One former corporate treasurer with a strong background working in IT believes that technology is strategically changing how treasury departments work. Is the end game total outsourcing?
In an interview published by Kantox, Patrick Verspecht, the former global treasurer at General Electrics (GE) Measurement & Controls and a member of the board of the Belgian Association of Corporate Treasurers, outlines his vision of the future of treasury. The role of corporate treasurer and the treasury department could look very different in 10 years time and most of that change will be driven by technological innovation. It's feasible that we'll be seeing a very slimmed-down version of the current treasury set-up and the treasury team of 2027 could consist of far fewer professionals using outsourced functions for many of the activities currently considered to be key treasury processes.
More treasury responsibilities could be outsourced
Outsourcing payments and other back-office activities to shared service centres (SSCs) has been a common tendency among multinationals for many years. Verspecht names Boeing, IBM and GE among some of the corporates that have moved their low-value, high-volume accounts payable (AP) into payments factories and shared service centres. But the trend to centralise AP is now also being applied to other functions and Verspecht gives the examples of “non-back-office-related activities, like banking relationships, FX risk management and to some extent, trade finance.”
He argues that this migration of traditional treasury activities to an SSC will have implications for the role of corporate treasurer, either adding to or removing some responsibilities. And one scenario is that the whole of treasury, as a non-operational function, could be outsourced either to a SSC or even to a third-party service provider. This is driven by the unrelenting corporate push for cutting cost and simplifying processes. The former treasurer states: “In my view, almost any corporate functions will be 'at risk' of being outsourced, whether internally (SSC) or externally. For example, we are starting to see part of the tax functions being outsourced to external firms, such as indirect tax activities (VAT, Customs…). Basically, you would keep the full ownership of your core business activities, letting you separate the operational from the non-operational.”
Smaller treasury teams in future
Verspecht's envisages the treasury of the future as being a small team of high-calibre professionals using resources from SSCs, but remaining in control of fraud, risk management and compliance.
This vision seems like a very likely scenario as increasingly sophisticated treasury managements systems and ERPs will enable many financial processes to be automated or to be outsourced (internally or externally), also enabling a small group of treasury professionals to maintain controls and monitor cash flows and payables. Treasury professionals will have to revise their skill sets (perhaps focusing more on IT skills and knowledge of compliance, fraud and risk) to remain competitive in the future treasury jobs market.
CTMfile take: What's your opinion on this? Do you feel like your treasury role could be outsourced? What are you doing to keep your skill set relevent?
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