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Treasury and Procurement – Closing the Gap

by Nick Blake, Corporate Sales Executive, European Corporates, J.P. Morgan Treasury Services, EMEA and Cara Hanrahan, Head of U.S. MNC European Subsidiary Sales, J.P. Morgan Treasury Services, EMEA

Treasury and procurement departments of large multinational corporations have been quite distinct parts of the business until relatively recently and in many cases, each department would have been largely unfamiliar with each other’s objectives and metrics. In recent years, this has gradually changed as physical and financial supply chain integration at a global level become increasingly important to meet corporations’ strategic and competitive objectives. For example, while procurement professionals have a vital role to play in optimising the physical supply chain, they are also instrumental in the financial side, such as negotiating payment terms and discounts, which has a direct impact on treasury’s working capital and liquidity management objectives.

Prompted by the global financial crisis, procurement professionals are increasingly motivated to manage risk and increase the resilience of the supply chain.

Prompted by the global financial crisis, procurement professionals are increasingly motivated to manage risk and increase the resilience of the supply chain. These factors, amongst others, are heralding a closer relationship in which both departments can support the objectives of the other. This Guide looks at some of the opportunities for greater collaboration between the two business functions, but also explores some of the potential friction, particularly in that procurement and treasury typically have performance metrics that at times may be contradictory.