Treasury in Transformation Treasury is undergoing a profound transformation around the globe. In response

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  • Treasury in Transformation Results of Treasury Strategies’ 2008 Global

    Corporate Treasury and Liquidity Research Program

    Insights from North America, Europe and Asia-Pacific

    across Middle Market, Mid-Corporate and

    Large Corporate turnover segments

  • Treasury Strategies, Inc.

    is the leading Treasury consulting firm

    working with corporations and financial institutions.

    Our experience and thought leadership in treasury

    management, working capital management, liquidity and

    payments, combined with our comprehensive view of the

    market, reward you with a unique perspective, unparalleled

    insights and actionable solutions. For more information,

    please visit www.TreasuryStrategies.com.

    © Treasury Strategies 2008

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    Contents

    Study Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

    Key Treasury Issues and Initiatives . . . . . . . . . . . . . . . . . . . . . . 5

    Treasury Staffing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

    Liquidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

    Treasury Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

    Financial Services Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

    Research Program Background . . . . . . . . . . . . . . . . . . . . . . . . 32

    Treasury in Transformation Results of Treasury Strategies’ 2008 Global

    Corporate Treasury and Liquidity Research Program

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    The goal of the Corporate Treasury and Liquidity Research Program is to help corporate treasurers and financial services providers better understand the market. Treasury Strategies believes that by understanding the issues that are top of mind for corporate treasurers, financial services providers will be better positioned to deliver value to their corporate customers and, in turn, retain and acquire new business in this dynamic, rapidly changing environment. The research also provides our corporate clients around the globe with a benchmark of current treasury practices and issues.

    The research program explores the corporate treasury function broadly, encompassing treasury key issues and initiatives, organization and staffing, liquidity management practices, treasury technology and financial services providers.

    Segment Definitions For the purposes of analyzing segment differences, respondents were grouped by annual turnover, as shown below.

    Region Definitions

    • North America comprises the US and Canada

    • Europe comprises Western Europe (Belgium, Denmark, France, Germany, Italy, Netherlands, Norway, Luxembourg, Spain, Sweden, Switzerland and the United Kingdom)

    • Asia-Pacific comprises select key Treasury centers within the region (Australia, Hong Kong, India, Malaysia and Singapore)

    Study Objectives

    Segment Annual

    Middle Market Less than $1 Billion USD

    Mid-Corporate $1 to $5 Billion USD

    Large Corporate Over $5 Billion USD

  • 4

    Introduction

    implementing or considering Treasury Management Systems (TMS), Treasurers are also evaluating a broader array of technology. They’ve expanded their focus beyond TMS to assess an array of technology solutions that can be integrated into their TMS or enterprise resource planning (ERP) — such as multi-provider execution platforms, digital dashboards, bank relationship management software, online investment portals, payment factories and corporate access to SWIFTNet. Technology solutions are helping companies centralize key activities such as FX and investments. As a result, Treasurers are seeking integrated, global treasury solutions; and the banking community is responding. Banks are consolidating globally and also better integrating their solutions across regions. Reflecting these moves, our research indicates that more banks are emerging with leading market positions in multiple countries. In particular, there has been a rise in both pan-European and true global banks. Through technology and more tightly integrated global banking solutions, Treasury is improving efficiency — not to reduce staff, but to free up resources to take on expanded strategic activities. Across all regions, at least 10% of respondents noted that they increased treasury staff in 2008, underscoring the strategic importance of Treasury.

    • In response to market turmoil, Treasury is rebalancing its cash portfolios and restructuring its banking relationships. Market turmoil has led Treasurers to reduce portfolio risk, often by moving money out of active investments and into lower risk, passive investments such as money market funds. In most regions, Treasury is planning to rely more heavily on banking providers, expanding service usage with a core group of strategic partners. In 2005, Treasury Strategies outlined the “Next Generation of Treasury Services,” arguing that the traditional treasury management business had matured and providers could grow by redefining the business to encompass deeper working capital and liquidity solutions. Now, in 2008, we are seeing the emergence of select banks that are yielding double digit growth by delivering deeper, more tightly integrated solutions to their corporate clients.

    The remainder of this document outlines the above themes in greater detail.

    Treasury is undergoing a profound transformation around the globe. In response to market turmoil, globalization, banking consolidation and the increasingly strategic nature of payments, Treasury is expanding its scope of activities and becoming a change agent within the firm. Our research and consulting work reveal Treasury is continuing to evolve, characterized by several key themes. By understanding and crafting effective responses to these themes, financial services providers can win share and differentiate themselves in the marketplace.

    • Treasury is becoming a strategic business partner, developing cross-functional relationships to help business units globalize as well as execute and accept new payment media. In some cases, Treasury is helping to integrate the physical and financial supply chains to accelerate the speed of business. As part of this effort, Treasury is examining counterparty relationships with financial institutions and trading partners for their ability to support this integration and drive efficiencies. More aggressive firms are adopting innovative new solutions that deliver buyer financing, simplify and electronify the exchange of payment documents, improve workflow around working capital, and deliver enhanced information throughout the lifecycle of a transaction.

    • Treasury is managing a broader set of risks, expanding beyond foreign exchange (FX) and interest-rate risk, to assume responsibility for commodity risk and, in some cases, non-financial risks such as non-insurable business risk as part of a comprehensive enterprise risk management responsibility. Treasurers are rethinking their approaches to identifying, measuring and managing risk, offering financial services providers unprecedented opportunities to differentiate their ideas and solutions. In response to changing financial accounting standards governing measurement and reporting of risk, as well as heightened sensitivity to counter-party risk, Treasurers are seeking assistance in the form of technology solutions and advisory services from financial partners.

    • Treasury is deploying technology and centralizing activities to strengthen controls and risk management, maximize efficiency and improve access to liquidity — a critical objective in today’s tight credit markets. While many firms are

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    Key Treasury Issues and Initiatives

    Middle Market Mid-Corporate Large Corporate

    North America

    1. Risk Management

    2. Credit/Funding

    3. Liquidity Management

    1. Liquidity Management

    2. Risk Management

    3. Credit/Funding

    1. Liquidity Management

    2. Risk Management

    3. Credit/Funding

    Middle Market Mid-Corporate Large Corporate

    Europe 1. FX Risk Management

    2. Risk Management

    3. Liquidity Management

    1. FX Risk Management

    2. Liquidity Management

    3. Risk Management

    1. Risk Management

    2. FX Risk Management

    3. Liquidity Management

    Middle Market Mid-Corporate Large Corporate

    Asia-Pacific 1. FX Risk Management

    2. Credit/Funding

    3. Market Conditions

    1. FX Risk Management

    2. Credit/Funding

    3. Liquidity Management

    1. FX Risk Management

    2. Credit/Funding

    3. Liquidity Management

    In Europe and Asia-Pacific, FX risk management is the other recurring, top-three treasury issue cited by respondents. FX risk management is a key issue in both Europe and Asia-Pacific in part because of the significant decline of the US dollar relative to the euro, the yen and other Asian currencies.

    Concerns around FX, risk, liquidity and funding can be seen throughout the survey results.

    Key Issues At the outset of 2007, Treasury Strategies called upon Treasurers to “Bulletproof” Treasury — to safeguard every dollar of cash flow throughout its lifecycle via appropriate controls, policies and procedures that identify, measure, monitor and manage risk. Treasurers that heeded this advice were well served and were able to continue the