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When it comes to process improvements in treasury, most companies often face similar challenges, but at the same time there is no uniform approach to solving them. The drivers of optimisation can basically be measured 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 the business models. It is not uncommon for the general trend of digitalisation and the reformation of system landscapes to be an impetus for a treasury roadmap of its own. In order to fully cover the objectives of the treasury, an effective organisational, process and control structure is required.

The range of tasks is diverse and has become even more complex in recent years. Not least, during the Corona crisis, treasury became the focus of attention in order to ensure financial stability and long-term corporate success. The aim is to make the company's own processes crisis-proof and, above all, future-oriented. In this context, internal financial and sometimes scarce human resources are crucial. Every change should therefore be justified by an appropriate cost-benefit analysis. 

Regardless of the intention to adapt or expand the process, the so-called target operating model must always be the focus of project management and communicated transparently. This refers to the operating model consisting of the company organisation, treasury processes including interfaces to neighbouring processes, people and the IT landscape.

The creation of an individual roadmap is crucial for the success of the project. We would like to present some relevant dimensions in this article:

• Financial efficiency
  Any adjustment must be economically justifiable in essence and contribute to increasing efficiency in the treasury. Automation and standardisation play a decisive role here and can contribute directly both to cost reduction (e.g. reduction of bank fees through bank account reduction or use of a payment factory) and to minimising the error potential of manual processes (e.g. standardisation of treasury accounting). In addition to a technological driver, operational efficiency can be achieved through sensible adaptation of the process and organisational structure (e.g. organisation according to end-to-end processes instead of according to specialist areas).
• Compliance
  When taking compliance requirements into account, there is basically no negotiable framework. Compliance with laws and regulatory requirements is the organisation's top priority. Violations can lead to both significant financial loss and considerable reputational damage for the company. An effective internal control system ensures that the company is protected from potential harm.
• Organisational capabilities
  The ability to change is limited by personnel expertise and availability of in-house resources. A proper allocation of internal competencies should be consciously prioritised. In addition, the further development of one's own organisation and persons with the technological change must be considered. This also means a cultural change. Personnel cannot be replaced easily and indefinitely. Therefore, parallel development is fundamental (for example, co-design of new processes, early training with new systems, communication plans). During a time-intensive analysis and project phase, the operational business must also be ensured. It is a balancing act to use decisive resources and know-how in a targeted manner.
• Market risks
  As an internal financial service provider, the treasury ensures a reduction of financial risks for the organisation. A review of the current risk strategy should be analysed first and foremost to determine whether it continues to be in line with the corporate objectives. It is important to question the current risk appetite and adjust it accordingly to the current market environment. 
• Technological change
  The market for IT support in treasury continues to grow rapidly. Technological changes have increased significantly, not least in topics such as artificial intelligence, APIs or robotics. It is not uncommon for the SAP S/4HANA roadmap to play an important role and for treasury to use this for its own benefit (cf. the KPMG newsletter from June 2021). Regardless of the system-based solution approach, the goal should be increased transparency, improved data quality and an effective control system. By outsourcing manual and repetitive processes, the treasury's own resources can be used optimally.

The creation of a customised roadmap first requires a detailed analysis of one's own organisational and process structure. By evaluating one's own strengths and weaknesses, a sensible prioritisation of optimisation fields can be derived. Treasury functions differ significantly in their complexity and in their organisational structure. In any case, a planned realignment must be in line with the own business models. The key for treasury is the end-to-end idea of processes along the value chain in order to leverage additional synergies within the company.

In addition to taking into account the success factors mentioned above, there is a need for targeted prioritisation and a sensible timeline for implementation. The question remains, what do I want to achieve through process optimisation? The target picture should be transparent and clearly communicated. The exchange with key people from the adjacent business units is essential for strengthening the internal position of the treasury along the value chain. The following aspects must also be intensively considered to ensure the success of the project. It is imperative that the desired process landscape is in line with the corporate business objectives. Before any strategic decision is made, the requirements and the implementation of adequate structures should be examined in detail. 

Source: KPMG Corporate Treasury News, Ausgabe 128. Dezember 2022
Authors:
Börries Többens, Partner, Finance and Treasury Management, Corporate Treasury Advisory, KPMG AG
Daniel Lichtenberg, Manager, Finance and Treasury Management, Corporate Treasury Advisory, KPMG AG