Moving up the treasury maturity ladder

We often talk about the maturity of a treasury function in terms of the role it plays in supporting the business. The maturity increasing based on the level of operational support, organisational reach and strategic focus undertaken. We at PwC have noted four categories of treasury maturity:

• Transactional treasury: playing a pure execution role, enabling the business to carry out necessary transactions. This is deemed the least mature.
• Process efficient treasury: providing excellence in execution, ensuring the financial processes are as efficient and effective as possible not just with the Treasury function but wherever such activities occur within the organisation (i.e. in a shared service centre).
• Value enhancing treasury: delivering quantifiable financial value to the business as a whole, optimising flexibility and efficiency and acting as an enabler to the business to achieve its strategic goals. Examples of this may be developing businesses in new countries.
• Strategic treasury: actively contributing to the strategic decisions of the business such as mergers and acquisitions and entering new markets. Strategic areas may include FX issues, pricing decisions etc.

But in an ever more complex world, what is it that enables treasury to progress up the maturity ladder – and stay there - to meet the increasing needs of today’s global business?

• Investing in talent: treasury is shifting from providing financial management to assisting strategic business making decisions. Investing in individuals with business partnering capabilities and a technology skill set augments the operational skill sets already embedded within most treasury teams. Key attributes are an ability to take the groups’s business requirements and add a treasury lens to best optimise liquidity and aid effective financial risk management.
• Investment in systems and technology and automation: using digital technologies by enhancing treasury and cash system capabilities supported by FinTech additions as required aids increased insight and better decision making. We are seeing businesses begin to invest in robotic process automation (RPA) and artificial intelligence (AI) to enable increased productivity and improve insights in order to drive strategic decisions, cash forecasting is a prime example in this category.
• Managing data: the ability to leverage data and technology to drive real time decision making is critical. We are increasingly seeing treasury invest in data visualisation and management tools to further aid decision making.
• Cybersecurity defenses: defending the borders of treasury from cyber attack and payment fraud continues to be challenging for many treasurers. Raising employee awareness, working with IT to enhance IT security controls and ensuring payment controls are sufficient continue to be a battle worth fighting.

As the old adage goes, “A man (or woman) is only as good as their tools”. This has never been so true, and treasurers should be considering if their function is at the right level of maturity to meet the business need.