Traditional functions such as foreign exchange, risk management, cash management processes are increasingly automated, web-enabled, and streamlined. Treasurers are outsourcing many non-core functions such as accounts receivable and payable in order to focus on core competencies. As a result, the traditional domain of the corporate treasurer has not so much shifted as been squeezed.
Forces of change
The global economy is changing rapidly, competition has forced markets to consolidate, merge and cooperate. Margins are shrinking and shareholders are demanding higher value at lower cost. Finance officers at corporate headquarters are feeling the full force of this change.
A product of such cost-consciousness is the shared service center (SSC). Centralizing corporate functions such as tax, accounting, human resources, legal services, and treasury has several benefits aside from the lower costs. Benefits include better risk management, elimination of duplication of work, specialization, better information flow and business responsiveness. For all those reasons, plus the emergence of sophisticated enterprise resource planning (ERP) systems enabling the integration process, SSCs are in vogue.
Thus the traditional distinctions between those corporate functions are gradually wearing away. And though the treasurer's domain is looking leaner, a treasurer's skills set looks to be rounding out. The corporate treasurer must, for example, understand tax and regulatory issues not only in relation to functions like cross border and/or cross currency pooling and netting, but also how they interact with the other corporate functions, which treasury closely overlaps.
The focus of the post-Asian crisis treasurer is once again on FX exposure management, changing regulatory regimes, risk-based product pricing, and technology-driven solutions/products. Treasurers must become risk management professionals, familiar with in-country regulations, and the volatility of the Asian market environment. There must be as much investment in risk management as there is cash forecasting.
E-business and the treasurer
E-commerce and the internet are also fundamentally changing the role of the treasurer. Dynamic trade means that treasury also has to be dynamic. Online buyers demand rapid responses and therefore the supply chain has to be fluid. Even banks are moving financial transactions from batch processing to real-time. And so the challenge has been thrown up to treasurers to add value to the electronic commerce cycle.
Electronic marketing typically involves sourcing suppliers/buyers on the internet, and the various processes preceding the making or receiving of payment of the goods. This means that treasury has to adopting electronic mechanisms for paying and collecting payments from customers to ensure that the full commerce cycle runs smoothly.
It is imperative that treasurers assert themselves when corporations shed old economy business models and redesign new ones.
