Delivering value through thoughtful implementation of corporate treasury outsourcing

Social Bonds : A significant financing opportunity amid the pandemic

Executive summary

In today’s dynamic business landscape, corporate treasury faces a range of new challenges and assumes expanded responsibilities. As the financial landscape evolves, treasury professionals play a crucial role in managing risks, optimising liquidity and supporting strategic decision-making.

Recent upheavals in the international economy as a result of the pandemic and the Russia-Ukraine war have led to challenges in maintaining a healthy cash flow cycle, as the gap is growing and making it difficult to have enough working capital amid rising inflation. The treasury function has become more complex due to factors such as globalisation, tightened financial regulations, market volatility, technological advancements, mergers and acquisitions, cash repatriation and capital allocation, cybersecurity threats and fraud risk. As a result, a skilled treasurer needs to address these challenges methodically by conducting an upfront assessment. We believe firms will benefit significantly by including outsourcing in their suite of response strategies.

In this white paper, we have suggested several tasks of the treasury lifecycle that could be outsourced and have sequenced the transition to an outsourcing vendor. While our discussion may serve as a baseline for further development, outsourcing partners will, in all cases, incorporate client-specific measures when designing any value-added outsourcing programme. Given that the current economic trends add more complexity and opportunity, together with regulatory and cost pressures, we expect firms to outsource more rapidly going forward, to source sustainable differentiation that delivers long term competitive advantages.

Key Takeaways

Access to expertise and specialised knowledge: The treasury function requires in-depth knowledge of financial markets, risk management techniques, cash management strategies and regulatory compliance. By outsourcing to a specialised treasury service provider, a company can leverage the expertise and experience of professionals who specialise in treasury management.

Cost savings: Outsourcing the treasury function can lead to cost savings for the company. Hiring and retaining qualified treasury professionals can be expensive, especially for smaller or mid-size companies. By outsourcing, the company can access the necessary skills and expertise without the need for substantial investment in hiring, training and retaining a dedicated treasury team.

Risk management and compliance: Treasury functions involve managing financial risks, such as foreign exchange risk, interest rate risk and liquidity risk. Outsourcing the treasury function can provide access to risk management tools, technology platforms and professionals who specialise in mitigating these risks. Additionally, outsourcing can help ensure compliance with regulatory requirements and reporting standards related to treasury operations.

Scalability and flexibility: Outsourcing the treasury function allows companies to scale their operations based on their needs. As the company grows or undergoes changes, such as mergers or acquisitions, the outsourced provider can easily adapt to the changing requirements. This flexibility enables companies to focus on their core business activities while managing treasury operations efficiently.

Technology and infrastructure: Treasury operations require advanced technology systems and infrastructure to monitor and manage financial transactions effectively. By outsourcing, companies can benefit from the infrastructure and technology platforms already established by the service provider. This could include access to treasury management systems, trading platforms and analytics tools that may be costly to implement and maintain in-house.

Focus on core business: Outsourcing the treasury function allows companies to concentrate on their core business activities and strategic objectives. By delegating treasury responsibilities to a trusted partner, companies can free up internal resources and management attention to focus on their core competencies, market expansion, product development and customer relationships.

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