Most companies often face very similar challenges when it comes to improving treasury processes, yet so far, there is no standardized approach to solving them. In principle, the drivers of optimization can be benchmarked against a wide range of internal and external factors, such as M&A activities, uncertainties and volatilities in the market environment, increasing demands on the internal control system, or changes in business models. More often than not, a general trend toward digitization and the reformation of system landscapes acts as an impetus for a company's own treasury roadmap. To cover treasury objectives in full, having in place an effective organizational, process, and control structure is a must.

Treasury is a multifaceted function that has become even more complex in recent years. In particular, it became a focus of attention during the COVID-19 crisis as a means of ensuring financial stability and the company's long-term success. The task is to make the company's own processes both resilient to crises and, above all, forward-looking. In this regard, internal financial resources as well as personnel resources, which are sometimes in short supply, are crucial. Any change should therefore be based on an appropriate cost-benefit analysis. 

Overall view with a top-down approach

Regardless of why the processes are being adapted or expanded, the target operating model must always be the focus of project management and communicated transparently. This refers to the operating model composed of the company organization, treasury processes including interfaces to neighboring processes, people and the IT landscape.

Developing an individual roadmap is crucial for the success of the project. In this article, we aim to present some of the relevant dimensions:

  • Financial efficiency
    Any adjustment must be economically justifiable in essence and contribute to an improved efficiency in the treasury. In this context, automation and standardization play a crucial role and can directly contribute to both reducing costs (for example, cutting bank fees by using fewer bank accounts or a payment factory) and minimizing the potential for errors in manual processes (for example, standardizing treasury accounting). In addition to a technological driver, operational efficiency can be achieved through judicious adaptation of the process and organizational structure (for example, organizing according to end-to-end processes instead of specialist areas).
  • Compliance
    There is basically no negotiable framework when it comes to taking compliance requirements into account. For any organization, compliance with laws and regulatory requirements is a top priority. Non-compliance can lead to both significant financial loss and considerable reputational damage for the company. An effective internal control system safeguards the company against potential damage.
  • Organizational capabilities
    The ability to change is limited by the expertise of your staff and the availability of your own resources. It should be deliberately prioritized to allocate internal competencies appropriately. On top of this comes the further evolution of the company's own organization and its employees in line with technological change. This also means undergoing a cultural change. Employees cannot be replaced easily and indefinitely. Therefore, it is essential to ensure the simultaneous further development (e.g., co-design of the new processes, early training with new systems, communication plans). In addition, you need to ensure that your day-to-day business is running smoothly during the time-consuming analysis and project phase. It is a balancing act to use crucial resources and know-how selectively.
  • Market risks
    As an internal financial service provider, Treasury helps to reduce financial risks for the organization. The first step is to analyze the current risk strategy and whether it continues to be in line with the corporate objectives. It is important to challenge the current risk appetite and adjust it accordingly to the current market environment. 
  • Technological change
    The market for supporting IT in treasury is continuing to grow rapidly. Technological changes have accelerated, not least in topics such as artificial intelligence, APIs and robotics. Quite often, the SAP S/4HANA roadmap plays an important role and it is important for the treasury to use this roadmap for its own benefit (cf. the KPMG newsletter from June 2021). Irrespective of the system-based solution approach, it should aim at increased transparency, improved data quality and an effective control system. By outsourcing manual and repetitive processes, the company's in-house resources can be used in the most effective way.

Summary – The factors for achieving a robust planning

First of all, creating a customized roadmap requires a detailed analysis of one's own organizational and process structure. Assessing one's own strengths and weaknesses allows for deriving a meaningful prioritization of areas requiring optimization. Treasury functions vary significantly in terms of their complexity and organizational structure. In any case, any planned realignment must be consistent with the company's own business models. The key for treasury is the end-to-end notion of processes along the value chain in order to leverage additional synergies within the company.

In addition to incorporating the aforementioned success factors, this requires targeted prioritization and a sensible timeline for implementation. The question remains, what do I want to achieve through process optimization? The target vision should be transparent and clearly communicated. To strengthen Treasury's internal position along the value chain, it is essential to maintain an exchange with key personnel from adjacent business areas. It is also crucial for the success of the project to pay close attention to the aspects mentioned above. And the intended process landscape must be in line with the company's business objectives. Therefore, before any strategic decision is made, the requirements and the implementation of adequate structures should be examined in detail. 

Source: KPMG Corporate Treasury News, Edition 128, December 2022
Börries Többens, Partner, Finance and Treasury Management, Corporate Treasury Advisory, KPMG AG
Daniel Lichtenberg, Manager, Finance and Treasury Management, Corporate Treasury Advisory, KPMG AG