Take Five 

HSBC

Between sessions at HSBC’s recent Global Liquidity and Cash Management Natural Resources and Utilities Annual Forum, TMI caught up with an HSBC Representative to leverage their global expertise on the key topics impacting corporate treasury departments today, and to gather his insights on the actions treasurers can take to prepare for tomorrow. 

What is the ONE thing –  above all else – that treasurers should have on their agenda right now and why?

As the world becomes more digital, cybersecurity should be a priority for all corporate treasurers. They must join forces with IT to take responsibility for the company’s cyber defences, in particular around payments. 

More treasurers are doing this: according to a survey that HSBC recently conducted in conjunction with Celent, 82% of treasurers cited cybersecurity as their number one concern. But the cybercriminals are now specifically targeting treasury departments, since they not only have the ability to move cash, but they also sit on valuable data, such as bank account information. Therefore, treasury teams need to be increasingly vigilant and proactive when it comes to cybersecurity.

What are TWO top actions that treasurers should have on their to-do list to prepare for a post-Brexit world?

The first step should be a departmental review of the set-ups, workflows and instruments that may be affected by the UK’s departure from the EU. That means looking at everything from financial products to banking relationships and cash pooling arrangements.

Once that stock-take has been performed, putting an outline roadmap in place will enable the team to be ready for decisions that may be made later down the line. Treasury could, for example, begin formulating a loose plan to move critical treasury and cash management structures away from the UK, to countries such as France or the Netherlands – and mapping out what that might involve.

It is important to remember, though, that no agreement has been set in stone between the UK and EU yet, so treasury’s plans should have flexibility built into them.

What are the THREE biggest barriers to successful digitisation of the treasury function and why?

Based on conversations with clients, the first barrier is management-level buy-in. Without support from the top, there will be insufficient budget and resources for the digitisation project. Building a great business case, which puts the benefits in terms that management truly understands, is therefore vital. Assessing the support available from your banking partners and feeding that into the project plan could also help to secure buy-in.

Even with the right budget and resources, if a company doesn’t have a continuous improvement mindset and isn’t open to change, then it will be extremely difficult to successfully digitise treasury processes – especially those that touch other parts of the corporate organisation. So, culture is the second significant barrier to successful digitisation.

 The third hurdle is failing to put in place the right policies and processes. If the treasury department’s policies do not support the change in technology that is happening, such as the use of real-time payments, then the department’s processes will never be able to evolve, either.

Could you share FOUR practical steps that corporates can take to prepare for real-time payments?

A useful first step is to have a dialogue with your banking partners to better understand their capabilities for processing real-time payments. Be wary of assuming that all your banks will be able to process immediate payments in every jurisdiction where such schemes are in place.

The second action point is to review the capabilities of your own internal systems, from the Enterprise Resource Planning (ERP) to the Treasury Management System (TMS). Speak with your technology vendors and ensure that the systems will be able to cope with real-time flows of information.

If your systems and banks are able to support real-time payments, the next step is to look at those policies and processes that we spoke about before. Ensure those are up-to-date and that you take into account considerations such as monies coming into the company every day of the week, as these can only be put to use as short-term investments if the right framework is in place. Reviewing policies and processes also provides an excellent opportunity to optimise legacy workflows.

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The fourth step is assessing the impact that real-time payments will have on your supply chain, including internal departments such as procurement as well as buyers and suppliers. How will metrics such as DPO and DSO change? Will new working capital tools be required? Could supplier discounts be negotiated for settling invoices using real-time payments? Answering these questions should help treasurers prepare for real-time payments and take full advantage of them. 

On the back of these trends, how do you see the treasury function changing over the next FIVE years – and what does this mean for treasury talent?

The rise of technology and digitisation means that treasury teams will be dealing with significant, and growing, amounts of data. Managing, interpreting and leveraging this data will undoubtedly require a new skillset, as well as change in the way that treasury systems interoperate and aggregate data. 

Leading treasurers are already investigating the potential that API technologies are bringing here. Rather than using spreadsheets to gather data in one place, and then analyse it, APIs are enabling the all-in-one, real-time, dashboards that treasurers have long dreamt about to become a reality.

This will take a lot of the reporting burden away from treasury, and free up staff to spend time on more value-added tasks. Treasury teams of the future will therefore require critical thinkers who are happy to be relieved of their rote tasks, who can look for creative ways to improve treasury’s performance, and who are prepared to be strategic partners to the business.