Centre Stage

An At-a-Glance Guide to Treasury SSCs in Latin America

Treasury shared service centres (SSCs) are becoming increasingly popular for global corporations seeking to centralise their financial operations, optimise cash flow, and streamline processes. Latin America offers numerous attractive locations for SSCs, but each country has specific advantages and challenges. Here, Florent Michel, Managing Partner, Latinafinance.net, explores the pros and cons of key countries for SSCs in Latin America: Brazil, Mexico, Argentina, Chile, Costa Rica, Panama, and Uruguay.

Countries are fiercely competing within Latin America to become the top destination for treasury SSCs. While cost efficiency remains an important factor, companies must also evaluate other critical elements, such as talent availability, regulatory stability, infrastructure, and the ease of doing business, to determine the best fit for their operations.

A country-by-country analysis

Brazil
Brazil, the largest economy in Latin America, offers significant advantages for treasury and corporate finance operations. It has a mature banking and financial infrastructure and a skilled workforce with a growing pool of talent in finance and technology. The strong local market is ideal for supporting treasury functions in large-scale operations. However, Brazil’s challenges include its complex and frequently changing tax regulations, which can complicate compliance. Additionally, bureaucracy often slows down the operational set-up process, and Brazil’s expenditure on labour is higher than other countries in the region, impacting the overall cost structure.

Mexico
Mexico provides a strategic advantage due to its proximity to the United States, making it a hub for North American operations. The country has a large talent pool with financial expertise, bolstered by free trade agreements and a relatively stable financial infrastructure. On the downside, security concerns in certain regions may pose risks to businesses, and regulatory changes can sometimes bring unpredictability. Infrastructure limitations, especially in smaller cities, can also create challenges for operational expansion.

Argentina
Argentina is known for its high levels of financial expertise, particularly in accounting and treasury, making it a cost-effective destination for skilled labour. However, the country has historically faced significant challenges such as currency instability and strict FX controls, which can complicate international transactions. Inflationary pressures further increase operational costs, and an unpredictable political climate adds to the risks of conducting business in Argentina.

Chile
Chile stands out for its stable political and economic environment, coupled with a well-developed financial and banking system. The country is recognised for low corruption levels and high ease of doing business, making it an attractive destination for corporate finance operations. However, Chile has a smaller talent pool compared with larger economies such as  Brazil or Mexico, and its higher operational costs may deter companies from seeking cost efficiencies.

Costa Rica
Costa Rica is a well-known hub for shared services, with many multinational companies already operating SSCs in the country. It offers a skilled, bilingual workforce supported by a strong education system, alongside a stable political environment and a favourable business climate. On the downside, Costa Rica’s smaller domestic market limits opportunities for large-scale operations. Additionally, its labour costs are relatively high compared to other Central American countries, impacting overall competitiveness.

Panama
Panama offers excellent connectivity through the Panama Canal and Tocumen International Airport, alongside a dollarised economy that eliminates currency conversion risks. The country also provides tax incentives for multinational companies, making it a favourable destination for treasury operations. However, Panama’s labour pool for specialised financial roles is limited, and its reputation as a tax haven may raise concerns about corporate transparency.

Uruguay
Uruguay is highly regarded for its political and economic stability, low corruption levels, and strong business regulations. The country has a high-quality workforce with robust financial expertise and advanced technological infrastructure. Despite these advantages, Uruguay’s smaller market and workforce size may limit its appeal for larger operations. Additionally, high labour and operational costs could pose challenges for companies focused on cost optimisation.

This analysis highlights the specific strengths of each country while acknowledging the challenges, enabling businesses to make informed decisions about establishing treasury or corporate finance operations in Latin America.

FIG 1: Comparison Table: Key Factors

Recommendations

• For large operations: Brazil and Mexico are ideal for SSCs supporting high transaction volumes due to their deep talent pools and strong local markets.
• For stability: Chile, Costa Rica, and Uruguay stand out for their stable environments, ease of doing business, and skilled workforce.
• For cost efficiency: Argentina and Panama offer lower costs even though those of Argentina  increased significantly in 2024, but businesses must carefully navigate Argentina’s regulatory risks and Panama’s smaller talent pool.

Next steps

Selecting the right country for your treasury SSC in Latin America depends on a company’s specific needs, such as cost efficiency, market size, and operational stability. Ask around your professional network to see if any of your peers have set up an SSC in the region. They might be happy to share their experiences or put you in touch with one of their contacts. Research is, of course, vital, but personal insight is invaluable.