treasury remains underrepresented in the higher education system.  

6. A continually expanding treasury agenda

ESG, increased regulatory demands, the burden of administering digital payments – a constantly shifting treasury landscape not only requires additional resources but also niche skillsets and significant cross-departmental collaboration. In addition, the unprecedented challenges businesses have faced in recent years have placed a spotlight on treasury management as a critical resource for businesses. In 2022, an AFP survey found 35-43% treasury professionals were reporting a consistent increase in communication between treasury and the CFO. Further to this, a 2023 TIS survey found almost 50% of treasury professionals have become strategic partners with the CFO. This is further fueling an expanded and more complex treasury agenda, creating another pressure on skillsets and resources.  

Uncertainty meets its match 

These challenges are triggering uncertainty in treasuries. Do you have the resources and skill profiles you need? How can you give your team more bandwidth to deliver a constantly expanding treasury role? Who is going to manage the TMS you’ve just implemented? And what would happen if you unexpectedly lost a member of your team? We created our Treasury Business Services solution to support you as you maneuver uncertainty, enabling you to execute rapid performance improvements when you need them most.  

TBS is a special unit of Zanders offering a wide range of niche treasury expertise and flexible resourcing options to treasuries. From running your treasury-IT platform and covering routine back-office tasks, to taking care of highly specialized activities and filling your temporary resource needs – our service is deliberately broad to give you optimal flexibility and more control to shape the support you need. 

To find out more contact Carsten Jäkel.