Treasury Transformation

Treasury Transformation

Treasury transformation refers to the definition and implementation of the future state of a treasury department. This includes redisigning the treasury organization & strategy, the banking landscape, system infrastructure and treasury workflows & processes.

Zanders has witnessed first-hand a ‘Treasury Transformation’ trend sweeping global corporate treasuries in recent years and has seen an elite group of multinationals pursue increased efficiency, enhanced visibility and reduced cost on a grand scale in their respective finance and treasury organizations. Why does a treasury need to transform? There comes a point in an organization’s life where it is necessary to take stock of where it is coming from, how it has grown and especially its goals for the future. Corporates can grow in various ways: through the launch of new products, entering into new markets, making acquisitions or developing strong pipelines. However, to sustain further growth they needed to re-strengthen the foundations and transform themselves into stronger, leaner, better organizations for the future. What triggers a treasury organization to transform? It is interesting to look at the drivers behind a treasury transformation. Zanders distinguishes five main triggers:

  1. Organic growth of the organization
  2. Desire to be innovative and best-in-class
  3. Event-driven (merger, acquisition, spin-off)
  4. External factors (financial crisis, regulation)
  5. The changing role of corporate treasury

A typical treasury transformation program focuses on treasury organization, banking landscape, system infrastructure and treasury workflows & processes. Within these areas we see that many state-of-the art treasuries strive to:

  • be centralized
  • outsource routine tasks and activities into a financial shared service centre (FSSC)
  • have a clear bank relationship management strategy1 and have a balanced banking wallet
  • maintain a simple and transparent bank account structure with automatic cash concentration mechanisms
  • be bank agnostic as regards bank connectivity and formats in place
  • operate a fully integrated system landscape

Zanders’ seven-step approach to treasury transformation

There are many internal and external factors that require treasury organizations to increase efficiency, effectiveness and control. In order to achieve these goals for each of the treasury activities of treasury management, risk management and corporate finance, it is important to take a holistic approach, covering the organizational structure and strategy, the banking landscape, the systems infrastructure and the treasury workflows and processes. Zanders’ seven-step approach to treasury transformation provides such a methodology, by working from a detailed as-is analysis to the implementation of the future-state treasury organization.

  1. Review and assessment
  2. Solution design
  3. Roadmap
  4. Business case
  5. Selection(s)
  6. Execution
  7. Post-execution

1 See Zanders WAROC methodology Please find here the extended version of this article.